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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________
FORM 10-Q
_______________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______

Commission File Number: 001-37391
_______________________________
Reliant Bancorp, Inc.
(Exact name of registrant as specified in its charter)
_______________________________
Tennessee37-1641316
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
1736 Carothers Parkway,
Suite 100,
Brentwood,
Tennessee37027
(Address of principal executive offices)(Zip Code)
615-221-2020
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $1.00 par value per shareRBNCNASDAQ

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 filing 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 (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files): Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large Accelerated Filer¨Accelerated Filer
Non-Accelerated Filer¨Smaller Reporting Company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

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

The number of shares outstanding of the registrant’s common stock, par value $1.00 per share, as of November 3, 2020
was 16,297,676, excluding 337,794 unexchanged shares in connection with acquisitions.

TABLE OF CONTENTS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS3
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Risk Factors
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.





CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Various statements contained in or incorporated by reference into this Quarterly Report on Form 10-Q (this “Quarterly Report”) are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The words “believe,” “anticipate,” “expect,” “may,” “will,” “assume,” “should,” “predict,” “could,” “would,” “intend,” “targets,” “estimates,” “projects,” “plans,” and “potential,” and other similar words and expressions of the future, are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking. All forward-looking statements are subject to risks, uncertainties, and other factors that may cause the actual results, performance, or achievements of Reliant Bancorp, Inc. (“Reliant Bancorp”) to differ materially from any results, performance, or achievements expressed or implied by such forward-looking statements. Such risks, uncertainties, and other factors include, among others:

(1)    the global health and economic crisis precipitated by the coronavirus (COVID-19) pandemic;
(2)    actions taken by governments, businesses and individuals in response to the coronavirus (COVID-19) pandemic;
(3)    the pace of recovery when the coronavirus (COVID-19) pandemic subsides;
(4)    the possible recurrence of the coronavirus (COVID-19);
(5)    changes in political conditions or the legislative or regulatory environment, including governmental initiatives affecting the financial services industry such as, but not limited to, the Coronavirus Aid, Relief, and Economic Security Act (or the CARES Act);
(6)    the possibility that our asset quality could decline or that we experience greater loan losses than anticipated;
(7)    increased levels of other real estate, primarily as a result of foreclosures;
(8)    the impact of liquidity needs on our results of operations and financial condition;
(9)    competition from financial institutions and other financial service providers;
(10)    the effect of interest rate increases on the cost of deposits;
(11)    unanticipated weakness in loan demand or loan pricing;
(12)    greater than anticipated adverse conditions in the national economy or local economies in which we operate, including Middle Tennessee;
(13)    lack of strategic growth opportunities or our failure to execute on available opportunities;
(14)    deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses;
(15)    economic crises and associated credit issues in industries most impacted by the coronavirus (COVID-19) pandemic, including the restaurant, hospitality and retail sectors;
(16)    the ability to grow and retain low-cost core deposits and retain large, uninsured deposits;
(17)    our ability to effectively manage problem credits;
(18)    our ability to successfully implement efficiency initiatives on time and with the results projected;
(19)    our ability to successfully develop and market new products and technology;
(20)    the impact of negative developments in the financial industry and United States and global capital and credit markets;
(21)    our ability to retain the services of key personnel;
(22)    our ability to adapt to technological changes;
(23)    risks associated with litigation, including the applicability of insurance coverage;
(24)    the vulnerability of the computer and information technology systems and networks of Reliant Bank (the “Bank”), and the systems and networks of third parties with whom Reliant Bancorp or the Bank contract, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss, and other security breaches and interruptions;
(25)    changes in state and federal laws, rules, regulations, or policies applicable to banks or bank or financial holding companies, including regulatory or legislative developments;
(26)    adverse results (including costs, fines, reputational harm, and/or other negative effects) from current or future litigation, regulatory examinations, or other legal or regulatory actions;
(27)    the risk that expected cost savings and revenue synergies from (a) the merger of Reliant Bancorp and Tennessee Community Bank Holdings, Inc. (“TCB Holdings”) (the “TCB Holdings Transaction”) or (b) the merger of Reliant Bancorp and First Advantage Bancorp (“FABK”) (the “FABK Transaction” and, together with the TCB Holdings Transaction, collectively, the “Transactions”), may not be realized or may take longer than anticipated to be realized;
(28)    the effect of the Transactions on our customer, supplier, or employee relationships and operating results (including without limitation difficulties in maintaining relationships with employees and customers), as well as on the market price of Reliant Bancorp’s common stock;
(29)    the risk that the businesses and operations of TCB Holdings and its subsidiaries and of FABK and its subsidiaries cannot be successfully integrated with the business and operations of Reliant Bancorp and its subsidiaries or that integration will be more costly or difficult than expected;
2


(30)    the amount of costs, fees, expenses, and charges related to the Transactions, including those arising as a result of unexpected factors or events;
(31)    reputational risk associated with and the reaction of our customers, suppliers, employees, or other business partners to the Transactions;
(32)    the risk associated with Reliant Bancorp management’s attention being diverted away from the day-to-day business and operations of Reliant Bancorp to the integration of the Transactions; and
(33)    general competitive, economic, political, and market conditions, including economic conditions in the local markets where we operate.

Further, statements about the potential effects of the coronavirus (COVID-19) pandemic on our business, financial condition, liquidity, or results of operations may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable, and in many cases beyond our control, including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on our customers, other third parties, and us.

You should also consider carefully the risk factors discussed in Part I, Item 1A. "Risk Factors" of our most recent Annual Report on Form 10-K and in Part II, Item 1A. "Risk Factors" in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020, which address additional factors that could cause our actual results to differ from those set forth in forward-looking statements and could materially and adversely affect our business, operating results, and financial condition. The risks discussed in this Quarterly Report are factors that, individually or in the aggregate, management believes could cause our actual results to differ materially from expected and historical results. You should understand that it is not possible to predict or identify all such factors, many of which are beyond our ability to control or predict. Consequently, you should not consider such disclosures to be a complete discussion of all potential risks or uncertainties. Factors not here or otherwise listed may develop or, if currently extant, we may not have yet recognized them.

Forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
3

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1.    Consolidated Financial Statements (Unaudited)

RELIANT BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2020 (UNAUDITED) AND DECEMBER 31, 2019 (AUDITED)
(Dollar amounts in thousands)
September 30, 2020December 31, 2019
ASSETS
Cash and due from banks$14,050 $7,953 
Interest-bearing deposits in financial institutions61,349 43,644 
Federal funds sold12,273 52 
Total cash and cash equivalents87,672 51,649 
Securities available for sale273,893 260,293 
Loans2,357,898 1,409,952 
Less allowance for loan losses(19,834)(12,578)
Loans, net2,338,064 1,397,374 
Mortgage loans held for sale, net99,587 37,476 
Accrued interest receivable14,615 7,188 
Premises and equipment, net33,319 21,064 
Operating leases right of use assets14,619 — 
Restricted equity securities, at cost17,367 11,279 
Other real estate, net1,326 750 
Cash surrender value of life insurance contracts68,109 46,632 
Deferred tax assets, net8,523 3,933 
Goodwill51,506 43,642 
Core deposit intangibles11,820 7,270 
Other assets24,092 13,292 
TOTAL ASSETS$3,044,512 $1,901,842 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
Noninterest-bearing demand$538,844 $260,681 
Interest-bearing demand272,805 152,718 
Savings and money market deposit accounts813,001 408,724 
Time940,852 762,330 
Total deposits2,565,502 1,584,453 
Accrued interest payable3,744 2,022 
Federal funds purchased5,000  
Subordinated debentures70,389 70,883 
Federal Home Loan Bank advances40,555 10,737 
Operating leases liabilities15,756 — 
Other liabilities36,480 9,994 
TOTAL LIABILITIES2,737,426 1,678,089 
Preferred stock, $1 par value; 10,000,000 shares authorized, no shares issued to date
  
Common stock, $1 par value; 30,000,000 shares authorized; 16,634,572 and 11,206,254 shares issued and outstanding at September 30, 2020, and December 31, 2019, respectively
16,635 11,206 
Additional paid-in capital232,738 167,006 
Retained earnings55,206 40,472 
Accumulated other comprehensive income 2,507 5,069 
TOTAL SHAREHOLDERS’ EQUITY307,086 223,753 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$3,044,512 $1,901,842 
See accompanying notes to consolidated financial statements.
4


RELIANT BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019
(Dollar amounts in thousands except per share amounts)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020201920202019
INTEREST INCOME
Interest and fees on loans$32,895 $17,502 $86,987 $50,631 
Interest and fees on loans held for sale1,037 263 2,412 614 
Interest on investment securities, taxable399 549 978 1,639 
Interest on investment securities, nontaxable1,186 1,576 3,874 4,944 
Federal funds sold and other250 321 738 918 
TOTAL INTEREST INCOME35,767 20,211 94,989 58,746 
INTEREST EXPENSE
Deposits
Demand236 81 554 278 
Savings and money market deposit accounts1,162 976 3,668 3,156 
Time2,736 4,825 9,577 12,850 
Federal Home Loan Bank advances and other104 66 613 534 
Subordinated debentures992 199 2,967 590 
TOTAL INTEREST EXPENSE5,230 6,147 17,379 17,408 
NET INTEREST INCOME30,537 14,064 77,610 41,338 
PROVISION FOR LOAN LOSSES1,500 606 7,400 806 
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES29,037 13,458 70,210 40,532 
NONINTEREST INCOME
Service charges on deposit accounts1,583 976 4,172 2,796 
Gains on mortgage loans sold, net3,783 1,385 7,605 3,170 
Gain on securities transactions, net  327 306 
Other noninterest income635 399 1,602 1,124 
TOTAL NONINTEREST INCOME6,001 2,760 13,706 7,396 
NONINTEREST EXPENSE
Salaries and employee benefits12,184 7,634 33,885 22,605 
Occupancy2,054 1,359 5,566 4,069 
Data processing and software2,240 1,553 6,085 4,538 
Professional fees775 404 1,933 1,836 
Regulatory Fees365 (17)1,356 596 
Merger expenses78 299 6,895 302 
Other operating expense2,637 1,815 6,476 4,973 
TOTAL NONINTEREST EXPENSE20,333 13,047 62,196 38,919 
INCOME BEFORE PROVISION FOR INCOME TAXES14,705 3,171 21,720 9,009 
INCOME TAX EXPENSE2,800 557 3,524 1,430 
CONSOLIDATED NET INCOME11,905 2,614 18,196 7,579 
NONCONTROLLING INTEREST IN NET (INCOME) LOSS OF SUBSIDIARY(374)1,386 990 4,484 
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS$11,531 $4,000 $19,186 $12,063 
Basic net income attributable to common shareholders, per share$0.70 $0.36 $1.27 $1.07 
Diluted net income attributable to common shareholders, per share$0.69 $0.36 $1.27 $1.07 
See accompanying notes to consolidated financial statements.
5


RELIANT BANCORP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - UNAUDITED
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019
(Dollar amounts in thousands)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020201920202019
Consolidated net income$11,905 $2,614 $18,196 $7,579 
Other comprehensive income (loss)
Net unrealized gains on available-for-sale securities, net of tax of ($357) and ($973) for the three months ended September 30, 2020 and 2019, respectively, and ($864) and ($3,935) for the nine months ended September 30, 2020 and 2019, respectively
1,008 2,736 2,442 11,122 
Net unrealized losses on interest rate swap derivatives net of tax of ($133) and $98 for the three months ended September 30, 2020 and 2019, respectively, and $1,685 and $569 for the nine months ended September 30, 2020 and 2019, respectively
375 (275)(4,762)(1,606)
Reclassification adjustment for gains included in net income, net of tax of $0 and $0 for the three months ended September 30, 2020 and 2019, respectively, and $85 and $80 for the nine months ended September 30, 2020 and 2019, respectively
  (242)(226)
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)1,383 2,461 (2,562)9,290 
TOTAL COMPREHENSIVE INCOME$13,288 $5,075 $15,634 $16,869 

See accompanying notes to consolidated financial statements.
6


RELIANT BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY - UNAUDITED
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019
(Dollar amounts in thousands)

COMMON STOCKADDITIONAL
PAID-IN
CAPITAL
RETAINED
EARNINGS
ACCUMULATED
OTHER
COMPREHENSIVE
INCOME (LOSS)
NONCONTROLLING
INTEREST
TOTAL
SHARESAMOUNT
BALANCE - DECEMBER 31, 201911,206,254 $11,206 $167,006 $40,472 $5,069 $ $223,753 
Stock based compensation expense — — 349 — — — 349 
Exercise of stock options 868 1 7 — — — 8 
Restricted stock and dividend forfeiture (3,837)(4)(69)— — — (73)
Conversion shares issued to shareholders of Tennessee Community Bank Holdings, Inc.811,210 811 17,230 — — — 18,041 
Noncontrolling interest contributions — — — — — 976 976 
Cash dividend declared to common shareholders ($0.10 per share)
— — — (1,207)— — (1,207)
Cumulative effect of lease standard adoption— — — 100 — — 100 
Net loss— — — (215)— (976)(1,191)
Other comprehensive loss— — — — (6,084)— (6,084)
BALANCE - MARCH 31, 202012,014,495 $12,014 $184,523 $39,150 $(1,015)$ $234,672 
Stock based compensation expense— — 485 — — — 485 
Exercise of stock options1,021 1 14 — — — 15 
Employee Stock Purchase Plan stock issuance8,344 8 108 — — — 116 
Restricted stock awards3,022 3 (3)— — —  
Restricted stock and dividend forfeiture(1,697)(1)1 — — —  
Conversion shares issued to shareholders of First Advantage Bancorp4,606,419 4,607 47,308 — — — 51,915 
Noncontrolling interest contributions— — — — — 388 388 
Cash dividend declared to common shareholders ($0.10 per share)
— — — (1,667)— — (1,667)
Net income (loss)— — — 7,868 — (388)7,480 
Other comprehensive income— — — — 2,139 — 2,139 
BALANCE - JUNE 30, 202016,631,604 $16,632 $232,436 $45,351 $1,124 $ $295,543 
Stock based compensation expense— — 349 — — — 349 
Exercise of stock options4,655 5 61 — — — 66 
Restricted stock units vesting, net of taxes withheld8,030 8 (14)— — — (6)
Restricted stock and dividend forfeiture(9,717)(10)(94)— — — (103)
Noncontrolling interest contributions— — — — — (374)(374)
Cash dividend declared to common shareholders ($0.10 per share)
— — — (1,676)— — (1,676)
Net income— — — 11,531 — 374 11,905 
Other comprehensive income— — — — 1,383 — 1,383 
BALANCE - SEPTEMBER 30, 202016,634,572 $16,635 $232,738 $55,206 $2,507 $ $307,086 

COMMON STOCKADDITIONAL
PAID-IN
CAPITAL
RETAINED
EARNINGS
ACCUMULATED
OTHER
COMPREHENSIVE
INCOME (LOSS)
NONCONTROLLING
INTEREST
TOTAL
SHARESAMOUNT
BALANCE - DECEMBER 31, 201811,530,810 $11,531 $173,238 $27,329 $(3,684)$ $208,414 
Stock based compensation expense — — 250 — — — 250 
Exercise of stock options 2,183 2 26 — — — 28 
Restricted stock awards3,000 3 (3)— — —  
Restricted stock forfeiture(3,750)(4)4 1 — — 1 
Common stock shares redeemed(29,958)(30)(629)— — — (659)
Noncontrolling interest contributions — — — — — 1,543 1,543 
Cash dividends declared to common shareholders ($0.09 per share)
— — — (1,035)— — (1,035)
Net income (loss) — — — 3,824 — (1,543)2,281 
Other comprehensive income— — — — 4,296 — 4,296 
BALANCE - MARCH 31, 201911,502,285 $11,502 $172,886 $30,119 $612 $ $215,119 
Stock based compensation expense— — 280 — — — 280 
Exercise of stock options24,523 25 298 — — — 323 
Employee Stock Purchase Plan stock issuance4,728 5 85 — — — 90 
Restricted stock awards5,000 5 (5)— — —  
Restricted stock and dividend forfeiture(4,000)(4)4 — — —  
Common stock shares redeemed(335,973)(336)(7,296)— — — (7,632)
Noncontrolling interest contributions— — — — — 1,555 1,555 
Cash dividends declared to common shareholders ($0.09 per share)
— — — (1,009)— — (1,009)
Net income (loss)— — — 4,239 — (1,555)2,684 
Other comprehensive income— — — — 2,533 — 2,533 
BALANCE - JUNE 30, 201911,196,563 $11,197 $166,252 $33,349 $3,145 $ $213,943 
Stock based compensation expense— — 337 — — — 337 
Exercise of stock options600 1 8 — — — 9 
Restricted stock awards1,500 1 (1)— — —  
Restricted shares withheld for taxes(3,601)(4)(84)— — — (88)
Noncontrolling interest contributions— — — — — 1,386 1,386 
Cash dividend declared to common shareholders ($0.09 per share)
— — — (1,010)— — (1,010)
Net income (loss)— — — 4,000 — (1,386)2,614 
Other comprehensive loss— — — — 2,461 — 2,461 
BALANCE - SEPTEMBER 30, 201911,195,062 $11,195 $166,512 $36,339 $5,606 $ $219,652 

See accompanying notes to consolidated financial statements.
7


RELIANT BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019
(Dollar amounts in thousands)
Nine Months Ended
September 30,
OPERATING ACTIVITIES20202019
Consolidated net income$18,196 $7,579 
Adjustments to reconcile consolidated net income to net cash (used in) provided by operating activities
Provision for loan losses7,400 806 
Deferred income taxes2,003 3,686 
Gain on disposal of premises and equipment(1) 
Depreciation and amortization of premises and equipment2,084 1,486 
Net amortization of securities1,980 2,302 
Net realized gains on sales of securities(327)(306)
Gains on mortgage loans sold, net(7,605)(3,170)
Stock-based compensation expense1,183 867 
Gain on other real estate(24) 
Increase in cash surrender value of life insurance contracts(1,073)(838)
Mortgage loans originated for resale(327,521)(106,520)
Proceeds from sale of mortgage loans278,893 108,756 
Cash payments arising from operating leases2,327 — 
Other accretion, net of other amortization(10,748)(477)
Change in
Accrued interest receivable(4,094)726 
Other assets(4,535)508 
Accrued interest payable(526)547 
Other liabilities6,497 (6,392)
TOTAL ADJUSTMENTS(54,087)1,981 
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES(35,891)9,560 
INVESTING ACTIVITIES
Cash used to convert shares, and redeem stock options and fractional shares, net of cash received(8,500) 
Activities in available for sale securities
Purchases(31,179)(47,870)
Sales103,901 52,434 
Maturities, prepayments and calls10,370 8,587 
(Purchases) redemptions of restricted equity securities(1,867)411 
Net increase in loans(146,777)(118,758)
Purchase of premises and equipment(2,709)(843)
Proceeds from sale of premises and equipment257  
Proceeds from sale of other real estate2,273  
NET CASH USED IN INVESTING ACTIVITIES(74,231)(106,039)
FINANCING ACTIVITIES
Net change in deposits163,839 172,741 
Proceeds from Federal Home Loan Bank Advances444,000 163,824 
Payments on Federal Home Loan Bank Advances(463,156)(217,353)
Proceeds from Federal Funds Purchased5,000  
Issuance of common stock, net of repurchase of restricted shares(177)272 
Issuance of common stock related to exercise of stock options and ESPP199 90 
Redemption of common stock (8,291)
Noncontrolling interest contributions received990 4,415 
Cash dividends paid on common stock(4,550)(3,077)
NET CASH PROVIDED BY FINANCING ACTIVITIES146,145 112,621 
NET CHANGE IN CASH AND CASH EQUIVALENTS36,023 16,142 
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD51,649 35,178 
CASH AND CASH EQUIVALENTS - END OF PERIOD$87,672 $51,320 
See accompanying notes to consolidated financial statements.

RELIANT BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019
(Dollar amounts in thousands)
Nine Months Ended
September 30,
20202019
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for
Interest$20,508 $16,861 
Taxes$4,565 $1,607 
Non-cash investing and financing activities
Change in due to/from noncontrolling interest$990 $4,484 
Acquired bank facilities no longer in use transferred to other real estate owned and foreclosed assets from premises and equipment$2,420 $ 
Loans foreclosed and transferred to other real estate owned and foreclosed assets$197 $943 

See accompanying notes to consolidated financial statements.
8

Table of Contents
RELIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020 AND 2019 (UNAUDITED) AND DECEMBER 31, 2019
(Dollar amounts in thousands except per share amounts)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Reliant Bancorp, Inc. is a Tennessee corporation and the holding company for and the sole shareholder of Reliant Bank (the "Bank"), collectively, "the Company". Reliant Bancorp is registered as a financial holding company under the Bank Holding Company Act of 1956, as amended ("Bank Holding Company Act"). Reliant Bank is a commercial bank chartered under Tennessee law and a member of the Federal Reserve System (the "Federal Reserve"). The Bank provides a full range of traditional banking products and services to business and consumer clients throughout Middle Tennessee.

Reliant Risk Management, Inc., a wholly-owned insurance captive subsidiary of Reliant Bancorp, that began operations on June 1, 2020, is a Tennessee-based captive insurance company which insures Reliant Bancorp and the Bank against certain risks unique to their operations and for which insurance may not be currently available or economically feasible in today's insurance marketplace. Reliant Risk Management, Inc. pools resources with several other similar insurance company subsidiaries of financial institutions to spread a limited amount of risk among themselves. Reliant Risk Management, Inc. is subject to regulations of the State of Tennessee and undergoes periodic examinations by the Tennessee Department of Commerce and Insurance.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with instructions to Quarterly Report on Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"). All adjustments consisting of normally recurring accruals that, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations for the periods covered by the report have been included.  The accompanying unaudited consolidated financial statements should be read in conjunction with the Company's consolidated financial statements and related notes appearing in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

The consolidated financial statements as of and for the periods presented include Reliant Bancorp, Inc., its wholly-owned direct and indirect subsidiaries and Reliant Mortgage Ventures, LLC ("RMV"), of which the Bank controls 51% of the governance rights. As described in Note 12 to these unaudited consolidated financial statements, Reliant Bancorp, Inc. and TCB Holdings merged effective on January 1, 2020, and Reliant Bancorp, Inc. and FABK merged effective April 1, 2020.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions based on available information. These estimates and assumptions 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 reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to determination of the allowance for loan losses, the valuation of other real estate, the valuation of debt and equity securities, the valuation of deferred tax assets and fair values of financial instruments.

The consolidated financial statements as of September 30, 2020, and for the three and nine months ended September 30, 2020 and 2019, included herein have not been audited. The accounting and reporting policies of the Company conform to U.S. GAAP and Article 8 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, although the Company believes that the disclosures made are adequate to make the information not misleading.

The accompanying consolidated financial statements reflect all adjustments which, in the opinion of management, are necessary to present a fair statement of the results for the interim periods presented. Such adjustments are of a normal recurring nature. The Company evaluates subsequent events through the date of filing. Certain prior period amounts have been reclassified to
9

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2020 AND 2019 (UNAUDITED) AND DECEMBER 31, 2019
(Dollar amounts in thousands except per share amounts)

conform to the current period presentation. The results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.

Recently Adopted Accounting Pronouncements

Information about certain issued accounting standards updates is presented below. Also refer to Note 1 - Summary of Significant Accounting Policies, “Recent Authoritative Accounting Guidance” in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 for additional information related to previously issued accounting standards updates.

ASU 2016-02, “Leases (Topic 842).” ASU 2016-02 requires lessees to recognize a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis, and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 went into effect for the Company on January 1, 2020 and the Company elected the prospective application approach provided by ASU 2018-11 and did not adjust prior periods for ASC 842. The Company also elected certain practical expedients within the standard and consistent with such elections did not reassess whether any expired or existing contracts are or contain leases, did not reassess the lease classification for any expired or existing leases, and did not reassess any initial direct costs for existing leases. The effect of implementing this pronouncement resulted in right to use assets of $11,973 and a similar corresponding liability, as of January 1, 2020.

ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment.” ASU 2017-04 eliminates Step 2 from the goodwill impairment test which required entities to compute the implied fair value of goodwill. Under ASU 2017-04, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 was early adopted as of January 1, 2020 and did not have a significant impact on the Company's consolidated financial statements as it simplifies the test of impairment of goodwill.

ASU 2020-04, "Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting." In March 2020, the FASB issued Topic 848 amendments to provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. It provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update are effective for all entities as of March 12, 2020 through December 31, 2022. The Company has evaluated the effect of the pronouncement on the consolidated financial statements, noting no significant impact.

Newly Issued not yet Effective Accounting Standards

ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts and requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In addition, ASU 2016-13 amends the accounting for credit losses on available for sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 is expected to be effective for the Company on January 1, 2023. We are currently evaluating the potential impact of ASU 2016-13 on the Company's financial statements by developing an implementation plan to include assessment of processes, portfolio segmentation, model development, system requirements and the identification of data and resource needs, among other things. The adoption of ASU 2016-13 could result in an increase in the allowance for loan losses as a result of changing from an “incurred loss” model, which encompasses allowances for current known and inherent losses within the portfolio, to an “expected loss” model, which encompasses allowances for losses expected to be incurred over the life of the portfolio. Furthermore, ASU 2016-13 will necessitate that we establish an allowance for expected credit losses for certain debt securities and other financial assets. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Financial Instruments - Credit Losses (ASC 326), Derivatives and Hedging (ASC 815), and Financial Instruments (ASC 825). The amendments in this ASU improve the codification by eliminating inconsistencies and providing clarifications. The amended guidance in this ASU related to credit losses is expected to be effective for the Company in conjunction with the adoption of the standard on January 1, 2023. The Company is currently evaluating the impact of these ASUs on the Company’s consolidated financial statements. While we are currently unable to
10

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2020 AND 2019 (UNAUDITED) AND DECEMBER 31, 2019
(Dollar amounts in thousands except per share amounts)

reasonably estimate the impact of adopting these ASUs, we expect that the impact of adoption will be significantly influenced by the composition, characteristics and quality of the Company's loan and securities portfolios as well as the prevailing economic conditions and forecasts as of the adoption date.

NOTE 2 - SECURITIES

The amortized cost and fair value of available for sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income at September 30, 2020 and December 31, 2019 were as follows:
September 30, 2020
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
U. S. Treasury and other U. S. government agencies$12,117 $1 $(1)$12,117 
State and municipal175,976 14,717 (70)190,623 
Corporate bonds15,750 167 (108)15,809 
Mortgage-backed securities 41,240 348 (1,212)40,376 
Asset-backed securities15,199  (231)14,968
Total$260,282 $15,233 $(1,622)$273,893 

December 31, 2019
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
U. S. Treasury and other U. S. government agencies$59 $ $ $59 
State and municipal186,283 10,413 (36)196,660 
Corporate bonds7,880 97 (132)7,845 
Mortgage-backed securities 38,126 296 (661)37,761 
Asset-backed securities18,374  (406)17,968 
Total$250,722 $10,806 $(1,235)$260,293 

Securities pledged at September 30, 2020 and December 31, 2019 had a carrying amount of $43,406 and $46,918, respectively, and were pledged to collateralize Federal Home Loan Bank ("FHLB") advances, Federal Reserve Bank ("FRB") advances and municipal deposits.

The fair values of available for sale debt securities at September 30, 2020 by contractual maturity are provided below. Actual maturities may differ from contractual maturities for mortgage- and asset-backed securities since the underlying asset may be called or prepaid with or without penalty. Securities not due at a single maturity date are shown separately.

Results from sales of securities were as follows:
Nine months ended
September 30, 2020September 30, 2019
Proceeds$103,901 $52,434 
Gross gains810 475 
Gross losses(483)(169)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2020 AND 2019 (UNAUDITED) AND DECEMBER 31, 2019
(Dollar amounts in thousands except per share amounts)

Amortized
Cost
Estimated
Fair Value
Due within one year$12,567 $12,565 
Due in one to five years2,175 2,186 
Due in five to ten years17,222 17,965 
Due after ten years171,879 185,833 
Mortgage-backed securities41,240 40,376 
Asset-backed securities15,199 14,968 
Total$260,282 $273,893 

The following table shows available for sale securities with unrealized losses and their estimated fair value aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2020 and December 31, 2019, respectively:
Less than 12 months12 months or moreTotal
Estimated
Fair Value
Unrealized
Loss
Estimated
Fair Value
Unrealized
Loss
Estimated
Fair Value
Unrealized
Loss
September 30, 2020
U. S. Treasury and other
U. S. government agencies
$12,066 $1 $ $ $12,066 $1 
State and municipal7,319 70   7,319 70 
Corporate bonds9,142 107 500 1 9,642 108 
Mortgage-backed securities 6,613 282 20,982 930 27,595 1,212 
Asset-backed securities790 1 14,092 230 14,882 231 
Total temporarily impaired$35,930 $461 $35,574 $1,161 $71,504 $1,622 

December 31, 2019
U. S. Treasury and other
U. S. government agencies
$ $ $ $ $ $ 
State and municipal1,960 36   1,960 36 
Corporate bonds  2,499 132 2,499 132 
Mortgage-backed securities 16,104 286 9,081 375 25,185 661 
Asset-backed securities  17,682 406 17,682 406 
Total temporarily impaired$18,064 $322 $29,262 $913 $47,326 $1,235 

Management has the intent and ability to hold all securities in an unrealized loss position for the foreseeable future, and the decline in fair value is largely due to changes in interest rates. As the fair value is expected to recover as the securities approach their maturity date and/or market rates decline, we do not consider these securities to be other-than-temporarily impaired at September 30, 2020. There were 43 and 47 securities in an unrealized loss position as of September 30, 2020 and December 31, 2019, respectively.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2020 AND 2019 (UNAUDITED) AND DECEMBER 31, 2019
(Dollar amounts in thousands except per share amounts)

NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES

Loans at September 30, 2020 and December 31, 2019 were comprised as follows:
September 30,
2020
December 31, 2019
Commercial, Industrial and Agricultural$477,785 $245,515 
Real Estate
    1-4 Family Residential334,730 227,529 
    1-4 Family HELOC101,492 96,228 
    Multi-family and Commercial864,756 536,845 
    Construction, Land Development and Farmland366,760 273,872 
Consumer209,071 16,855 
Other8,259 13,180 
Gross loans2,362,853 1,410,024 
    Less: Deferred loan fees 4,955 72 
    Less: Allowance for loan losses19,834 12,578 
Loans, net$2,338,064 $1,397,374 

Activity in the allowance for loan losses by portfolio segment was as follows for the three months ended September 30, 2020 and September 30, 2019, respectively:

Commercial Industrial and AgriculturalMulti-family
and
Commercial
Real Estate
Construction
Land
Development and Farmland
1-4 Family
Residential
Real Estate
1-4 Family HELOCConsumerOtherTotal
Beginning balance at June 30, 2020
$4,675 $8,407 $2,126 $1,454 $975 $584 $16 $18,237 
Charge-offs   (8) (60) (68)
Recoveries88 9 4 22 12 30  165 
Provision249 (169)(175)821 498 272 4 1,500 
Ending balance at
September 30, 2020
$5,012 $8,247 $1,955 $2,289 $1,485 $826 $20 $19,834 

Beginning balance at June 30, 2019
$1,881 $4,713 $2,707 $1,455 $686 $188 $36 $11,666 
Charge-offs(2)  (12) (16)(21)(51)
Recoveries48 3 (201)4  16 200 70 
Provision372 472 7 (64)18 (18)(181)606 
Ending balance at
September 30, 2019
$2,299 $5,188 $2,513 $1,383 $704 $170 $34 $12,291 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2020 AND 2019 (UNAUDITED) AND DECEMBER 31, 2019
(Dollar amounts in thousands except per share amounts)

Activity in the allowance for loan losses by portfolio segment was as follows for the nine months ended September 30, 2020 and September 30, 2019, respectively:
Commercial Industrial and AgriculturalMulti-family
and
Commercial
Real Estate
Construction
Land
Development and Farmland
1-4 Family
Residential
Real Estate
1-4 Family HELOCConsumerOtherTotal
Beginning balance at December 31, 2019$2,529 $5,285 $2,649 $1,280 $624 $177 $34 $12,578 
Charge-offs(507) (114)(68)(98)(355) (1,142)
Recoveries126 20 8 769 15 60  998 
Provision2,864 2,942 (588)308 944 944 (14)7,400 
Ending balance at
September 30, 2020
$5,012 $8,247 $1,955 $2,289 $1,485 $826 $20 $19,834 

Beginning balance at December 31, 2018$1,751 $4,429 $2,500 $1,333 $656 $184 $39 $10,892 
Charge-offs(170)  (29) (37)(34)(270)
Recoveries342 62  220 11 28 200 863 
Provision376 697 13 (141)37 (5)(171)806 
Ending balance at
September 30, 2019
$2,299 $5,188 $2,513 $1,383 $704 $170 $34 $12,291 

The allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of September 30, 2020 were as follows:
Commercial Industrial and AgriculturalMulti-family
and
Commercial
Real Estate
Construction
Land
Development and Farmland
1-4 Family
Residential
Real Estate
1-4 Family HELOCConsumerOtherTotal
Allowance for loan losses
Individually evaluated for impairment$764 $ $ $ $ $ $ $764 
Acquired with credit impairment        
Collectively evaluated for impairment 4,248 8,247 1,955 2,289 1,485 82620 19,070 
Total$5,012 $8,247 $1,955 $2,289 $1,485 $826 $20 $19,834 
Loans
Individually evaluated for impairment$1,084 $2,537 $1,777 $1,687 $316 $592 $ $7,993 
Acquired with credit impairment257 1,211 787 934 14 1,330  4,533 
Collectively evaluated for impairment 476,444 861,008 364,196 332,109 101,162 207,1498,259 2,350,327 
Total$477,785 $864,756 $366,760 $334,730 $101,492 $209,071 $8,259 $2,362,853 
 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2020 AND 2019 (UNAUDITED) AND DECEMBER 31, 2019
(Dollar amounts in thousands except per share amounts)

The allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2019 were as follows:
Commercial Industrial and AgriculturalMulti-family
and
Commercial
Real Estate
Construction
Land
Development and Farmland
1-4 Family
Residential
Real Estate
1-4 Family HELOCConsumerOtherTotal
Allowance for loan losses
Individually evaluated for impairment$755 $ $17 $ $ $ $ $772 
Acquired with credit impairment        
Collectively evaluated for impairment 1,774 5,285 2,632 1,280 624 177 34 11,806 
Total$2,529 $5,285 $2,649 $1,280 $624 $177 $34 $12,578 
Loans
Individually evaluated for impairment$1,154 $3,439 $1,217 $1,536 $374 $28 $ $7,748 
Acquired with credit impairment 215 813 195    1,223 
Collectively evaluated for impairment 244,361 533,191 271,842 225,798 95,854 16,827 13,180 1,401,053 
Total$245,515 $536,845 $273,872 $227,529 $96,228 $16,855 $13,180 $1,410,024 



Non-accrual loans by class of loan were as follows at September 30, 2020 and December 31, 2019:
September 30, 2020December 31, 2019
Commercial, Industrial and Agricultural$791 $572 
Multi-family and Commercial Real Estate1,532 1,276 
Construction, Land Development and Farmland1,100 555 
1-4 Family Residential Real Estate1,591 1,344 
1-4 Family HELOC239 296 
Consumer1,485 28 
Total$6,738 $4,071 

Performing non-accrual loans totaled $2,926 and $1,332 at September 30, 2020 and December 31, 2019, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2020 AND 2019 (UNAUDITED) AND DECEMBER 31, 2019
(Dollar amounts in thousands except per share amounts)

Individually impaired loans by class of loans were as follows at September 30, 2020:
Unpaid
Principal
Balance
Recorded
Investment
with no
Allowance for Loan Losses
Recorded
Recorded
Investment
with
Allowance for Loan Losses
Recorded
Total
Recorded
Investment
Related
Allowance for Loan Losses
Commercial, Industrial and Agricultural$2,575 $436 $905 $1,341 $764 
Multi-family and Commercial Real Estate5,837 3,748  3,748  
Construction, Land Development and Farmland3,032 2,564  2,564  
1-4 Family Residential Real Estate3,322 2,621  2,621  
1-4 Family HELOC436 330  330  
Consumer3,819 1,922  1,922  
Total $19,021 $11,621 $905 $12,526 $764 

Individually impaired loans by class of loans were as follows at December 31, 2019:
Unpaid
Principal
Balance
Recorded
Investment
with no
Allowance for Loan Losses
Recorded
Recorded
Investment
with
Allowance for Loan Losses
Recorded
Total
Recorded
Investment
Related
Allowance for Loan Losses
Commercial, Industrial and Agricultural$1,154 $5 $1,149 $1,154 $755 
Multi-family and Commercial Real Estate3,746 3,654  3,654  
Construction, Land Development and Farmland2,347 1,859 171 2,030 17 
1-4 Family Residential Real Estate1,852 1,731  1,731  
1-4 Family HELOC376 374  374  
Consumer31 28  28  
Total $9,506 $7,651 $1,320 $8,971 $772 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2020 AND 2019 (UNAUDITED) AND DECEMBER 31, 2019
(Dollar amounts in thousands except per share amounts)

The average balances of impaired loans and the interest income recognized for the three and nine months ended September 30, 2020 and 2019 were as follows:
Three Months Ended September 30,
Nine Months Ended September 30,
2020201920202019
Average Recorded InvestmentInterest Income RecognizedAverage Recorded InvestmentInterest Income RecognizedAverage Recorded InvestmentInterest Income RecognizedAverage Recorded InvestmentInterest Income Recognized
Impaired loans with an allowance
Commercial, Industrial and Agricultural$947 $6$2,435 $112$975 $32$1,384 $342
Multi-family and Commercial Real Estate        
Construction, Land Development and Farmland  172  43  172  
1-4 Family Residential Real Estate        
1-4 Family HELOC  25    13 1 
Consumer    1    
Subtotal947 6 2,631 112 1,019 32 1,568 343 
Impaired loans with no allowance
Commercial, Industrial and Agricultural594 42 672 9 356 56 537 33 
Multi-family and Commercial Real Estate4,375 63 3,474 46 4,138 278 2,838 141 
Construction, Land Development and Farmland2,949 28 1,797 21 2,471 115 2,399 168 
1-4 Family Residential Real Estate3,002 54 2,124 26 2,631 154 1,924 88 
1-4 Family HELOC331  296  367  148 4 
Consumer2,118 68 15 1 1,076 205 16 2 
Subtotal$13,369 $255$8,378 $103$11,039 $808$7,862 $436 
Total$14,316 $261 $11,009 $215 $12,058 $840$9,430 $779 

The Company utilizes a risk grading system to monitor the credit quality of the Company’s commercial loan portfolio which consists of commercial, industrial and agricultural, commercial real estate and construction loans. Loans are graded on a scale of 1 to 9. Grades 1 to 5 are pass credits, grade 6 is special mention, grade 7 is substandard, grade 8 is doubtful and grade 9 is loss. A description of the risk grades are as follows:

    Grade 6 - Special Mention
Special mention assets have potential weaknesses that may, if not checked or corrected, weaken the asset or inadequately protect the Company’s position at some future date. These assets pose elevated risk, but their weakness does not yet justify a substandard classification. Borrowers may be experiencing adverse operating trends (declining revenues or margins) or an ill proportioned balance sheet (e.g., increasing inventory without an increase in sales, high leverage, tight liquidity). Adverse economic or market conditions, such as interest rate increases or the entry of a new competitor, may also support a special mention rating. Nonfinancial reasons for rating a credit exposure special mention include management problems, pending litigation, an ineffective loan agreement or other material structural weakness, and any other significant deviation from prudent lending practices. The special mention rating is designed to identify a specific level of risk and concern about asset quality. Although a special mention asset has a higher probability of default than a pass asset, its default is not imminent.

    Grade 7 - Substandard
A ‘‘substandard’’ extension of credit is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Extensions of credit so classified should have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard credits, does not have to exist in individual extensions of credit classified substandard. Substandard assets have a high probability of payment default, or they have other well-defined weaknesses. They require more intensive supervision by Company management. Substandard assets are generally characterized by
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2020 AND 2019 (UNAUDITED) AND DECEMBER 31, 2019
(Dollar amounts in thousands except per share amounts)

current or expected unprofitable operations, inadequate debt service coverage, inadequate liquidity, or marginal capitalization. Repayment may depend on collateral or other credit risk mitigation.
    
Grade 8 - Doubtful
An extension of credit classified ‘‘doubtful’’ has all the weaknesses inherent in one classified substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors that may work to the advantage of and strengthen the credit, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors may include a proposed merger or acquisition, liquidation proceedings, capital injection, perfecting liens on additional collateral, or refinancing plans. Generally, the doubtful classification should not extend for a long period of time because in most cases the pending factors or events that warranted the doubtful classification should be resolved either positively or negatively in a reasonable period of time.

    Grade 9 - Loss
Extensions of credit classified ‘‘loss’’ are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the credit has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be effected in the future. Amounts classified loss should be promptly charged off. The Company will not attempt long term recoveries while the credit remains on the Company’s books. Losses should be taken in the period in which they surface as uncollectible. With loss assets, the underlying borrowers are often in bankruptcy, have formally suspended debt repayments, or have otherwise ceased normal business operations. Once an asset is classified loss, there is little prospect of collecting either its principal or interest.

Loans not falling in the criteria above are considered to be pass-rated loans.

Non-commercial purpose loans are initially assigned a default loan grade of 99 (Pass) and are risk graded (Grade 6, 7, or 8) according to delinquency status when applicable.

Credit quality indicators by class of loan were as follows at September 30, 2020:
PassSpecial
Mention
SubstandardTotal
Commercial, Industrial and Agricultural$474,199 $1,534 $2,052 $477,785 
1-4 Family Residential Real Estate331,930 5 2,795 334,730 
1-4 Family HELOC101,176  316 101,492 
Multi-family and Commercial Real Estate859,739 663 4,354 864,756 
Construction, Land Development and Farmland365,135  1,625 366,760 
Consumer 207,016 7 2,048 209,071 
Other6,739 1,520  8,259 
Total $2,345,934 $3,729 $13,190 $2,362,853 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2020 AND 2019 (UNAUDITED) AND DECEMBER 31, 2019
(Dollar amounts in thousands except per share amounts)

Credit quality indicators by class of loan were as follows at December 31, 2019:
PassSpecial
Mention
SubstandardTotal
Commercial, Industrial and Agricultural$241,089 $2,382 $2,044 $245,515 
1-4 Family Residential Real Estate225,809  1,720 227,529 
1-4 Family HELOC95,678  550 96,228 
Multi-family and Commercial Real Estate531,055 1,519 4,271 536,845 
Construction, Land Development and Farmland272,440  1,432 273,872 
Consumer 16,634  221 16,855 
Other13,180   13,180 
Total $1,395,885 $3,901 $10,238 $1,410,024 

None of the Company's loans had a risk rating of "Doubtful" or "Loss" as of September 30, 2020 or December 31, 2019.

Past due status by class of loan was as follows at September 30, 2020:
30-59 Days
Past Due
60-89 Days
Past Due
90+ Days
Past Due
Total
Past Due
CurrentTotal Loans
Commercial, Industrial and Agricultural$219 $ $412 $631 $477,154 $477,785 
1-4 Family Residential Real Estate1,006 544 318 1,868 332,862 334,730 
1-4 Family HELOC  198 198 101,294 101,492 
Multi-family and Commercial Real Estate  1,023 1,023 863,733 864,756 
Construction, Land Development and Farmland 684 205 889 365,871 366,760 
Consumer 389 767 617 1,773 207,298 209,071 
Other    8,259 8,259 
Total$1,614 $1,995 $2,773 $6,382 $2,356,471 $2,362,853 

Past due status by class of loan was as follows at December 31, 2019:
30-59 Days
Past Due
60-89 Days
Past Due
90+ Days
Past Due
Total
Past Due
CurrentTotal Loans
Commercial, Industrial and Agricultural$79 $4 $572 $655 $244,860 $245,515 
1-4 Family Residential Real Estate501 236 229 966 226,563 227,529 
1-4 Family HELOC  296 296 95,932 96,228 
Multi-family and Commercial Real Estate485  558 1,043 535,802 536,845 
Construction, Land Development and Farmland255  339 594 273,278 273,872 
Consumer 38 26 64 128 16,727 16,855 
Other    13,180 13,180 
Total$1,358 $266 $2,058 $3,682 $1,406,342 $1,410,024 

There was one loan past due 90 days or more and still accruing interest at September 30, 2020 totaling $38. At December 31, 2019, there was one loan totaling $64 past due 90 days or more and still accruing interest.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2020 AND 2019 (UNAUDITED) AND DECEMBER 31, 2019
(Dollar amounts in thousands except per share amounts)

The following table presents loans by class modified as troubled debt restructurings ("TDRs") during the first nine months of 2020. There were no modifications in the three months ending September 30, 2020. There were no loans that were modified as TDRs during the three or nine months ended September 30, 2019.
Number of ContractsPre-Modification Outstanding Recorded InvestmentsPost-Modification Outstanding Recorded Investments
September 30, 2020
Commercial, Industrial and Agricultural1 $150 $150 
Multi-family and Commercial Real Estate1 721 721 
1-4 Family Residential1 394 394 
Total3 $1,265 $1,265 

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was signed into law on March 27, 2020, and subsequent regulatory guidance provide that financial institutions may elect to account for certain loan modifications due to COVID-19 as not TDRs. The Company had applied this guidance to approve initial modifications in April and May 2020 for loans with principal balances of $530.7 million. The majority of these modifications were for a period of up to three months and contained either interest-only periods or full payment deferrals. Through September 30, 2020, further modifications were approved for $21.8 million of the loans previously modified. Additional modifications of these loans are likely to be executed in the fourth quarter of 2020.

The CARES Act provides over $2.0 trillion in emergency economic relief to individuals and businesses impacted by the COVID-19 pandemic. The CARES Act authorized the Small Business Administration (“SBA”) to administer new loan programs including, but not limited to, the guarantee of loans under a new 7(a) loan program called the Paycheck Protection Program (“PPP”). Upon completion of the FABK Transaction as disclosed in Note 12, we assumed their qualified SBA lender status. The Company originated 893 loans amounting to $83 million of PPP loans in 2020 which are included in the commercial, industrial, and agricultural segment. PPP loans do not have a corresponding allowance as they are fully guaranteed by the SBA. Fees range from 1% to 5% of the loan and are deferred and amortized over the life of the loan. As PPP loans are forgiven, any deferred loan fee or cost is recognized related to each individual loan.

The Company has acquired loans for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The outstanding balance and carrying amount of the purchased credit impaired loans were as follows at September 30, 2020 and December 31, 2019:

September 30, 2020December 31, 2019
Commercial, Industrial and Agricultural$989 $ 
Multi-family and Commercial Real Estate2,243 217 
Construction, Land Development and Farmland1,003 1,021 
1-4 Family Residential Real Estate1,211 231 
1-4 Family HELOC18  
Consumer2,105  
Total outstanding balance7,569 1,469 
Less remaining purchase discount3,036 246 
Allowance for loan losses  
Carrying amount, net of allowance for loan losses and remaining purchase discounts$4,533 $1,223 

20

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2020 AND 2019 (UNAUDITED) AND DECEMBER 31, 2019
(Dollar amounts in thousands except per share amounts)

Activity related to the accretable portion of the purchase discount on loans acquired with deteriorated credit quality is as follows for the nine months ended September 30, 2020 and 2019:
20202019
Balance at January 1,$98 $110 
New loans purchased870  
Year-to-date settlements(137)(12)
Balance at September 30,
$831 $98 
Year-to-date settlements include both loans that were charged-off as well as loans that were paid off.



NOTE 4 - LEASES

On January 1, 2020, the Company adopted ASU No. 2016-02 “Leases (Topic 842)” and all subsequent ASUs that modified Topic 842. The Company elected the prospective application approach provided by ASU 2018-11 and did not adjust prior periods for ASC 842. Leases with initial terms of less than one year are not recorded on the balance sheet.

The Company’s long-term lease agreements are classified as operating leases. Certain of these leases offer the option to extend the lease term and the Company has included such extensions in its calculation of the lease liabilities to the extent the options are reasonably assured of being exercised. The lease agreements do not provide for residual value guarantees and have no restrictions or covenants that would impact dividends or require incurring additional financial obligations.

The implementation of the new standard resulted in recognition of a right-of-use asset of $12.0 million and a lease liability of $11.9 million at the date of adoption, which is related to the Company’s lease of premises used in operations. The Company used a discount rate of 4.5% in determining the right-of-use asset and lease liability as of January 1, 2020.

Information related to the Company's operating leases is presented below:
September 30, 2020
Operating leases right of use assets$14,619 
Operating leases liabilities$15,756 
Weighted average remaining lease term (in years)6.14
Weighted average discount rate4.34 %

The components of lease expense included in occupancy expenses for the three and nine months ended September 30, 2020, were as follows:

Three Months Ended September 30, 2020
Nine Months Ended September 30, 2020
Operating lease cost $851 $2,333 
Short-term lease cost2 2 
Variable lease cost98276 
Total lease cost$951 $2,611 

The Company does not separate lease and non-lease components and instead elects to account for them as a single lease component. Variable lease cost primarily represents variable payments such as common area maintenance, utilities, and property taxes.

Lease expense for the three and nine months ended September 30, 2019, prior to the adoption of ASU 2016-02, was $669 and $2,039, respectively.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2020 AND 2019 (UNAUDITED) AND DECEMBER 31, 2019
(Dollar amounts in thousands except per share amounts)


A maturity analysis of operating lease liabilities and a reconciliation of undiscounted cash flows to the total operating lease liability is as follows:

Lease payments due on or beforeSeptember 30, 2020
September 30, 2021$3,155 
September 30, 20222,755 
September 30, 20232,716 
September 30, 20242,703 
September 30, 20252,372 
Thereafter4,289 
Total undiscounted cash flows17,990 
Discount on cash flows(2,234)
Total lease liability$15,756 

As of September 30, 2020, the Company entered into a five year lease with a related party that commences January 1, 2021 and has a base annual rental of $211,000, with a 2.5% per year increase. This lease may be terminated December 31, 2021 with a 90-day notice. As the lease has not yet commenced, it is not included in the lease payments due above.


NOTE 5 - DERIVATIVES

The Company utilizes interest rate swap agreements as part of its asset liability management strategy to help manage its interest rate risk position. The notional amount of the interest rate swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and other terms of the individual interest rate swap agreements.

Interest Rate Swaps Designated as Cash Flow Hedges

Interest rate swaps with notional amounts totaling $160,000 as of September 30, 2020 were designated as cash flow hedges of certain short-term interest-bearing liabilities and subordinated debentures, which are fully effective. As such, no amount of ineffectiveness has been included in net income. Therefore, the aggregate fair value of the swaps is recorded in other assets (liabilities) with changes in fair value recorded in other comprehensive income (loss). The amount included in accumulated other comprehensive income (loss) would be reclassified to current earnings should the hedges no longer be considered effective. The Company expects the hedges to remain fully effective during the remaining terms of the swap agreements. No gains or losses were reclassified from accumulated other comprehensive income into net income during the periods presented.


Summary information related to the interest rate swaps designated as cash flow hedges as of September 30, 2020, is as follows:
Notional amounts$160,000 
Weighted average pay rates2.050 %
Weighted average receive rates0.390 %
Weighted average maturity 3.35 years
Unrealized losses$8,526 

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SEPTEMBER 30, 2020 AND 2019 (UNAUDITED) AND DECEMBER 31, 2019
(Dollar amounts in thousands except per share amounts)

The following table reflects the cash flow hedges included in the Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019, respectively:
September 30, 2020December 31, 2019
Notional AmountFair ValueNotional AmountFair Value
Included in other liabilities:
Interest rate swaps related to:
Subordinated debentures$10,000 $(750)$10,000 $(439)
Short-term interest-bearing liabilities150,000 (7,776)100,000 (1,639)
Total included in other liabilities$160,000 $(8,526)$110,000 $(2,078)

The following table presents the net gains (losses) recorded in accumulated other comprehensive income and the Consolidated Statements of Income, net of tax, relating to the cash flow derivative instruments for the three and nine months ended September 30, 2020 and 2019, respectively:

Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss)
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Interest rate swaps-subordinate debentures$51 $(42)$(230)$(264)
Interest rate swaps-interest-bearing liabilities324 (233)(4,532)(1,342)
$375 $(275)$(4,762)$(1,606)

Fair Value Hedges

Summary information related to the fair value hedges as of September 30, 2020, is as follows:
Notional amounts$19,345 
Weighted average pay rates3.51 %
Weighted average receive rates1.21 %
Weighted average maturity 8.34 years
Unrealized losses$1,690 

The following table reflects the fair value hedges included in the Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019, respectively:
September 30, 2020December 31, 2019
Notional AmountFair ValueNotional AmountFair Value
Included in other liabilities:
Interest rate swaps related to investments19,345 (1,690)19,605 (630)
Total included in other liabilities$19,345 $(1,690)$19,605 $(630)

The following table reflects the fair value hedges and the underlying hedged items included in the Consolidated Statements of Income for the three and nine months ended September 30, 2020 and 2019, respectively:
Three Months Ended September 30,Nine Months Ended September 30,
ItemLocation2020201920202019
Interest rate swaps - securitiesInterest on investment securities, nontaxable$(118)$(20)$(243)$(21)
Hedged item - securitiesInterest on investment securities, nontaxable$118 $20 $243 $21 

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SEPTEMBER 30, 2020 AND 2019 (UNAUDITED) AND DECEMBER 31, 2019
(Dollar amounts in thousands except per share amounts)


NOTE 6 - STOCK-BASED COMPENSATION

In 2006, the board of directors and shareholders of the Bank (then known as "Commerce Union Bank") approved the Commerce Union Bank Stock Option Plan (the “Plan”). The Plan provided for the granting of stock options for up to 625,000 shares of Bank common stock to employees and organizers and authorized the issuance of Bank common stock upon the exercise of such options. As part of the Bank's reorganization into a holding company corporate structure in 2012, all Bank options were replaced with Commerce Union Bancshares, Inc. (now known as "Reliant Bancorp, Inc.") options with no change in terms.

On March 10, 2015, the shareholders of Reliant Bancorp (then known as "Commerce Union Bancshares, Inc.") approved the Commerce Union Bancshares, Inc. Amended and Restated Stock Option Plan (the “A&R Plan”), which permits the grant of awards with respect to up to 1,250,000 shares of Reliant Bancorp common stock in the form of stock options. As part of the merger of Commerce Union Bank and Reliant Bank in 2015, all outstanding stock options of Reliant Bank were converted to stock options of Reliant Bancorp (then known as "Commerce Union Bancshares, Inc.") under the A&R Plan. Under the A&R Plan, stock option awards may be granted in the form of incentive stock options or non-statutory stock options, and are generally exercisable for up to 10 years following the date such option awards are granted. Exercise prices of incentive stock options must be equal to or greater than the fair market value of Reliant Bancorp's common stock on the grant date.
    
On June 18, 2015, the shareholders of Reliant Bancorp (then known as "Commerce Union Bancshares, Inc.") approved the Commerce Union Bancshares, Inc. 2015 Equity Incentive Plan, which reserves up to 900,000 shares of Reliant Bancorp common stock to be subject to awards under the plan, including awards in the form of stock options, restricted stock grants, performance-based awards, and other awards denominated or payable by reference to or based on or related to Reliant Bancorp common stock.

The Company has recognized stock-based compensation expense, within salaries and employee benefits for employees, and within other non-interest expense for directors, in the consolidated statement of income as follows:

Three Months Ended September 30,
Nine Months Ended September 30,
2020201920202019
Stock-based compensation expense before income taxes$349 $337 $1,183 $867 
Less: deferred tax benefit(91)(88)(309)(227)
Reduction of net income$258 $249 $874 $640 

Common Stock Options
    
A summary of stock option activity for the nine months ended September 30, 2020 is as follows:
SharesWeighted Average Exercise PriceWeighted Average Remaining Contractual TermAggregate Intrinsic Value
Outstanding at January 1, 2020149,293$18.81 6.68 years$553 
Granted $ 
Exercised(6,544)$12.03 26
Forfeited or expired(20,007)$21.02 
Outstanding at September 30, 2020122,742$18.81 5.95 years$73 
Exercisable at September 30, 202083,042$16.43 5.03 years$73 
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SEPTEMBER 30, 2020 AND 2019 (UNAUDITED) AND DECEMBER 31, 2019
(Dollar amounts in thousands except per share amounts)



SharesWeighted Average
Grant-Date Fair Value
Non-vested options at January 1, 202074,600 $6.08
Granted $
Vested(23,400)$5.23
Forfeited(11,500)$6.37
Non-vested options at September 30, 202039,700 $6.56
    
As of September 30, 2020, there was $235 of unrecognized future compensation expense to be recognized related to stock options. The cost is expected to be recognized over a weighted-average period of 3.08 years.

Restricted Stock and Restricted Stock Unit Awards

The following table shows the activity related to non-vested restricted stock and restricted stock unit awards for the nine months ended September 30, 2020:
Restricted Stock UnitsRestricted Stock
Underlying SharesWeighted Average Grant-Date
Fair Value
SharesWeighted Average Grant-Date
Fair Value
Non-vested units/shares at January 1, 202047,750 $23.30 90,960 $25.31 
Granted102,400 14.02   
Vested(12,500)22.57 (48,550)23.99 
Forfeited(2,000)10.25  
Non-vested units/shares at September 30, 2020135,650 $16.55 42,410 $26.82 

As of September 30, 2020, there was $2,096 of unrecognized compensation cost related to non-vested restricted stock and restricted stock unit awards. The cost is expected to be recognized over a weighted-average period of 2.11 years. The total fair value of shares vested during the nine months ended September 30, 2020 was $970.


NOTE 7 - REGULATORY CAPITAL REQUIREMENTS

The Company and the Bank are subject to regulatory capital requirements administered by the federal and state banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action or affect the amount of dividends the Company and the Bank may distribute. Management believes that as of September 30, 2020, the Company and the Bank met all capital adequacy requirements to which they were subject.

Capital amounts and ratios for Reliant Bancorp and the Bank (required) are presented below as of September 30, 2020 and December 31, 2019.
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SEPTEMBER 30, 2020 AND 2019 (UNAUDITED) AND DECEMBER 31, 2019
(Dollar amounts in thousands except per share amounts)

Actual
Regulatory
Capital
Minimum Required
Capital Including
Capital Conservation
Buffer
To Be Well
Capitalized Under
Prompt Corrective
Action Provisions
AmountRatioAmountRatioAmountRatio
September 30, 2020
Reliant Bancorp
Tier I leverage$253,534 8.72 %$116,300 4.00 %$145,375 5.00 %
Common equity tier I241,786 9.77 %173,235 7.00 %160,861 6.50 %
Tier I risk-based capital253,534 10.25 %210,248 8.50 %197,880 8.00 %
Total risk-based capital332,434 13.44 %259,714 10.50 %247,347 10.00 %
Bank
Tier I leverage$304,376 10.48 %$116,174 4.00 %$145,218 5.00 %
Common equity tier I304,376 12.33 %172,801 7.00 %160,458 6.50 %
Tier I risk-based capital304,376 12.33 %209,829 8.50 %197,486 8.00 %
Total risk-based capital324,635 13.15 %259,214 10.50 %246,871 10.00 %
December 31, 2019
Reliant Bancorp
Tier I leverage$176,748 9.74 %$72,586 4.00 %$90,733 5.00 %
Common equity tier I165,063 10.55 %109,520 7.00 %101,698 6.50 %
Tier I risk-based capital176,748 11.30 %132,952 8.50 %125,131 8.00 %
Total risk-based capital249,751 15.97 %164,207 10.50 %156,388 10.00 %
Bank
Tier I leverage$186,734 10.30 %$72,518 4.00 %$90,648 5.00 %
Common equity tier I186,734 11.95 %109,384 7.00 %101,571 6.50 %
Tier I risk-based capital186,734 11.95 %132,823 8.50 %125,010 8.00 %
Total risk-based capital199,737 12.79 %163,975 10.50 %156,167 10.00 %



NOTE 8 - EARNINGS PER SHARE

The following is a summary of the components comprising basic and diluted earnings per common share of stock ("EPS"):
Three Months EndedNine Months Ended
September 30,September 30,
2020201920202019
Basic EPS Computation
Net income attributable to common shareholders$11,531 $4,000 $19,186 $12,063 
Weighted average common shares outstanding16,587,274 11,104,918 15,053,087 11,247,921 
Basic earnings per common share$0.70 $0.36 $1.27 $1.07 
Diluted EPS Computation
Net income attributable to common shareholders$11,531 $4,000 $19,186 $12,063 
Weighted average common shares outstanding16,587,274 11,104,918 15,053,087 11,247,921 
Dilutive effect of stock options, restricted stock shares and units, and employee stock purchase plan62,399 72,449 67,616 66,445 
Adjusted weighted average common shares outstanding16,649,673 11,177,367 15,120,703 11,314,366 
Diluted earnings per common share$0.69 $0.36 $1.27 $1.07 


NOTE 9 - FAIR VALUES OF ASSETS AND LIABILITIES
 
Financial accounting standards relating to fair value measurements establish a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1    Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.

Level 2    Inputs to the valuation methodology include:

Quoted prices for similar assets or liabilities in active markets;
Quoted prices for identical or similar assets or liabilities in inactive markets;
Inputs other than quoted prices that are observable for the asset or liability; and
Inputs that are derived principally from or corroborated by the observable market data by correlation or other means.

If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3    Inputs to the valuation methodology are unobservable and reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

An asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques should maximize the use of observable inputs and minimize the use of unobservable inputs.

Following is a description of the valuation methodologies used for assets and liabilities measured at fair value on a recurring basis:

Securities available for sale: The fair values of securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). The Company obtains fair value measurements for securities available for sale from an independent pricing service. The fair value measurements consider observable data that may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, cash flows and reference data, including market research publications, among other things.

Interest rate swaps: The fair values of interest rate swaps and fair value hedges are determined based on discounted future cash flows.

Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). Assets and liabilities measured at fair value on a nonrecurring basis include the following:

Impaired Loans: The fair value of an impaired loan with specific allocations of the allowance for loan losses is generally based on the present value of expected payments using the loan’s effective rate as the discount rate or recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the
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SEPTEMBER 30, 2020 AND 2019 (UNAUDITED) AND DECEMBER 31, 2019
(Dollar amounts in thousands except per share amounts)




appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value.

Other Real Estate: The fair value of other real estate is generally based on recent real estate appraisals less estimated disposition cost. These appraisals may use a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in Level 3 classification of the inputs for determining fair value.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company’s valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates.

The following table sets forth the Company’s major categories of assets and liabilities measured at fair value on a recurring basis, by level within the fair value hierarchy, as of September 30, 2020 and December 31, 2019:
Fair ValueQuoted
Prices in
Active
Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
September 30, 2020
Assets
U. S. Treasury and other U. S. government agencies $12,117 $ $12,117 $ 
State and municipal190,623  190,623  
Corporate bonds15,809  15,809  
Mortgage backed securities 40,376  40,376  
Asset backed securities14,968  14,968  
Liabilities
Derivative liabilities$10,216 $ $10,216 $ 
December 31, 2019
Assets
U. S. Treasury and other U. S. government agencies $59 $ $59 $ 
State and municipal196,660  196,660  
Corporate bonds7,845  7,845  
Mortgage backed securities 37,761  37,761  
Asset backed securities17,968  17,968  
Derivative assets688  688  
Liabilities
Derivative liabilities$3,396 $ $3,396 $ 
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SEPTEMBER 30, 2020 AND 2019 (UNAUDITED) AND DECEMBER 31, 2019
(Dollar amounts in thousands except per share amounts)





The following table sets forth the Company’s major categories of assets and liabilities measured at fair value on a nonrecurring basis, by level within the fair value hierarchy, as of September 30, 2020 and December 31, 2019:

Fair ValueQuoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
September 30, 2020    
Assets    
Impaired loans$141 $ $ $141 
Other real estate1,326   1,326 
Other repossessions1,603   1,603 
December 31, 2019    
Assets    
Impaired loans$553 $ $ $553 
Other real estate750  750 
Other repossessions   



The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which we have utilized Level 3 inputs to determine fair value at September 30, 2020 and December 31, 2019:
Valuation
Techniques (1)
Significant
Unobservable Inputs
Range
(Weighted Average)
Impaired loansAppraisalEstimated costs to sell10%
Other real estateAppraisalEstimated costs to sell10%
Other repossessionsThird-party guidelinesEstimated costs to sell10%
(1)The fair value is generally determined through independent appraisals of the underlying collateral, which may include Level 3 inputs that are not identifiable, or by using the discounted cash flow method if the loan is not collateral dependent. Estimated cash flows change and appraised values of the assets or collateral underlying the loans will be sensitive to changes.

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SEPTEMBER 30, 2020 AND 2019 (UNAUDITED) AND DECEMBER 31, 2019
(Dollar amounts in thousands except per share amounts)




Carrying amounts and estimated fair values of financial instruments not reported at fair value at September 30, 2020 and December 31, 2019 were as follows:
September 30, 2020Carrying
Amount
Estimated
Fair
Value
Quoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
Financial assets
Cash and due from banks$14,050 $14,050 $14,050 $ $ 
Federal funds sold12,273 12,273  12,273  
Loans, net2,338,064 2,336,300   2,336,300 
Mortgage loans held for sale99,587 99,587  99,587  
Accrued interest receivable14,615 14,615  14,615  
Restricted equity securities17,367 17,367  17,367  
Financial liabilities
Deposits$2,565,502 $2,571,305 $ $ $2,571,305 
Accrued interest payable3,744 3,744  3,744  
Subordinate debentures70,389 69,237   69,237 
Federal Home Loan Bank advances40,555 40,887   40,887 

December 31, 2019
Financial assets
Cash and due from banks$7,953 $7,953 $7,953 $ $ 
Federal funds sold52 52  52  
Loans, net1,397,374 1,383,719   1,383,719 
Mortgage loans held for sale37,476 38,379  38,379  
Accrued interest receivable7,188 7,188  7,188  
Restricted equity securities11,279 11,279  11,279  
Financial liabilities
Deposits$1,584,453 $1,582,781 $ $ $1,582,781 
Accrued interest payable2,022 2,022  2,022  
Subordinate debentures70,883 71,454   71,454 
Federal Home Loan Bank advances10,737 10,755   10,755 

The methods and assumptions used to estimate fair value are described as follows:

Carrying amount is the estimated fair value for cash and cash equivalents, accrued interest receivable and payable, restricted equity securities, federal funds sold or purchased, demand deposits, and variable rate loans or deposits that re-price frequently and fully. For fixed rate loans or deposits and for variable rate loans or deposits with infrequent re-pricing or re-pricing limits, fair value is based on discounted cash flows using current market rates applied to the estimated life and credit risk. Fair value of debt is based on discounted cash flows using current rates for similar financing.

NOTE 10 - SEGMENT REPORTING

The Company has two reportable business segments: commercial banking and residential mortgage banking. Segment information is derived from the internal reporting system utilized by management. Revenues and expenses for segments reflect those which can be specifically identified and have been assigned based on internally developed allocation methods. Financial results have been presented, to the extent practicable, as if each segment operated on a stand-alone basis.

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SEPTEMBER 30, 2020 AND 2019 (UNAUDITED) AND DECEMBER 31, 2019
(Dollar amounts in thousands except per share amounts)




Commercial Banking provides deposit and lending services to consumer and business customers within our primary geographic markets. Our customers are serviced through branch locations, ATMs, online banking, and mobile banking.

Residential Mortgage Banking originates traditional first lien residential mortgage loans and first lien home equity lines of credit throughout the United States. The traditional first lien residential mortgage loans are typically underwritten to government agency standards and sold to third-party secondary market mortgage investors. The home equity lines of credit are typically sold to participating banks or other investor groups and are underwritten to their standards.

During the second quarter of 2019, RMV began acquiring loans from approved correspondent lenders and reselling them in the secondary market. These loans are not government agency-qualified loans and are of higher risk, such as jumbo loans or senior position home equity lines of credit.

The following presents summarized results of operations for the Company’s business segments for the periods indicated:
Three Months Ended
September 30, 2020
Commercial BankingResidential
Mortgage
Banking
Elimination
Entries
Consolidated
Net interest income$29,729 $808 $ $30,537 
Provision for loan losses1,500   1,500 
Noninterest income2,218 3,797 (14)6,001 
Noninterest expense (excluding merger expense)16,065 4,190  20,255 
Merger expense78   78 
Income tax expense (benefit)2,773 27  2,800 
Net income (loss)11,531 388 (14)11,905 
Noncontrolling interest in net income of subsidiary (388)14 (374)
Net income attributable to common shareholders$11,531 $ $ $11,531 

 Three Months Ended
September 30, 2019
 Commercial BankingResidential Mortgage BankingElimination EntriesConsolidated
Net interest income$13,910 $154 $ $14,064 
Provision for loan losses606   606 
Noninterest income1,375 1,377 8 2,760 
Noninterest expense (excluding merger expense)9,726 3,022  12,748 
Merger expense299   299 
Income tax expense (benefit)654 (97) 557 
Net income (loss)4,000 (1,394)8 2,614 
Noncontrolling interest in net loss of subsidiary 1,394 (8)1,386 
Net income attributable to common shareholders$4,000 $ $ $4,000 

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SEPTEMBER 30, 2020 AND 2019 (UNAUDITED) AND DECEMBER 31, 2019
(Dollar amounts in thousands except per share amounts)




Nine Months Ended September 30, 2020
Commercial BankingResidential Mortgage BankingElimination EntriesConsolidated
Net interest income$75,933 $1,677 $ $77,610 
Provision for loan losses7,400   7,400 
Noninterest income6,102 7,601 3 13,706 
Noninterest expense (excluding merger expense)44,961 10,340  55,301 
Merger expense6,895   6,895 
Income tax expense (benefit)3,593 (69) 3,524 
Net income (loss)19,186 (993)3 18,196 
Noncontrolling interest in net loss of subsidiary 993 (3)990 
Net income attributable to common shareholders$19,186 $ $ $19,186 

Nine Months Ended September 30, 2019
Commercial BankingResidential Mortgage BankingElimination EntriesConsolidated
Net interest income$40,986 $352 $ $41,338 
Provision for loan losses806   806 
Noninterest income4,226 3,187 (17)7,396 
Noninterest expense (excluding merger expense)30,300 8,317  38,617 
Merger expense302   302 
Income tax expense (benefit)1,741 (311) 1,430 
Net income (loss)12,063 (4,467)(17)7,579 
Noncontrolling interest in net loss of subsidiary 4,467 17 4,484 
Net income attributable to common shareholders$12,063 $ $ $12,063 


NOTE 11 – INCOME TAXES

Income tax expense for the three and nine months ended September 30, 2020 totaled $2,800 and $3,524, respectively, compared to $557 and $1,430, respectively, for the three and nine months ended September 30, 2019. The effective tax rate for the three and nine months ended September 30, 2020 was 19.0% and 16.2%, respectively, compared to 17.6% and 15.9%, respectively, for the three and nine months ended September 30, 2019.


NOTE 12 - BUSINESS COMBINATIONS

Tennessee Community Bank Holdings, Inc.

Effective January 1, 2020, Reliant Bancorp completed the acquisition of TCB Holdings pursuant to the Agreement and Plan of Merger, dated September 16, 2019 (the “TCB Holdings Agreement”), by and among Reliant Bancorp, TCB Holdings, and Community Bank & Trust, a Tennessee-chartered commercial bank and wholly owned subsidiary of TCB Holdings (“CBT”). On the terms and subject to the conditions set forth in the TCB Holdings Agreement, TCB Holdings merged with and into Reliant Bancorp (the “TCB Holdings Transaction”), with Reliant Bancorp as the surviving corporation. Immediately following the TCB Holdings Transaction, CBT merged with and into the Bank, with the Bank continuing as the surviving banking corporation. Pursuant to the TCB Holdings Agreement, at the effective time of the TCB Holdings Transaction, each outstanding share of TCB Holdings common stock, par value $1.00 per share (other than certain excluded shares), was converted into and canceled in exchange for the right to receive (i) $17.13 in cash, without interest, and (ii) 0.769 shares of the Reliant Bancorp’s common stock, par value $1.00 per share (“Reliant Bancorp Common Stock”). The aggregate consideration payable by Reliant
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SEPTEMBER 30, 2020 AND 2019 (UNAUDITED) AND DECEMBER 31, 2019
(Dollar amounts in thousands except per share amounts)




Bancorp in respect of shares of TCB Holdings common stock as consideration for the TCB Holdings Transaction was 811,210 shares of Reliant Bancorp Common Stock and approximately $18,073 in cash. Reliant Bancorp did not issue fractional shares of Reliant Bancorp Common Stock in connection with the TCB Holdings Transaction, but paid cash in lieu of fractional shares based on the volume weighted average closing price per share of the Reliant Bancorp Common Stock on The Nasdaq Capital Market for the 10 consecutive trading days ending on and including December 30, 2019 (calculated as $22.36). At the effective time of the TCB Holdings Transaction, each outstanding option to purchase TCB Holdings common stock was canceled in exchange for a cash payment in an amount equal to the product of (i) $34.25 minus the per share exercise price of the option multiplied by (ii) the number of shares of TCB Holdings common stock subject to the option (to the extent not previously exercised). Reliant Bancorp paid aggregate consideration to holders of unexercised options of approximately $430. All shares of Reliant Bancorp’s common stock outstanding immediately prior to the TCB Holdings Transaction were unaffected by the TCB Holdings Transaction.

The following table details the financial impact of the TCB Holdings Transaction, including the calculation of the purchase price, the allocation of the purchase price to the fair values of net assets assumed and goodwill recognized:
Calculation of Purchase Price
Shares of Tennessee Community Bank Holdings, Inc. common stock outstanding as of January 1, 20201,055,041 
Exchange ratio for Reliant Bancorp, Inc. common stock0.769 
Reliant Bancorp, Inc. common stock shares issued811,210 
Reliant Bancorp, Inc. share price at January 1, 2020$22.24 
Estimated value of Reliant Bancorp, Inc. shares issued18,041
Cash settlement for Tennessee Community Bank Holdings, Inc. common stock ($17.13 per share)
18,073 
Cash settlement for Tennessee Community Bank Holdings, Inc.'s 26,450 outstanding stock options ($34.25 settlement price less weighted average exercise price of $18.00)
430 
Cash settlement for Reliant Bancorp, Inc. fractional shares ($22.36 per pro rata fractional share)
3 
Estimated fair value of Tennessee Community Bank Holdings, Inc.$36,547 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2020 AND 2019 (UNAUDITED) AND DECEMBER 31, 2019
(Dollar amounts in thousands except per share amounts)





Allocation of Purchase Price
Total consideration above$36,547 
Fair value of assets acquired and liabilities assumed
Cash and cash equivalents11,026 
Investment securities available for sale56,336 
Loans, net of unearned income171,445 
Accrued interest receivable948 
Premises and equipment6,401 
Cash surrender value of life insurance contracts5,629 
Restricted equity securities909 
Core deposit intangible3,617 
Other assets833 
Deposits(210,538)
Deferred tax liability(337)
Borrowings(58)
FHLB advances(13,102)
Other liabilities(3,682)
Total fair value of net assets acquired29,427 
Goodwill$7,120 

CBT was a Tennessee-based full-service community bank with operations in Ashland City, Kingston Springs, Pegram, Pleasant View, and Springfield, Tennessee. These communities lie on the northwest perimeter of Nashville, Tennessee.

First Advantage Bancorp

Effective April 1, 2020, Reliant Bancorp completed the acquisition of FABK pursuant to the Agreement and Plan of Merger, dated October 22, 2019 (the “FABK Agreement”), by and among Reliant Bancorp, FABK, and PG Merger Sub, Inc., a Tennessee corporation and wholly owned subsidiary of Reliant Bancorp ("Merger Sub"). On the terms and subject to the conditions set forth in the FABK Agreement, Merger Sub merged with and into FABK (the "FABK Transaction"), with FABK as the surviving corporation, followed immediately by the merger of FABK with and into Reliant Bancorp, with Reliant Bancorp as the surviving corporation. Immediately following the merger of FABK into Reliant Bancorp, First Advantage Bank, a Tennessee-chartered commercial bank and wholly owned subsidiary of FABK ("FAB"), merged with and into the Bank, with the Bank continuing as the surviving banking corporation. Pursuant to the FABK Agreement, at the effective time of the FABK Transaction, each outstanding share of FABK common stock, par value $0.01 per share (the “FABK Common Stock”), other than certain excluded shares, was converted into the right to receive (i) 1.17 shares of Reliant Bancorp Common Stock and (ii) $3.00 in cash, without interest. In lieu of the issuance of fractional shares of Reliant Bancorp Common Stock, Reliant Bancorp agreed to pay cash in lieu of fractional shares based on the volume-weighted average closing price per share of Reliant Bancorp Common Stock on The Nasdaq Capital Market for the 10 consecutive trading days ending on and including March 30, 2020 (calculated as $11.74). Based on the April 1, 2020 opening price for Reliant Bancorp Common Stock of $11.27 per share and 3,935,165 shares of FABK Common Stock outstanding on April 1, 2020, the consideration for the FABK Transaction was approximately $64,094, in the aggregate, or $16.28 per share of FABK Common Stock.

The following table details the financial impact of the FABK Transaction, including the calculation of the purchase price, the allocation of the purchase price to the fair values of net assets assumed and goodwill recognized:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2020 AND 2019 (UNAUDITED) AND DECEMBER 31, 2019
(Dollar amounts in thousands except per share amounts)




Calculation of Purchase Price
Shares of First Advantage Bancorp common stock outstanding as of April 1, 20203,935,165 
Conversion of restricted stock units to shares of common stock of First Advantage Bancorp as of April 1, 20202,000 
Total First Advantage Bancorp common stock outstanding as of April 1, 20203,937,165 
Exchange ratio for Reliant Bancorp, Inc. common stock1.17
Reliant Bancorp, Inc. common stock shares issued4,606,483 
Remove fractional shares(64)
Reliant Bancorp, Inc. common stock shares issued4,606,419
Reliant Bancorp, Inc. share price at April 1, 2020$11.27 
Estimated value of Reliant Bancorp, Inc. shares issued51,914 
Cash settlement for Reliant Bancorp, Inc. fractional shares ($11.74 per pro rata fractional share)
1
Cash settlement for First Advantage Bancorp common stock ($3.00 per share)
11,805
Cash settlement for First Advantage Bancorp restricted stock units ($3.00 per share)
6
Cash settlement for First Advantage Bancorp's 34,800 outstanding stock options ($30.00 settlement price less weighted average exercise price of $19.44)
368
Estimated fair value of First Advantage Bancorp$64,094 

Allocation of Purchase Price
Total consideration above$64,094 
Fair value of assets acquired and liabilities assumed
Cash and cash equivalents11,159 
Investment securities available for sale35,970 
Loans, net of unearned income622,423 
Mortgage loans held for sale, net5,878 
Premises and equipment7,905 
Deferred tax asset6,024 
Cash surrender value of life insurance contracts14,776 
Other real estate and repossessed assets1,259 
Core deposit intangible2,280 
Operating lease right-of-use assets6,536 
Other assets10,934 
Deposits(608,690)
Borrowings(35,962)
Operating lease liabilities(6,536)
Other liabilities(10,606)
Total fair value of net assets acquired63,350 
Goodwill$744 

FAB was a Tennessee-based full-service community bank headquartered in Clarksville, Tennessee. FAB operated branch offices in Montgomery, Davidson and Williamson counties, Tennessee and operated a loan production office in Knoxville, Tennessee primarily originating manufactured housing loans.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2020 AND 2019 (UNAUDITED) AND DECEMBER 31, 2019
(Dollar amounts in thousands except per share amounts)




Supplemental Pro Forma Combined Condensed Statements of Income

Pro forma data for the three and nine months ended September 30, 2020 and 2019 in the table below presents information as if the TCB Holdings Transaction and FABK Transaction occurred on January 1, 2019. These results combine the historical results of TCB Holdings and FABK into the Company's consolidated statement of income and, while certain adjustments were made for the estimated impact of certain fair value adjustments, they are not indicative of what would have occurred had the acquisitions taken place on the indicated date nor are they intended to represent or be indicative of future results of operations. In particular, no adjustments have been made to eliminate the amount of TCB Holdings' or FABK's provision for credit losses for the first three and nine months of 2019 that may not have been necessary had the acquired loans been recorded at fair value as of the beginning of 2019. Additionally, these financials were not adjusted for non-recurring expenses, such as merger-related charges incurred by either the Company, TCB Holdings or FABK. The Company expects to achieve operating cost savings and other business synergies as a result of the acquisitions which are also not reflected in the pro forma amounts.


Three Months EndedNine Months Ended
September 30,September 30,
2020201920202019
Revenue(1)
$35,881 $29,478 $106,771 $86,217 
Net interest income$29,880 $25,232 $85,741 $74,835 
Net income attributable to common shareholders$11,117 $9,182 $17,715 $28,545 
(1) Net interest income plus noninterest income


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Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations
Executive Summary
The following is a summary of the Company’s financial highlights and significant events for the nine months ended September 30, 2020:

Net income attributable to common shareholders totaled $19.2 million, or $1.27 per diluted common share, for the nine months ended September 30, 2020 compared to $12.1 million, or $1.07 per diluted common share, during the same period in 2019.
Merger expenses for the nine months ended September 30, 2020 totaled $6.9 million.
Loans increased $940.7 million for the nine months ended September 30, 2020.
Deposits increased $981.0 million for the nine months ended September 30, 2020.
Asset quality remained strong with nonperforming assets to total assets of 0.32 percent.
Successfully closed the TCB Holdings and FABK transactions as well as conversions with Community Bank & Trust and First Advantage Bank.
The following discussion and analysis is intended to assist in the understanding and assessment of significant changes and trends related to our financial position and operating results. This discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes included elsewhere herein along with Reliant Bancorp's Annual Report on Form 10-K for the year ended December 31, 2019. Amounts in the narrative are shown in thousands, except for economic and demographic information, numbers of shares, per share amounts and as otherwise noted.
Acquisition of parent company of CBT
Effective January 1, 2020, Reliant Bancorp completed the acquisition of TCB Holdings. On the terms and subject to the conditions set forth in the TCB Holdings Agreement, TCB Holdings merged with and into Reliant Bancorp, with Reliant Bancorp as the surviving corporation. Immediately following the TCB Holdings Transaction, CBT merged with and into Reliant Bank, with Reliant Bank continuing as the surviving banking corporation. Pursuant to the TCB Holdings Agreement, at the effective time of the TCB Holdings Transaction, each outstanding share of TCB Holdings common stock, par value $1.00 per share (other than certain excluded shares), was converted into and canceled in exchange for the right to receive (i) $17.13 in cash, without interest, and (ii) 0.769 shares of Reliant Bancorp's common stock. The aggregate consideration payable by Reliant Bancorp in respect of shares of TCB Holdings common stock as consideration for the TCB Holdings Transaction was 811,210 shares of Reliant Bancorp Common Stock and approximately $18,073 in cash. Reliant Bancorp did not issue fractional shares of Reliant Bancorp Common Stock in connection with the TCB Holdings Transaction, but instead paid cash in lieu of fractional shares based on the volume weighted average closing price per share of the Reliant Bancorp Common Stock on The Nasdaq Capital Market for the 10 consecutive trading days ending on and including December 30, 2019 (calculated as $22.36). At the effective time of the TCB Holdings Transaction, each outstanding option to purchase TCB Holdings common stock was canceled in exchange for a cash payment in an amount equal to the product of (i) $34.25 minus the per share exercise price of the option multiplied by (ii) the number of shares of TCB Holdings common stock subject to the option (to the extent not previously exercised). Reliant Bancorp paid aggregate consideration to holders of unexercised options of approximately $430.
Acquisition of parent company of FAB
Effective April 1, 2020, Reliant Bancorp, completed the acquisition of FABK and FAB. In accordance with the terms of the FABK Agreement, (i) Merger Sub merged with and into FABK, with FABK being the surviving corporation and becoming a wholly-owned subsidiary of Reliant Bancorp, and (ii) immediately following the merger of FABK and Merger Sub, FABK merged with and into Reliant Bancorp, with Reliant Bancorp being the surviving corporation. Additionally, immediately following the merger of Reliant Bancorp and FABK, FAB merged with and into Reliant Bank, with Reliant Bank being the surviving bank.

As consideration for the FABK Transaction, each outstanding share of FABK Common Stock, other than certain excluded shares, at the effective time of the FABK Transaction converted into the right to receive (i) 1.17 shares of Reliant Bancorp Common Stock and (ii) $3.00 in cash, without interest. In lieu of the issuance of fractional shares of Reliant Bancorp Common Stock, Reliant Bancorp agreed to pay cash in lieu of fractional shares based on the volume-weighted average closing price per share of Reliant Bancorp Common Stock on The Nasdaq Capital Market for the 10 consecutive trading days ending on and including March 30, 2020 (calculated as $11.74). Reliant Bancorp paid aggregate consideration to holders of unexercised options of approximately $368. Based on the March 31, 2020 closing price for Reliant Bancorp Common Stock of $11.27 per
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share and 3,937,165 shares of FABK Common Stock outstanding on March 31, 2020, the consideration for the FABK Transaction was approximately $64,094, in the aggregate, or $16.28 per share of FABK Common Stock.

Formation of Reliant Risk Management, Inc.

Reliant Risk Management, Inc. is a wholly-owned insurance captive subsidiary of Reliant Bancorp, Inc. that began operations on June 1, 2020 as a Tennessee-based captive insurance company which insures Reliant Bancorp and the Bank against certain risks unique to their operations and for which insurance may not be currently available or economically feasible in today's insurance marketplace. It pools resources with several other similar insurance company subsidiaries of financial institutions to spread a limited amount of risk among themselves. Reliant Risk Management, Inc. is subject to regulations of the State of Tennessee and undergoes periodic examinations by the Tennessee Department of Commerce and Insurance.

Critical Accounting Policies

The accounting principles we follow and our methods of applying these principles conform to U.S. GAAP and with general practices within the banking industry. There have been no significant changes to our critical accounting policies as described in our Annual Report on Form 10-K for the year ended December 31, 2019. The following is a brief summary of the more significant policies.

Principles of Consolidation

The Company's consolidated financial statements as of and for the periods presented include the accounts of Reliant Bancorp, the Bank, Community First Trups Holding Company (a wholly owned subsidiary of Reliant Bancorp), Reliant Risk Management, Inc., Reliant Investment Holdings, LLC (a wholly owned subsidiary of the Bank), and RMV. All significant intercompany balances and transactions have been eliminated in consolidation. As described previously, effective January 1, 2020, Reliant Bancorp and TCB Holdings merged and effective April 1, 2020, Reliant Bancorp and First Advantage Bancorp merged.

During 2011, the Bank and another entity organized RMV. Under the RMV operating agreement, the non-controlling member receives 70% of the cash flow distributions of RMV, and the Bank receives 30% of the cash flow distributions, once the non-controlling member recovers its capital contributions to RMV. The non-controlling member is required to fund RMV’s losses in arrears via additional capital contributions to RMV. As of September 30, 2020, RMV's cumulative losses to date totaled $14,707. RMV will have to generate net income of at least this amount before the Bank will participate in future cash flow distributions.

Purchased Loans

The Company maintains an allowance for loan losses on purchased loans based on credit deterioration subsequent to the acquisition date. In accordance with the accounting guidance for business combinations, because we recorded all loans acquired from TCB Holdings and FABK at fair value as of the dates of the TCB Holdings Transaction and the FABK Transaction, respectively, we did not establish an allowance for loan losses on any of the loans we purchased as of the acquisition date as any credit deterioration evident in the loans was included in the determination of the acquisition date fair values. For purchased credit-impaired loans accounted for under ASC 310-30, management is required to establish an allowance for loan losses subsequent to the dates of acquisition by re-estimating expected cash flows on these loans on a quarterly basis, with any decline in expected cash flows due to a credit triggering impairment recorded as provision for loan losses. The allowance for loan losses established is the excess of the loan’s carrying value over the present value of projected future cash flows, discounted at the current accounting yield of the loan or the fair value of collateral (less estimated costs to sell) for collateral dependent loans. These cash flow evaluations are inherently subjective as they require material estimates, all of which may be susceptible to significant change. While the determination of specific cash flows involves estimates, each estimate is unique to the individual loan, and none is individually significant. For purchased non-credit-impaired loans acquired in the TCB Holdings Transaction and the FABK Transaction that are accounted for under ASC 310-20, the historical loss estimates are based on the historical losses experienced by the Bank for loans with similar characteristics as those acquired other than purchased credit-impaired loans. The Bank records an allowance for loan losses only when the calculated amount exceeds the remaining credit mark established at acquisition.

Allowance for Loan Losses

The allowance for loan losses ("allowance") is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent
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recoveries, if any, are credited to the allowance. Management estimates the allowance balance required using historical loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, current economic conditions (national and local), and other factors such as changes in interest rates, portfolio concentrations, changes in the experience, ability, and depth of the lending function, levels of and trends in charged-off loans, recoveries, past-due loans and volume and severity of classified loans. The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired. The general component covers non-impaired loans and is based on historical loss experience adjusted for current factors. The entire allowance is available for any loan that, in management’s judgment, should be charged off as uncollectible.

A loan is impaired when full payment under the loan terms is not expected. All classified loans and loans on nonaccrual status are individually evaluated for impairment. Factors considered in determining if a loan is impaired include the borrower’s ability to repay amounts owed, collateral deficiencies, the risk rating of the loan and economic conditions affecting the borrower’s industry, among other things. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value (less estimated costs to sell) of collateral if repayment is expected solely from the collateral. Interest payments on impaired loans are typically applied to principal unless the principal amount is deemed fully collectible, in which case interest is recognized on a cash basis. When recognition of interest income on a cash basis is appropriate, the amount of income recognized is limited to what would have been accrued on the remaining principal balance at the contractual rate. Cash payments received over this limit, and not applied to reduce the loan's remaining principal balance, are recorded as recoveries of prior charge-offs until these charge-offs have been fully recovered.

Fair Value of Financial Instruments

Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in a separate note to our consolidated financial statements. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates.

Coronavirus (COVID-19) Impact

The following is a description of certain impacts the novel coronavirus (COVID-19) pandemic is having on our financial condition and results of operations and certain risks to our business that the pandemic creates or exacerbates.

Operational Impact

As part of our pandemic response, we have encouraged a significant portion of our employees to work from home. We have also extended virtual medical coverage to all employees as well as provided pay to employees who may have been exposed as they quarantine at home. We are encouraging virtual meetings and conference calls in place of in-person meetings, including our earnings call and investor meetings which were held virtually this quarter. We are promoting social distancing, frequent hand washing, thorough disinfection of all surfaces, and the use of masks or nose and mouth coverings have been mandated in all of our locations. We have reopened all branches for normal business hours. Banking center drive-ups, ATMs and online/mobile banking services continue to operate. Infection rates in the communities we serve vary by region and we will make prudent decisions for the safety of our colleagues and our clients.

Loan Modifications

Section 4013 of the CARES Act, which was signed into law on March 27, 2020, provides that financial institutions may elect to account for loan modifications occurring between March 1, 2020, and the earlier of December 31, 2020 and the 60th day after the end of the COVID-19 national emergency declared by President Trump, which are due to COVID-19 and where the borrower was current on contractual payments as of December 31, 2019, as not TDRs. Additionally, on April 7, 2020, federal banking regulators issued an Interagency Statement on Loan Modifications by Financial Institutions Working with Customers Affected by the Coronavirus (Revised), which replaced a prior interagency statement predating the CARES Act. The revised interagency statement encourages financial institutions to work prudently with borrowers that may be unable to meet their contractual payment obligations because of the effects of COVID-19. It also addresses loan modifications not meeting the criteria set forth in Section 4013 of the CARES Act or for which financial institutions elect not to apply Section 4013. With respect to these loan modifications, the revised interagency statement provides that short-term (e.g. six month) modifications made on a good faith basis in response to COVID-19 to borrowers who were current on their contractual payments at the time of implementation of a modification program are not TDRs.

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Through September 30, 2020, the Company had applied this guidance to approve initial modifications in April and May 2020 for loans with principal balances of $530.7 million. The majority of these modifications involved extensions of up to three months of either interest-only periods or full payment deferrals. Through September 30, 2020, further modifications were approved for $21.8 million of the loans previously modified. Additional modifications are likely to be executed in the fourth quarter of 2020.

Initial Modification Requests through May 31, 2020Subsequent Modification Requests through September 30, 2020
Commercial RE$291,232 $6,179 
Hospitality96,047 14,211 
Restaurant54,067 — 
C&I34,851 1,448 
Multifamily14,757 — 
Manufactured Housing14,887 — 
Church/Consumer/Medical24,809 — 
Total Modification Requests$530,650 $21,838

Paycheck Protection Program (PPP) and Liquidity

The CARES Act provided for over $2.0 trillion in emergency economic relief to individuals and businesses impacted by the COVID-19 pandemic. The CARES Act authorized the SBA to administer new loan programs, including, but not limited to, the guarantee of loans under a new 7(a) loan program called the "Paycheck Protection Program".

An eligible business could apply for a PPP loan in an amount up to the lesser of: (1) 2.5 times its average monthly “payroll costs” or (2) $10.0 million. PPP loans have: (a) an interest rate of 1.0%; (b) a two-year loan term to maturity for loans made prior to June 5, 2020, or a five-year loan term to maturity for loans made on or after June 5, 2020; and (c) principal and interest payments deferred for 10 months after the end of the borrower's loan forgiveness covered period. The SBA will guarantee 100% of the PPP loans made to eligible borrowers. The entire principal amount of the borrower’s PPP loan, including any accrued interest, is eligible to be reduced by the loan forgiveness amount under the PPP so long as employee and compensation levels of the business are maintained and 60% of the loan proceeds are used for payroll expenses, with the remaining 40% of the loan proceeds used for other qualifying expenses.

Through September 30, 2020, we had received SBA authorizations for 893 PPP loans totaling $83,290 and related fees of $3,296. Participation in the PPP will likely have an impact on the Company's asset mix and net interest margin for the remainder of 2020. At September 30, 2020, we had $93,000 in federal funds lines available and $337,000 of available borrowing capacity from correspondent banks. In addition, the Federal Reserve has implemented a liquidity facility available to financial institutions participating in the PPP. As such, the Company believes it has sufficient liquidity sources to continue to provide this important service to local businesses if and as additional funds are appropriated for the PPP.

As of September 30, 2020, the Bank's capital ratios were in excess of all regulatory requirements. While we believe that we have sufficient capital to withstand an extended economic recession brought about by the COVID-19 pandemic, our reported and regulatory capital ratios could be adversely impacted by future credit losses.

Asset Impairment

At September 30, 2020, our level of non-performing assets was not materially impacted by the economic pressures of COVID-19. We are closely monitoring credit risk and our exposure to increased loan losses resulting from the impact of COVID-19 on our commercial and other clients.

At this time, we do not believe there exists any impairment to our intangible assets, long-lived assets, right of use assets, or available-for-sale investment securities due to the COVID-19 pandemic. It is uncertain whether prolonged effects of the COVID-19 pandemic will result in future impairment charges related to any of the aforementioned assets.


Risks

See Part II , Item 1A. "Risk Factors" for more information.

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Allowance for Loan Loss

We are in regular communication with our customers to gain a better understanding of our highest risk exposures and probable defaults. In the third quarter of 2020 we recorded a provision expense of $1.5 million, which can be attributed to increased risk factors related to the COVID-19 pandemic as well as our loan growth. Our losses year-to-date remain low but we continue to build reserves as we anticipate future downgrades and defaults may eventually result in losses.

See Note 3 to the Company's financial statements included in Part I, Item 1. "Consolidated Financial Statements (Unaudited)" and Part I, Item 2. "Management’s Discussion and Analysis of Financial Condition and Results of Operations -Comparison of Balance Sheets at September 30, 2020 and December 31, 2019 - Allowance for Loan Losses” for more information.


COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

Effect of Mergers
Effective January 1, 2020, Reliant Bancorp completed the acquisition of TCB Holdings.
As a result of the TCB Holdings Transaction, on January 1, 2020, the Company:

acquired total assets of $257 million;
acquired total loans of $171 million; and
acquired total deposits of $211 million.

Effective April 1, 2020, Reliant Bancorp completed the acquisition of FABK.

As a result of the FABK Transaction, on April 1, 2020, the Company:

acquired total assets of $725 million;
acquired total loans of $622 million; and
acquired total deposits of $609 million.

Earnings

Net income attributable to common shareholders amounted to $11,531, or $0.70 per basic share, and $19,186, or $1.27 per basic share, for the three and nine months ended September 30, 2020, respectively, compared to $4,000, or $0.36 per basic share, and $12,063, or $1.07 per basic share, for the same periods in 2019, respectively. Diluted net income attributable to common shareholders was $0.69 and $1.27 per share for the three and nine months ended September 30, 2020, respectively, compared to $0.36 and $1.07 per share for the three and nine months ended September 30, 2019, respectively. The major components contributing to the change when compared to the prior year periods are an increase of 117.1% and 87.7% in net interest income for the three and nine months ended September 30, 2020, respectively, and an increase of 117.4% and 85.3% in noninterest income for the three and nine months ended September 30, 2020, respectively, and partially offset by an increase of 55.8% and 59.8% in noninterest expense (mainly driven by salaries and employee benefits) for the three and nine months ended September 30, 2020, and an increase of $894 and $6,594 in provision for loan losses for the three and nine months ended September 30, 2020, compared to the same periods in 2019. These and other components of earnings are discussed further below.

Non-GAAP Financial Measures

This Quarterly Report contains certain financial measures that are considered "non-GAAP financial measures" and should be read along with the accompanying tables. Generally, a non-GAAP financial measure is a numerical measure of a company's financial performance, financial position, or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with U.S. GAAP. Management believes that non-GAAP financial measures provide a greater understanding of ongoing performance and operations and enhance comparability across periods. Non-GAAP financial measures should not, however, be considered as an alternative to any measure of performance or financial condition as determined in accordance with U.S. GAAP, and readers should consider the Company’s performance and financial condition as reported under U.S. GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP financial measures have limitations as analytical
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tools, and readers should not consider them in isolation or as a substitute for analysis of the Company's results or financial condition as reported under U.S. GAAP. Non-GAAP financial measures presented by the Company may not be comparable to non-GAAP financial measures (even those with the same or similar names) presented by other companies.

Company management uses, and believes that investors benefit from referring to, the following non-GAAP financial measures, among others, to assess the Company's operating results and trends: (i) tax-equivalent net interest income; (ii) adjusted net interest income; (iii) adjusted net interest margin; (iv) adjusted net income attributable to common shareholders; (v) adjusted net income attributable to common shareholders, per diluted share; (vi) adjusted return on average assets; (vii) adjusted return on average shareholders' equity; (viii) average tangible shareholders' equity; (ix) return on average tangible common equity (ROATCE); and (x) adjusted return on average tangible common equity. In the following table, the Company has provided a reconciliation of these non-GAAP financial measures to their most comparable U.S. GAAP financial measures.

Three Months EndedNine Months Ended
September 30, 2020September 30, 2019September 30, 2020September 30, 2019
NON-GAAP FINANCIAL MEASURES
Adjusted net interest margin (1)(4)
Net interest income$30,537 $14,064 $77,610 $41,338 
Fully tax-equivalent adjustments:
Loans$760 $302 $1,865 $908 
Tax-exempt investment securities$347 $424 $1,095 $1,320 
Tax-equivalent net interest income (1)(2)
$31,643 $14,787 $80,570 $43,566 
Purchase accounting adjustments(3,868)(383)(9,773)(1,163)
Adjusted net interest income (1)
$27,775 $14,404 $70,797 $42,403 
Net interest margin (tax-equivalent basis)4.54 %3.51 %4.30 %3.57 %
Adjusted net interest margin3.98 %3.42 %3.78 %3.47 %
Adjusted net income attributable to common shareholders and related impact (1)
Net income attributable to common shareholders$11,531 $4,000 $19,186 $12,063 
Merger expenses78 299 6,895 302 
Tax effect of adjustments to net income(20)(27)(1,617)(79)
After tax adjustments to net income58 272 5,278 223 
Adjusted net income attributable to common shareholders11,589 4,272 24,464 12,286 
Net income attributable to common shareholders, per diluted share$0.69 $0.36 $1.27 $1.07 
Adjusted net income attributable to common shareholders, per diluted share$0.70 $0.38 $1.62 $1.09 
Return on average:
Return on average assets(3)
1.54 %0.88 %0.95 %0.91 %
Adjusted return on average assets (1)(3)
1.55 %0.94 %1.21 %0.93 %
Return on average shareholders' equity(3)
15.32 %7.31 %9.26 %7.57 %
Adjusted return on average shareholders' equity (1)(3)
15.40 %7.81 %11.80 %7.71 %
Average tangible shareholders' equity: (1)
Average shareholders' equity299,435 217,087 276,846 213,107 
Less: average goodwill51,108 43,642 52,241 43,642 
Less: average core deposit intangibles12,104 7,598 11,801 7,863 
Average tangible shareholders' equity236,223 165,847 212,804 161,602 
Return on average tangible common equity (ROATCE) (1)(3)
19.42 %9.57 %12.04 %9.98 %
Adjusted ROATCE (1) (3)
19.52 %10.22 %15.36 %10.16 %
(1) Not a recognized measure under U.S. GAAP.
(2) Amount includes tax equivalent adjustment to quantify the tax equivalent net interest income.
(3) Data has been annualized.
(4) Prior calculation of this ratio removed tax credits related to certain tax-preference-qualified loans and tax-exempt securities. The Company views these credits as normal course of business and as such removal is unnecessary.


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Net Interest Income

Net interest income represents the amount by which interest earned on various earning assets exceeds interest accrued on deposits and other interest-bearing liabilities and is the most significant component of our revenues. The following table sets forth the amount of our average balances, interest income or interest expense for each category of interest-earning assets and interest-bearing liabilities and the average interest rate for interest-earning assets and interest-bearing liabilities, net interest rate spread and net interest margin for the three and nine months ended September 30, 2020, and 2019 (dollars in thousands):

Three Months Ended September 30, 2020Three Months Ended September 30, 2019Change
Average BalancesRates / Yields (%)Interest Income / ExpenseAverage BalancesRates / Yields (%)Interest Income / ExpenseDue to VolumeDue to RateTotal
Interest earning assets
Loans$2,337,958 5.34 $30,640 $1,312,153 5.12 $16,632 $13,712 $754 $14,466 
Loan fees— 0.38 2,255 — 0.26 870 1,385 — 1,385 
Loans with fees2,337,958 5.73 32,895 1,312,153 5.38 17,502 15,097 754 15,850 
Mortgage loans held for sale103,729 3.98 1,037 18,271 5.71 263 828 (54)774 
Deposits with banks57,909 0.47 68 33,410 1.96 165 2,642 (2,739)(97)
Investment securities - taxable67,569 2.35 399 73,115 2.98 549 (40)(110)(150)
Investment securities - tax-exempt185,058 3.29 1,186 220,233 3.60 1,576 (303)(164)(467)
Federal funds sold and other19,694 3.68 182 12,300 5.03 156 47 (21)26 
Total earning assets2,771,917 5.29 35,767 1,669,482 4.98 20,211 18,271 (2,334)15,937 
Nonearning assets209,770 136,973 
Total assets$2,981,687 $1,806,455 
Interest bearing liabilities
Interest bearing demand272,506 0.34 236 142,702 0.23 81 102 53 155 
Savings and money market786,589 0.59 1,162 350,440 1.10 976 296 (110)186 
Time deposits - retail715,310 1.01 1,819 540,688 2.17 2,956 1,735 (2,872)(1,137)
Time deposits - wholesale223,095 1.64 917 294,750 2.52 1,872 (392)(563)(955)
Total interest-bearing deposits1,997,500 0.82 4,134 1,328,580 1.76 5,885 1,741 (3,492)(1,751)
Federal Home Loan Bank advances and other borrowings40,567 1.02 104 14,216 1.84 66 50 (12)38 
Subordinated Debt70,361 5.61 992 11,655 6.77 199 821 (28)793 
Total borrowed funds110,928 3.93 1,096 25,871 4.06 265 871 (40)831 
Total interest-bearing liabilities2,108,428 0.99 5,230 1,354,451 1.80 6,150 2,612 (3,532)(920)
Net interest rate spread (%) / Net interest income ($)4.30 $30,537 3.18 $14,061 $15,658 $1,198 $16,857 
Noninterest bearing deposits536,353 (0.20)227,502 (0.26)
Other noninterest bearing liabilities37,471 7,415 
Shareholders' equity299,435 217,087 
Total liabilities and shareholders' equity$2,981,687 $1,806,455 
Cost of funds0.79 1.54 
Net interest margin4.54 3.51 


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Nine Months Ended September 30, 2020Nine Months Ended September 30, 2019Change
Average BalancesRates / Yields (%)Interest Income / ExpenseAverage BalancesRates / Yields (%)Interest Income / ExpenseDue to VolumeDue to RateTotal
Interest earning assets
Loans$2,085,316 5.38 $82,105 $1,275,834 5.15 $48,273 $32,502 $2,288 $34,790 
Loan fees— 0.31 4,882 — 0.25 2,358 2,524 — 2,524 
Loans with fees2,085,316 5.69 86,987 1,275,834 5.40 50,631 35,026 2,288 37,314 
Mortgage loans held for sale79,000 4.08 2,412 14,534 5.65 614 1,918 (120)1,798 
Deposits with banks55,212 0.59 242 30,487 1.75 399 (859)702 (157)
Investment securities - taxable69,490 1.88 978 74,330 2.95 1,639 (101)(560)(661)
Investment securities - tax-exempt191,814 3.46 3,874 223,596 3.75 3,874 (839)(456)(1,295)
Federal funds sold and other19,324 3.43 496 12,751 5.44 519 (81)58 (23)
Total earning assets2,500,156 5.23 94,989 1,631,532 5.00 57,676 35,064 1,912 36,976 
Nonearning assets203,703 138,926 
Total assets$2,703,859 $1,770,458 
Interest bearing liabilities
Interest bearing demand245,962 0.30 554 144,427 0.26 278 226 50 276 
Savings and money market659,673 0.74 3,668 374,876 1.13 3,156 938 (426)512 
Time deposits - retail669,119 1.29 6,446 576,568 2.12 9,137 1,870 (4,561)(2,691)
Time deposits - wholesale218,109 1.92 3,131 191,133 2.60 3,713 682 (1,264)(582)
Total interest-bearing deposits1,792,863 1.03 13,799 1,287,004 1.69 16,284 3,717 (6,202)(2,485)
Federal Home Loan Bank advances and other92,264 0.89 613 31,378 2.28 534 115 (36)79 
Subordinated Debt70,455 5.63 2,967 11,634 6.78 590 2,460 (83)2,377 
Total borrowed funds162,719 2.94 3,580 43,012 3.49 1,124 2,575 (119)2,456 
Total interest-bearing liabilities1,955,582 1.19 17,379 1,330,016 1.75 17,408 6,292 (6,321)(29)
Net interest rate spread (%) / Net interest income ($)4.04 $77,610 3.25 $43,566 $28,772 $8,232 $37,005 
Noninterest bearing deposits439,521 (0.22)219,106 (0.25)
Other noninterest bearing liabilities31,910 8,229 
Shareholders' equity276,846 213,107 
Total liabilities and shareholders' equity$2,703,859 $1,770,458 
Cost of funds0.97 1.50 
Net interest margin4.30 3.57 

Table AssumptionsAverage loan balances are inclusive of nonperforming loans. Interest income and yields computed on tax-exempt instruments are on a tax-equivalent basis including a state tax credit included in loan yields of $751 and $1,834 for the three and nine months ended September 30, 2020, respectively, and $300 and $900 for the same periods in 2019. Net interest spread is calculated as the yields realized on interest-bearing assets less the rates paid on interest-bearing liabilities as well as tax-exempt securities adjustments of $347 and $1,095 for the three and nine months ended September 30, 2020, respectively, and $423 and $1,320 for the same periods in 2019. Net interest margin is the result of net interest income calculated on a tax-equivalent basis divided by average interest earning assets for the period. Changes in net interest income are attributed to either changes in average balances (volume change) or changes in average rates (rate change) for earning assets and sources of funds on which interest is received or paid. Volume change is calculated as change in volume times the previous rate while rate change is change in rate times the previous volume. Changes not due solely to volume or rate changes have been allocated to volume change and rate change in proportion to the relationship of the absolute dollar amounts of the change in each category.

AnalysisFor the three and nine months ended September 30, 2020, we recorded net interest income on a tax-equivalent basis of approximately $31,643 and $80,570, respectively, which resulted in a net interest margin (net interest income divided by the average balance of interest-earning assets) of 4.54% and 4.30%, respectively. For the three and nine months ended September 30, 2019, we recorded net interest income on a tax-equivalent basis of approximately $14,787 and $43,566, respectively, which resulted in a net interest margin of 3.51% and 3.57%, respectively.

Our year-over-year average loan volume increased by approximately 63.4% for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 and was mainly driven by the TCB Holdings Transaction and FABK
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Transaction. Our combined loan and loan fee yield increased from 5.38% to 5.73% for the three months ended September 30, 2020 compared to the same period in 2019 and increased from 5.40% to 5.69% for the nine months ended September 30, 2020 compared to the same period in 2019. The increased yield for the three and nine months ended September 30, 2020 is primarily attributable to the increased purchase accounting accretion from the two mergers as well as the increased fees from the PPP loans.

Our tax-equivalent yield on tax-exempt investments was 3.29% and 3.46% for the three and nine months ended September 30, 2020 compared to 3.60% and 3.75% for the same periods in 2019. Our year-over-year average tax-exempt investment volume decreased by 14.2% for the nine months ended September 30, 2020 compared to the same period in 2019 due to investment sales in the fourth quarter of 2019. Our year-over-year average taxable securities volume decreased by 6.5% for the nine months ended September 30, 2020 compared to the same period in 2019.

Our cost of funds decreased to 0.79% and 0.97% from 1.54% and 1.50%, respectively, for the three and nine months ended September 30, 2020 compared to the same periods in 2019. The decrease in our cost of funds was primarily driven by a decrease in the cost of our interest-bearing deposits and other interest-bearing liabilities due to the recent decrease in rates by the Federal Reserve. We experienced a 100.6% increase in our average noninterest-bearing deposits for the nine months ended September 30, 2020 when compared to the same period in 2019, which is largely attributable to the TCB Holdings Transaction and FABK Transaction.

The Bank strives to maintain a strong net interest margin that is insulated from changes in market interest rates. Our net interest margin, while generally considered fairly neutral, is currently subject to slight expansions in a rising rate environment and slight contractions in a falling rate environment. The Company has interest rate floors on certain loans and those floors will mitigate further declines in interest rates.

Provision for Loan Losses

We recorded a provision of $1,500 and $7,400 for loan losses for the three and nine months ended September 30, 2020, respectively, compared to $606 and $806 for the three and nine months ended September 30, 2019. The increase in provision expense for the three and nine months ended September 30, 2020 can be primarily attributed to the recent downturn in the economy due to COVID-19 while a portion is due to the growing loan portfolio. The acquired loan portfolios from First Advantage Bank and Community Bank & Trust are reserved for through fair value marks that consider both credit quality and changes in interest rates. See “Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Comparison of Balance Sheets at September 30, 2020 and December 31, 2019 - Allowance for Loan Losses” included herein for further analysis of the provision for loan losses.

Noninterest Income

Our noninterest income is composed of several components, some of which vary significantly between periods. The following is a summary of our noninterest income for the three and nine months ended September 30, 2020, and 2019 (dollars in thousands):
Three Months Ended September 30,Percent
Increase
Nine Months Ended September 30,Percent
Increase
20202019(Decrease)20202019(Decrease)
Noninterest Income
Service charges and fees on deposits$1,583 $976 62.2 %$4,172 $2,796 49.2 %
Gains on mortgage loans sold, net3,783 1,385 173.1 %7,605 3,170 139.9 %
Securities gains, net— — — %327 306 6.9 %
Other noninterest income:
   Bank-owned life insurance386 283 36.4 %1,073 838 28.0 %
   Brokerage revenue65 13 400.0 %142 33 330.3 %
   Miscellaneous noninterest income184 103 78.6 %387 253 53.0 %
Total other noninterest income635 399 59.1 %1,602 1,124 42.5 %
Total noninterest income$6,001 $2,760 117.4 %$13,706 $7,396 85.3 %

The most significant reasons for the changes in total noninterest income during the three and nine months ended September 30, 2020 compared to the same periods in 2019 are the fluctuation in gains on mortgage loans sold, net as well as the increase in service charges mainly attributable to the two mergers. These and other factors impacting noninterest income are discussed further below.
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Service charges and fees on deposit accounts have increased due to the TCB Holdings Transaction, the FABK Transaction, and the concentrated effort to attract noninterest-bearing deposits. An increase in debit card fees makes up the majority of the 62.2% and 49.2% increase for the three and nine months ended September 30, 2020 as compared to the same period in 2019.

Securities gains and losses often fluctuate from period to period and can sometimes be attributable to various balance sheet risk strategies. During the nine months ended September 30, 2020, the Company sold securities totaling $103,901 with a gain of $327. During the nine months ended September 30, 2019, the Company sold securities classified as available for sale totaling $52,434 with a gain of $306. Securities were not sold in the three months ended September 30, 2020 or September 30, 2019.

Generally, mortgage-related revenue increases in lower interest rate environments and more robust housing markets and decreases in rising interest rate environments and more challenging housing markets. Mortgage-related revenue will fluctuate from quarter to quarter as the rate environment changes and as changes occur with our mortgage operations including but not limited to the number of loan originators employed and the channels available for loan sales of RMV’s products in the secondary markets. Gains on mortgage loans sold, net, amounted to $3,783 and $7,605 for the three and nine months ended September 30, 2020, respectively, compared to $1,385 and $3,170 for the same periods in the prior year. The increase in gains for the three and nine months ended September 30, 2020 when compared to the same periods in 2019 is primarily driven by the increase in volume in the traditional mortgage market. As discussed further in the notes to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2019, gains on mortgage loans sold are generally recognized at the time of a loan sale corresponding to the transfer of risk. As a result of increased production in the second and third quarters, the Company's held-for-sale portfolio increased by $62.1 million from December 31, 2019 to September 30, 2020.

Noninterest income also includes appreciation in the cash surrender value of bank-owned life insurance, which was $386 and $1,073 for the three and nine months ended September 30, 2020, respectively, compared to $283 and $838 for the same periods in 2019. The increases for both periods are attributable to the recent mergers. The assets that support these policies are administered by the life insurance carriers and the income we receive (i.e., increases or decreases in the cash surrender value of the policies) is dependent upon the returns the insurance carriers are able to earn on the underlying investments that support the policies. Earnings on these policies generally are not expected to be taxable.

Noninterest Expense

The following is a summary of our noninterest expense for the three and nine months ended September 30, 2020 and 2019 (dollars in thousands):
Three Months Ended September 30,Percent
Increase
Nine Months Ended
September 30,
Percent
Increase
20202019(Decrease)20202019(Decrease)
Noninterest Expense
Salaries and employee benefits$12,184 $7,634 59.6 %$33,885 $22,605 49.9 %
Occupancy 2,054 1,359 51.1 %5,566 4,069 36.8 %
Data processing and software2,240 1,553 44.2 %6,085 4,538 34.1 %
Professional fees775 404 91.8 %1,933 1,836 5.3 %
Regulatory fees365 (17)2,247.1 %1,356 596 127.5 %
Merger expenses78 299 (73.9)%6,895 302 2,183.1 %
Other operating expense2,637 1,815 45.3 %6,476 4,973 30.2 %
Total noninterest expense$20,333 $13,047 55.8 %$62,196 $38,919 59.8 %

Noninterest expense increased by $7,286 and $23,277, or 55.8% and 59.8%, for the three and nine months ended September 30, 2020, respectively, compared to the same periods in 2019 driven by an increase in salaries and employee benefits for both periods and merger expenses when comparing the nine months ended. The three and nine-months periods ended September 30, 2020 have been impacted by the TCB Holdings Transaction and the FABK Transaction which have resulted in additions to staff, additional vendor relationships and investments in technology. These and other factors impacting noninterest expense are discussed further below.

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Salaries and employee benefits increased by $4,550 and $11,280 or 59.6% and 49.9% for the three and nine months ended September 30, 2020, respectively, compared to the same periods in 2019. This increase is primarily attributable to the TCB Holdings Transaction in the first quarter of 2020 and FABK Transaction in the second quarter of 2020, as well as our year over year growth and severance for three executive officers. The staffing levels have normalized during the third quarter.

Occupancy costs increased by $695 or 51.1% and $1,497 or 36.8% during the three and nine months ended September 30, 2020, respectively, compared to the same periods in 2019 mainly due to the TCB Holdings Transaction and the FABK Transaction as well as the expansion of RMV.

Data processing and software costs increased by $687 or 44.2% and $1,547 or 34.1% when comparing the three and nine months ended September 30, 2020, respectively, to the comparable periods in 2019. This increase is mainly attributable to increased costs due to an increased volume of accounts and transactions services as well as continued investments in information technology infrastructure. Both the volume and location increases are primarily due to the TCB Holdings Transaction, the FABK Transaction, and the expansion of RMV.

Professional fees increased by $371 or 91.8%, and $97 or 5.3%, respectively, when comparing the three and nine months ended September 30, 2020, to the same periods in 2019. This fluctuation is mainly attributable to the increased fees related to special projects by the Company.

Our regulatory expenses are largely made up of FDIC deposit insurance expense which is based on our outstanding liabilities for the period multiplied by a factor determined by the FDIC, mainly driven by our most recent regulatory rating and certain financial performance factors. Our FDIC expense increased by $382 and $760 for the three and nine months ended September 30, 2020, compared to the same periods in 2019. This increase is primarily the result of our increase in deposits due to the TCB Holdings Transaction and the FABK Transaction as well as credits received in 2019 which significantly reduced the expense recognized.

Merger-related expenses increased by $6,593 for the nine months ended September 30, 2020 when compared to the same period in 2019 and decreased by $221 for the three months ended September 30, 2020 as compared to the same period in 2019. These costs are considered one-time expenses which are associated with the TCB Holdings Transaction and the FABK Transaction. We anticipate no further significant merger expenses to be incurred in relation to these two transactions.

Other operating expenses increased by $822 or 45.3% and $1,503 or 30.2% for the three and nine months ended September 30, 2020 compared to the same periods in 2019, mainly due to an increase in amortization of core deposit intangibles and franchise taxes due to the TCB Holdings Transaction and FABK Transaction.

Income Taxes

During the three and nine months ended September 30, 2020, we recorded consolidated income tax expense of $2,800 and $3,524, respectively, compared to $557 and $1,430, respectively, for the three and nine months ended September 30, 2019. The Company files separate federal tax returns for RMV and the bank segment. The taxable income or losses of the mortgage banking operations are included in the respective franchise and excise returns of the Bank and non-controlling member for federal purposes.

Our income tax expense attributable to shareholders for the three and nine months ended September 30, 2020, reflects an effective income tax rate of 19.39% and 15.77%, respectively, (exclusive of a tax expense (benefit) from our mortgage banking operations of $27 and $(69) for the three and nine months ended September 30, 2020, respectively, on pre-tax income (losses) of $415 and $(1,062) for the three and nine months ended September 30, 2020, respectively), compared to 14.05% and 12.61% for the same periods in 2019 (exclusive of a tax benefit of $97and $311 on pre-tax losses of $(1,491) and $(4,778), respectively, from our mortgage banking operations for the comparable periods in 2019). Additionally, our effective tax rate for the three and nine months ended September 30, 2020 is higher than the same period in 2019 primarily due to the change in the proportion of tax-exempt income to income before taxes. The Company's tax-exempt income from securities, loans and earnings from bank-owned life insurance contracts as well as state tax credits related to loans to encourage economic development impact the effective tax rate.

Non-controlling Interest in Operating Results of Subsidiary

Our non-controlling interest in operating results of subsidiary is solely attributable to the RMV minority interest. The Bank has a 51% voting interest in this venture, but under the terms of the related operating agreement, the non-controlling member receives 70% of the cash flow distributions of RMV and the Bank receives 30% of any cash flow distributions, after the non-
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controlling member recovers its aggregate capital contributions. The non-controlling member is required to fund RMV's losses, in arrears, via additional capital contributions. RMV had a net income (loss) of $374 and $(990) for the three and nine months ended September 30, 2020, respectively, compared to a net loss of $(1,386) and $(4,484) for the same periods in 2019. The improvements in operating results for the three and nine months ended September 30, 2020 when compared to the same period in 2019 is mainly attributable to the decrease in expense relating to the start-up of the correspondent line of business in 2019. Also, see Note 10 to our consolidated financial statements for segment reporting.

COMPARISON OF BALANCE SHEETS AT SEPTEMBER 30, 2020 AND DECEMBER 31, 2019

Overview

The Company’s total assets were $3,044,512 at September 30, 2020 and $1,901,842 at December 31, 2019. Assets increased by 60.1% from December 31, 2019 to September 30, 2020, primarily due to acquisition activity which increased total loans by $756,240. Total liabilities were $2,737,426 at September 30, 2020 and $1,678,089 at December 31, 2019, an increase of 63.1%. The increase in liabilities was substantially attributable to the increase in deposits of $981,049, or 61.9%, and an increase in FHLB advances of $29,818 during the period. These changes were materially impacted by the TCB Holdings Transaction as well as the FABK Transaction. These and other components of our consolidated balance sheets are discussed further below.

Loans

Lending-related income is the largest component of our net interest income and is a major contributor to profitability. The loan portfolio is the largest component of earning assets, and it, therefore, generates the largest portion of revenues. The absolute volume of loans and the volume of loans as a percentage of earning assets is an important determinant of net interest margin as loans are expected to produce higher yields than securities and other earning assets. The competition for quality loans in our markets has remained strong. Our goal is to steadily grow our loan portfolio, focusing on quality. This is not always possible for various reasons, including but not limited to scheduled maturities or early payoffs exceeding new loan volume, as well as economic conditions. Early payoffs typically increase in falling rate environments as customers identify advantageous opportunities for refinancing. We have been adding experienced lending officers to our staff to help with loan growth. We have expanded our Middle Tennessee footprint into Cheatham County with the TCB Holdings Transaction. The FABK Transaction expanded our footprint into Montgomery County as well as enhanced our presence in Davidson County. Additionally, the FABK Transaction diversified our loan portfolio with the addition of loans related to manufactured housing. Total loans, net, at September 30, 2020, and December 31, 2019, were $2,338,064 and $1,397,374, respectively, representing an increase of 67.3%. Contributing to this increase, $171,445 were acquired in connection with the first quarter TCB Holdings Transaction and $622,423 were acquired in connection with the second quarter FABK Transaction.

The table below provides a summary of the loan portfolio composition for the dates noted (including purchased credit-impaired ("PCI") loans).
September 30, 2020December 31, 2019
AmountPercentAmountPercent
Commercial, Industrial and Agricultural$477,785 20.2 %$245,515 17.4 %
Real estate:
1-4 Family Residential334,730 14.2 %227,529 16.2 %
1-4 Family HELOC101,492 4.3 %96,228 6.8 %
Multifamily and Commercial864,756 36.7 %536,845 38.1 %
Construction, Land Development and Farmland366,760 15.5 %273,872 19.4 %
Consumer209,071 8.8 %16,855 1.2 %
Other8,259 0.3 %13,180 0.9 %
2,362,853 100.0 %1,410,024 100.0 %
Less:
Deferred loan fees4,955 72 
Allowance for loan losses19,834 12,578 
Loans, net$2,338,064 $1,397,374 

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The table below provides a summary of PCI loans as of September 30, 2020 and December 31, 2019:
September 30, 2020December 31, 2019
Commercial, Industrial and Agricultural$989 $— 
Real estate:
1-4 Family Residential1,211 231 
1-4 Family HELOC18 — 
Multifamily and Commercial2,243 217 
Construction, Land Development and Farmland1,003 1,021 
Consumer2,105 — 
Other— — 
Total gross PCI loans7,569 1,469 
Less:
Remaining purchase discount3,036 246 
Allowance for loan losses— — 
Loans, net$4,533 $1,223 

Commercial, industrial and agricultural loans above consist solely of loans made to U.S.-domiciled customers. These include loans for use in normal business operations to finance working capital needs, equipment purchases, or other expansionary projects. Commercial, industrial, and agricultural loans were $477,785 at September 30, 2020 and increased by 94.6% compared to $245,515 at December 31, 2019 primarily driven by the TCB Holdings Transaction and FABK Transaction.

Real estate loans comprised 70.7% of the loan portfolio at September 30, 2020. Residential loans included in this category consist mainly of closed-end loans secured by first and second liens that are not held for sale and revolving, open-end loans secured by 1-4 family residential properties extended under home equity lines of credit. The Company increased the residential portfolio 34.7% from December 31, 2019 to September 30, 2020 primarily driven by the TCB Holdings Transaction and FABK Transaction. Multi-family and commercial loans included in the real estate category above include (in typical order of prominence) loans secured by non-owner-occupied commercial real estate properties, and loans secured by multi-family residential properties. Multi-family and commercial real estate loans were $864,756 at September 30, 2020 and increased 61.1% compared to the $536,845 held as of December 31, 2019 primarily driven by the TCB Holdings Transaction and FABK Transaction. Real estate construction loans consist of 1-4 family residential construction loans, other construction loans, land loans, and loans secured by farmland. Construction lending has continued to increase based on a strong local market demand.

Consumer loans mainly consist of loans to individuals for household, family, and other personal expenditures under revolving credit plans, credit cards, and automobile and other consumer loans. Our consumer loans experienced an increase from December 31, 2019, to September 30, 2020, of 1,140.4% primarily due to loans to finance manufactured homes that are not secured by real estate acquired in the FABK Transaction.

Other loans consist mainly of loans to states and political subdivisions and loans to other depository institutions and experienced a decrease of 37.3% from December 31, 2019 to September 30, 2020 due to loan payments.

The repayment of loans is a source of additional liquidity. The following table sets forth the loans repricing or maturing within specific intervals at September 30, 2020, excluding unearned net fees and costs.
One Year or
Less
One to Five
Years
Over Five
Years
Total
Gross loans$617,774 $1,132,058 $613,021 $2,362,853 
Fixed interest rate$1,391,044 
Variable interest rate971,809 
Total$2,362,853 

The information presented in the above table is based upon the contractual maturities or next repricing date of the individual loans, including loans which may be subject to renewal at their contractual maturity. Renewal of such loans is subject to review and credit approval, as well as modification of terms upon their maturity. Consequently, we believe this treatment presents fairly the maturity and repricing structure of the loan portfolio.
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Allowance for Loan Losses

At September 30, 2020, the allowance for loan losses was $19,834 compared to $12,578 at December 31, 2019. The allowance for loan losses as a percentage of total loans was 0.84% at September 30, 2020 compared to 0.89% at December 31, 2019.

The following table sets forth the activity in the allowance for loan losses for the periods presented.

Analysis of Changes in Allowance for Loan Losses
September 30, 2020September 30, 2019
Beginning Balance, January 1, 2020 and 2019, respectively$12,578 $10,892 
Loans charged off:
Commercial, Industrial and Agricultural(507)(170)
Real estate:
1-4 Family Residential(68)(29)
1-4 Family HELOC(98)— 
Multifamily and Commercial— — 
Construction, Land Development and Farmland(114)— 
Consumer(355)(37)
Other— (34)
Total loans charged off(1,142)(270)
Recoveries on loans previously charged off:
Commercial, Industrial and Agricultural126 342 
Real estate:
1-4 Family Residential769 220 
1-4 Family HELOC15 11 
Multifamily and Commercial20 62 
Construction, Land Development and Farmland— 
Consumer60 28 
Other— 200 
Total loan recoveries998 863 
Net (charge-offs) recoveries (144)593 
Provision for loan losses7,400 806 
Total allowance for loan losses at end of period$19,834 $12,291 
Gross loans at end of period (1)
$2,362,853 $1,350,522 
Average gross loans (1)
$2,085,316 $1,275,834 
Allowance for loan losses to total loans0.84 %0.91 %
Net (charge-offs) recoveries to average loans (annualized)(0.01)%0.06 %
(1)Loan balances exclude loans held for sale.

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While no portion of the allowance for loan losses is in any way restricted to any individual loan or group of loans, and the entire allowance for loan losses is available to absorb losses from any and all loans, the following table summarizes our allocation of allowance for loan losses by loan category and loans in each category as a percentage of total loans, for the periods presented.
September 30, 2020September 30, 2019
Amount% of Allowance to Allowance% of Loan Type to Total LoansAmount% of Allowance to Allowance% of Loan Type to Total Loans
Commercial, Industrial and Agricultural$5,012 25.3 %20.2 %$2,299 18.7 %17.2 %
Real estate:
1-4 Family Residential2,289 11.5 %14.2 %1,383 11.3 %17.5 %
1-4 Family HELOC1,485 7.5 %4.3 %704 5.7 %6.9 %
Multifamily and Commercial8,247 41.5 %36.7 %5,188 42.2 %38.5 %
Construction, Land Development and Farmland1,955 9.9 %15.5 %2,513 20.4 %17.6 %
Consumer826 4.2 %8.8 %170 1.4 %1.3 %
Other20 0.1 %0.3 %34 0.3 %1.0 %
$19,834 100.0 %100.0 %$12,291 100.0 %100.0 %

Nonperforming Assets

Nonperforming assets consists of nonperforming loans plus real estate acquired through foreclosure or deed in lieu of foreclosure and other repossessed collateral. Nonperforming loans by definition consists of nonaccrual loans and loans past due 90 days or more and still accruing interest. When we place a loan on nonaccrual status, interest accruals cease and uncollected interest is reversed and charged against current income. The interest on these loans is accounted for on the cash-basis, or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured, which generally includes a minimum performance of six months.

The following table provides information with respect to the Company’s nonperforming assets.
September 30, 2020December 31, 2019
Nonaccrual loans$6,738 $4,071 
Past due loans 90 days or more and still accruing interest64 64 
Total nonperforming loans6,802 4,135 
Foreclosed real estate ("OREO")1,326 750 
Repossessed collateral1,603 — 
Total nonperforming assets$9,731 $4,885 
Total nonperforming loans as a percentage of total loans0.29 %0.29 %
Total nonperforming assets as a percentage of total assets0.32 %0.26 %
Allowance for loan losses as a percentage of nonperforming loans291.61 %304.18 %

Investment Securities and Other Earning Assets

The investment securities portfolio is intended to provide the Bank with adequate liquidity, flexible asset/liability management and a source of stable income. The portfolio is structured with investment grade holdings and consists of securities classified as available-for-sale. All available-for-sale securities are carried at fair value and may be used for liquidity purposes should management deem it to be in our best interest. Unrealized gains and losses on this portfolio are excluded from earnings, but are reported as other comprehensive income in a separate component of shareholders’ equity, net of income taxes. Premium amortization and discount accretion are recognized as adjustments to interest income using the interest method. Realized gains or losses on sales are based on the net proceeds and the adjusted carrying value amount of the securities sold using the specific identification method.

Securities totaled $273,893 at September 30, 2020, in comparison to the $260,293 in securities balances at December 31, 2019. This increase can largely be attributed to the Company's investment in bank holding company subordinated debt offerings and U.S. Treasuries during the period of $31,179. Activity during the nine months ended September 30, 2020 includes the sale of
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$103,901 of securities, most of which were acquired as part of the TCB Holdings Transaction and FABK Transaction, as well as $10,370 of principal paydowns, calls, and maturities. In connection with the TCB Holdings Transaction and FABK Transaction, management determined that it would be beneficial to liquidate those portfolios and utilize those funds for loan demand and other uses.

Restricted equity securities totaled $17,367 and $11,279 at September 30, 2020, and December 31, 2019, respectively, and consist of FRB and FHLB stock.

The following table shows the Company’s investments’ amortized cost and fair value, aggregated by investment category, for the periods presented:
September 30, 2020December 31, 2019
Amortized
Cost
Fair Value% of TotalAmortized
Cost
Fair Value% of Total
U.S. Treasury and other U.S. government agencies$12,117 12,117 4.42 %$59 59 0.02 %
State and municipal bonds175,976 190,623 69.61 %186,283 196,660 75.56 %
Corporate bonds15,750 15,809 5.77 %7,880 7,845 3.01 %
Mortgage-backed securities41,240 40,376 14.74 %38,126 37,761 14.51 %
Asset-backed securities15,199 14,968 5.46 %18,374 17,968 6.90 %
Total$260,282 273,893 100.00 %$250,722 260,293 100.00 %

The table below summarizes the contractual maturities of securities at September 30, 2020:
Amortized
Cost
Estimated
Fair Value
Due within one year$12,567 $12,565 
Due in one to five years2,175 2,186 
Due in five to ten years17,222 17,965 
Due after ten years171,879 185,833 
Mortgage-backed securities41,240 40,376 
Asset-backed securities15,199 14,968 
Total$260,282 $273,893 

Premises and Equipment

Premises and equipment, net, totaled $33,319 at September 30, 2020 compared to $21,064 at December 31, 2019, a net increase of $12,255, or 58.2%. Premises and equipment purchases amounted to approximately $2,709 during the nine months ended September 30, 2020 and were mainly incurred for additional leasehold improvements for our branches and new mortgage locations while depreciation expense amounted to $2,084. As part of the TCB Holdings Transaction, $6,401 of premises and equipment were acquired effective January 1, 2020. Effective April 1, 2020, premises and equipment of $7,905 were acquired in the FABK Transaction.

Deposits

Deposits represent the Company’s largest source of funds. The Company competes with other banks and non-bank institutions for deposits, as well as with a growing number of non-deposit investment alternatives available to depositors such as money market funds and other brokerage investment products. Challenges to deposit growth include interest rate changes on deposit products given movements in the interest rate environment and other competitive pricing pressures, and customer preferences regarding higher-costing deposit products or non-deposit investment alternatives.

At September 30, 2020, total deposits were $2,565,502, an increase of $981,049, or 61.9%, compared to $1,584,453 at December 31, 2019. During the nine months ended September 30, 2020, noninterest bearing demand deposits increased by $278,163, interest-bearing demand deposits increased by $120,087, savings and money market deposits increased by $404,277, and time deposits increased by $178,522. The primary driver of the increase in deposits is attributable to the deposits acquired in the TCB Holdings Transaction which totaled $210,538 coupled with those acquired in the FABK Transaction which totaled
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$608,690. During the nine months ending September 30, 2020, management shifted from using brokered time deposits to transactional deposits and to using FHLB advances which offset this increase.

The following table shows maturity or repricing of time deposits of $250 or more by category based on time remaining until maturity at September 30, 2020.

September 30, 2020
Twelve months or less$293,942 
Over twelve months through three years21,622 
Over three years5,221 
Total$320,785 

Market and Liquidity Risk Management

Our objective is to manage assets and liabilities to provide a satisfactory, consistent level of profitability within the framework of established liquidity, loan, investment, borrowing, and capital policies. Our Asset Liability Management Committee ("ALCO") is charged with the responsibility of monitoring these policies, which are designed to ensure acceptable composition of asset/liability mix. Two critical areas of focus for ALCO are interest rate sensitivity and liquidity risk management.

Interest Rate Sensitivity—Interest rate sensitivity refers to the responsiveness of interest-earning assets and interest-bearing liabilities to changes in market interest rates. In the normal course of business, we are exposed to market risk arising from fluctuations in interest rates. ALCO measures and evaluates the interest rate risk so that we can meet customer demands for various types of loans and deposits. ALCO determines the most appropriate amounts of off-balance sheet items to maximize long-term earnings and mitigate interest rate risk. Measurements we use to help us manage interest rate sensitivity include a gap analysis, an earnings simulation model and an economic value of equity model. These measurements are used in conjunction with competitive pricing analysis and are further described below.

Interest Rate Sensitivity Gap Analysis—The rate sensitive position, or gap, is the difference in the volume of rate-sensitive assets and liabilities, at a given time interval, including both floating rate instruments and instruments which are approaching maturity. The measurement of our interest rate sensitivity, or gap, is one of the three principal techniques we use in our asset/liability management effort.

Our policy is to have 12 and 24-month cumulative repricing gaps that do not exceed 25% of assets. We slightly exceeded our policy as of September 30, 2020 for the 12-month cumulative repricing gap. Although we do monitor our gap on a periodic basis, we recognize the potential shortcomings of such a model. The static nature of the gap schedule makes it difficult to incorporate changes in behavior that are caused by changes in interest rates. Also, although the periods of estimated and contractual repricing are identified in the analysis, the extent of repricing is not modeled in the gap schedule (i.e. whether repricing is expected to move on a one-to-one or other basis in relationship to the market changes simulated). For these reasons and as a result of other model shortcomings, we rely more heavily on the earnings simulation model and the economic value of equity model discussed further below.

Earnings Simulation Model—We believe interest rate risk is effectively measured by our earnings simulation modeling. Earning assets, interest-bearing liabilities and off-balance sheet financial instruments are combined with simulated forecasts of interest rates for the next 12 months and 24 months. To limit interest rate risk, we have guidelines for our earnings at risk which seek to limit the negative variances of net interest income in instantaneous changes to interest rates. We also periodically monitor simulations based on various rate scenarios such as non-parallel shifts in market interest rates over time. For changes up or down in rates from a flat interest rate forecast over the next 12 and 24 months, our estimated change in net interest income as well as our policy limits are as follows:

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Instantaneous, Parallel Change in Prevailing Interest Rates Equal toEstimated Change in Net Interest Income and Policy of Maximum
Percentage Decline in Net Interest Income
Next 12Next 24
MonthsMonths
EstimatePolicyEstimatePolicy
-200 bp(0.9)%(15)%(2.2)%(15)%
-100 bp(0.7)%(10)%(1.8)%(10)%
+100 bp0.9%(10)%3.2%(10)%
+200 bp2.4%(15)%6.6%(15)%
+300 bp4.5%(20)%10.3%(20)%
+400 bp6.7%(25)%14.2%(25)%

We were in compliance with our earnings simulation model policies as of September 30, 2020, indicating what we believe to be a fairly neutral interest-rate risk profile.

Economic Value of Equity ModelOur economic value of equity model measures the extent that estimated economic values of our assets, liabilities and off-balance sheet items will change as a result of interest rate changes. Economic values are determined by discounting expected cash flows from assets, liabilities and off-balance sheet items, which establishes a base case economic value of equity.

To help monitor our related risk, we have established the following policy limits regarding simulated changes in our economic value of equity:
Instantaneous, Parallel Change in Prevailing
Interest Rates Equal to
Maximum Percentage Decline in Economic Value of
Equity from the Economic Value of Equity at
Currently Prevailing Interest Rates
±100bp15%
±200 bp25%
±300 bp30%
±400 bp35%
Non-parallel shifts35%

At September 30, 2020, our model results indicated that we were within these policy limits.

Each of the above analyses may not, on its own, be an accurate indicator of how our net interest income will be affected by changes in interest rates. Income associated with interest-earning assets and costs associated with interest-bearing liabilities may not be affected uniformly by changes in interest rates. In addition, the magnitude and duration of changes in interest rates may have a significant impact on net interest income. For example, although certain assets and liabilities may have similar maturities or periods of repricing, they may react in different degrees to changes in market interest rates. Interest rates on certain types of assets and liabilities fluctuate in advance of changes in general market rates, while interest rates on other types may lag behind changes in general market rates. In addition, certain assets, such as adjustable rate loans, have features (generally referred to as interest rate caps and floors) which limit changes in interest rates. Prepayment and early withdrawal levels also could deviate significantly from those assumed in calculating the maturity of certain instruments. The ability of many borrowers to service their debts also may decrease during periods of rising interest rates. Our ALCO reviews each of the above interest rate sensitivity analyses along with several different interest rate scenarios as part of its responsibility to provide a satisfactory, consistent level of profitability within the framework of established liquidity, loan, investment, borrowing, and capital policies.

Liquidity Risk Management The purpose of liquidity risk management is to ensure that there are sufficient cash flows to satisfy loan demand, deposit withdrawals, and our other needs. Traditional sources of liquidity for a bank include asset maturities and growth in core deposits. A bank may achieve its desired liquidity objectives from the management of its assets and liabilities and by internally generated funding through its operations. Funds invested in marketable instruments that can be readily sold and the continuous maturing of other earning assets are sources of liquidity from an asset perspective. The liability base provides sources of liquidity through attraction of increased deposits and borrowing funds from various other institutions and sources.

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Changes in interest rates also affect our liquidity position. We currently price deposits in response to market rates and our management intends to continue this policy. If deposits are not priced in response to market rates, a loss of deposits could occur which would negatively affect our liquidity position.

Scheduled loan payments are a relatively stable source of funds, but loan payoffs and deposit flows fluctuate significantly, being influenced by interest rates, general economic conditions, competition, and the actions of our customers. Additionally, debt security investments are subject to prepayment and call provisions that could accelerate their payoff prior to stated maturity. We attempt to price our deposit products to meet our asset/liability objectives consistent with local market conditions. Our ALCO is responsible for monitoring our ongoing liquidity needs. Our regulators also monitor our liquidity and capital resources on a periodic basis.

The Company has established a line of credit with the FHLB, which is secured by a blanket pledge of 1-4 family residential mortgages, multi-family residential, commercial real estate, and home equity loans, and available-for-sale securities. At September 30, 2020, FHLB advances totaled $40,555 compared to $10,737 as of December 31, 2019. This increase in FHLB advances generally correlates with a decrease in more expensive brokered deposits, contributing to an improved net interest margin.

At September 30, 2020, the scheduled maturities of our FHLB advances and interest rates were as follows (scheduled maturities will differ from scheduled repayments):
Scheduled MaturitiesAmountWeighted
Average
Rates
2020$23,000 0.22%
202112,636 2.36%
2022402 1.22%
20234,005 2.38%
2024512 2.52%
$40,555 1.14%

The Company has outstanding $23,000 of subordinated debentures associated with trust preferred securities issued by trusts that are affiliates of Reliant Bancorp, $10,000 of which is owned by a wholly-owned subsidiary of Reliant Bancorp. Reliant Bancorp has timely made its scheduled interest payments on these subordinated debentures since assumed in the first quarter of 2018. As of September 30, 2020, Reliant Bancorp was current on all interest payments due related to its subordinated debentures. Reliant Bancorp has the right to defer the payment of interest on the subordinated debentures at any time, for a period not to exceed 20 consecutive quarters. During the period in which it is deferring the payment of interest on its subordinated debentures, the indentures governing the subordinated debentures provide that Reliant Bancorp cannot pay any dividends on its common stock or preferred stock. 

On December 13, 2019, Reliant Bancorp issued and sold $60,000 in aggregate principal amount of its 5.125% Fixed-to-Floating Rate Subordinated Notes due 2029 (the “Subordinated Notes”). The Subordinated Notes will bear interest at an initial rate of 5.125%, payable semi-annually until December 15, 2024, at which time the Subordinated Notes will bear interest at a floating rate equal to the three-month Secured Overnight Financing Rate (“SOFR”) (provided, that in the event the three-month SOFR is less than zero, the three-month SOFR will be deemed to be zero), plus a spread of 376.5 basis points. If the three-month SOFR rises during the floating interest period, the cost of the Subordinated Notes will increase, thereby negatively affecting our net income.

Capital

Shareholders’ equity was $307,086 at September 30, 2020, an increase of $83,333, or 37.2%, from $223,753 at December 31, 2019. During the nine months ended September 30, 2020, the Company completed the TCB Holdings Transaction which increased shareholders' equity $18,041 and the FABK Transaction which increased shareholders' equity $51,915. Net income also contributed to the increase by $19,186. This increase was primarily offset by dividends declared of $4,550, and other comprehensive loss of $2,562. Contributions from the noncontrolling interest of $990 were recognized in the nine months ended September 30, 2020. The increase in shareholders' equity mitigated by the growth in the Bank's assets led to an increase in the Bank’s September 30, 2020 Tier 1 leverage ratio to 10.48% compared with 10.30% at December 31, 2019. See other ratios discussed further below. Additionally, the subordinated debentures qualified as Tier 1 and Total risk-based capital for the Company due to asset size at the time of issuance.
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On August 24, 2020, the Company filed a Registration Statement on Form S-3 to offer, issue and sell from time to time in one or more offerings any combination of (i) common stock, (ii) preferred stock, (iii) debt securities, (iv) depository shares, (v) warrants, (vi) units, (vii) purchase contracts, and (viii) rights, up to a maximum aggregate offering price of $100,000. The net proceeds from any offering will be used for general corporate purposes including repayment of debt or payment of interest thereon, capital expenditures, acquisitions, investments, and any other purposes that we may specify in any prospectus supplement. Until allocated to such purposes it is expected that we will invest any proceeds in short-term, interest-bearing instruments or other investment-grade securities. The Securities and Exchange Commission declared the Registration Statement on Form S-3 effective on September 3, 2020, and the Registration Statement on Form S-3 will expire on September 3, 2023.

Banks as regulated institutions are required to maintain certain levels of capital. The Federal Reserve Board of Governors, the primary federal regulator for the Bank, has adopted minimum capital regulations or guidelines that categorize capital components and the level of risk associated with various types of assets. Financial institutions are expected to maintain a level of capital commensurate with the risk profile assigned to their assets in accordance with applicable regulations and guidelines. We regularly review our capital adequacy to ensure compliance with these regulations and guidelines and to help ensure that sufficient capital is available for current and future needs. It is management’s intent to maintain an optimal capital and leverage mix for growth and for shareholder returns.

Prompt corrective action regulations provide five bank capital classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At September 30, 2020, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since these notifications that management believes have changed the institution’s category. Actual and required capital amounts and ratios are presented below as of September 30, 2020 and December 31, 2019 for Reliant Bancorp and the Bank.

Actual Regulatory CapitalMinimum Required Capital
Including Capital
Conservation Buffer
To Be Well Capitalized
Under Prompt Corrective
Action Provisions
AmountRatioAmountRatioAmountRatio
September 30, 2020
Reliant Bancorp
Tier I leverage$253,534 8.72 %$116,300 4.00 %$145,375 5.00 %
Common equity Tier 1241,786 9.77 %173,235 7.00 %160,861 6.50 %
Tier I risk-based capital253,534 10.25 %210,248 8.50 %197,880 8.00 %
Total risk-based capital332,434 13.44 %259,714 10.50 %247,347 10.00 %
Bank
Tier I leverage$304,376 10.48 %$116,174 4.00 %$145,218 5.00 %
Common equity Tier 1304,376 12.33 %172,801 7.00 %160,458 6.50 %
Tier I risk-based capital304,376 12.33 %209,829 8.50 %197,486 8.00 %
Total risk-based capital324,635 13.15 %259,214 10.50 %246,871 10.00 %
December 31, 2019
Reliant Bancorp
Tier I leverage$176,748 9.74 %$72,586 4.00 %$90,733 5.00 %
Common equity Tier 1165,063 10.55 %109,520 7.00 %101,698 6.50 %
Tier I risk-based capital176,748 11.30 %132,952 8.50 %125,131 8.00 %
Total risk-based capital249,751 15.97 %164,207 10.50 %156,388 10.00 %
Bank
Tier I leverage$186,734 10.30 %$72,518 4.00 %$90,648 5.00 %
Common equity Tier 1186,734 11.95 %109,384 7.00 %101,571 6.50 %
Tier I risk-based capital186,734 11.95 %132,823 8.50 %125,010 8.00 %
Total risk-based capital199,737 12.79 %163,975 10.50 %156,167 10.00 %
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Effects of Inflation and Changing Prices

The accompanying consolidated financial statements have been prepared in accordance with U.S. GAAP, which requires the measurement of financial positions and operating results in terms of historical dollars without considering the change in the relative purchasing power of money over time due to inflation. Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates generally have a more significant impact on the performance of a financial institution than the effects of general levels of inflation. Although interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services, increases in inflation generally have resulted in increased interest rates. In addition, inflation affects financial institutions’ cost of goods and services purchased, the cost of salaries and benefits, occupancy expense, and similar items. Inflation and related increases in interest rates generally decrease the market value of investments and loans held and may adversely affect liquidity, earnings, and shareholders’ equity. Commercial and other loan originations and refinancing tend to slow as interest rates increase, and can reduce our earnings from such activities.

Off-Balance Sheet Lending Arrangements

Off-balance sheet arrangements generally consist of unused lines of credit and standby letters of credit. Such commitments of the Company were as follows at September 30, 2020:
September 30, 2020
Unused lines of credit$534,971 
Standby letters of credit19,793 
Total commitments$554,764 

Other Off-Balance Sheet Arrangements

The Company utilizes interest rate swaps to mitigate interest rate risk. The total notional amount of swap agreements was $179,345 and $129,605, respectively, at September 30, 2020 and December 31, 2019. At September 30, 2020 and December 31, 2019, the contracts had negative fair values totaling $10,216 and $2,708, respectively.

Emerging Growth Company Status

Reliant Bancorp is presently an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and may take advantage of certain exemptions from various reporting requirements that are applicable to public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. In addition, even if Reliant Bancorp chooses to comply with the reporting requirements of public companies that are not emerging growth companies, Reliant Bancorp may avail itself of the reduced requirements applicable to emerging growth companies from time to time in the future, so long as Reliant Bancorp is an emerging growth company. Reliant Bancorp will remain an emerging growth company through the fiscal year ended December 31, 2020. Management cannot predict if investors will find Reliant Bancorp’s common stock less attractive because it will rely on these exemptions. If some investors find Reliant Bancorp’s common stock less attractive as a result, there may be a less active trading market for its common stock and Reliant Bancorp’s stock price may be more volatile.

Further, the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. Reliant Bancorp has elected to take advantage of the extended transition period that allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies, which means that the financial statements included in this filing, as well as certain financial statements we will file in the future, will be subject to all new or revised accounting standards generally applicable to private companies. As a result, we will comply with new or revised accounting standards to the same extent that compliance is required for non-public companies.
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Item 3.    Quantitative and Qualitative Disclosures About Market Risk.

This item is not applicable to smaller reporting companies.

Item 4.    Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Management, including our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported as and when required and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting during the quarter ended September 30, 2020, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION



Item 1.        Legal Proceedings.

Reliant Bancorp and its wholly-owned bank subsidiary, the Bank, are periodically involved as a plaintiff or defendant in various legal actions in the ordinary course of business. Neither Reliant Bancorp nor the Bank is involved in any litigation that is expected to have a material impact on our financial position or results of operations. Management believes that any claims pending against Reliant Bancorp or its subsidiaries are without merit or that the ultimate liability, if any, resulting from them will not materially affect the Bank’s financial condition or Reliant Bancorp’s consolidated financial position.

Item 1A.    Risk Factors.

There are no material changes from the risk factors set forth under Part I, Item 1A. "Risk Factors" in Reliant Bancorp's Annual Report on Form 10-K for the year ended December 31, 2019 as supplemented by Part II, Item 1A. "Risk Factors" in Reliant Bancorp's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020.


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

The following table contains information regarding shares of our common stock repurchased by Reliant Bancorp during the three months ended September 30, 2020.
Period
Total Number of Shares Purchased (1)
Average Price Paid Per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)
Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs (2) (in thousands)
July 1, 2020 to July 31, 2020$—$15,000
August 1, 2020 to August 31, 20206,799$14.66$15,000
September 1, 2020 to September 30, 2020545$14.70$15,000
Total7,344$14.67$15,000
(1)During the quarter ended September 30, 2020, 26,550 shares of restricted stock previously awarded to certain of the participants in our stock plans vested. We withheld 7,344 shares to satisfy tax withholding requirements associated with the vesting of these shares of restricted stock.

(2)On March 10, 2020, Reliant Bancorp's board of directors authorized a stock repurchase plan allowing Reliant Bancorp to repurchase up to $15 million of outstanding Reliant Bancorp common stock (the "Repurchase Plan"). As of September 30, 2020, Reliant Bancorp had not repurchased any shares of Reliant Bancorp common stock under the Repurchase Plan. The Repurchase Plan does not obligate Reliant Bancorp to repurchase any dollar amount or number of shares. The Repurchase Plan may be extended, modified, amended, suspended, or discontinued at any time. On April 27, 2020, we announced that our board of directors suspended the Repurchase Plan to preserve our financial strength during this challenging economic environment.

Item 3.         Defaults Upon Senior Securities.

Not applicable.


Item 4.         Mine Safety Disclosures.

Not applicable.

Item 5.         Other Information.

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None.
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Item 6.         Exhibits.
EXHIBIT INDEX 
Exhibit
No.
Description
 
101.INS*Inline XBRL Instance Document.
101.SCH*Inline XBRL Schema Documents.
  
101.CAL*Inline XBRL Calculation Linkbase Document.
101.LAB*Inline XBRL Label Linkbase Document.
101.PRE*Inline XBRL Presentation Linkbase Document.
101.DEF*Inline XBRL Definition Linkbase Document.
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*    Filed herewith.
**    Furnished herewith.
60

Table of Contents
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
RELIANT BANCORP, INC.
November 5, 2020/s/ DeVan D. Ard, Jr.
DeVan D. Ard, Jr.
Chairman and Chief Executive Officer
(Principal Executive Officer)
November 5, 2020/s/ Jerry Cooksey
Jerry Cooksey
Chief Financial Officer
(Principal Financial Officer)

61
Document

EXHIBIT 31.1


CERTIFICATIONS

I, DeVan D. Ard, Jr., certify that:
1.I have reviewed this report on Form 10-Q of Reliant Bancorp, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and



EXHIBIT 31.1

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
November 5, 2020/ s/ DeVan D. Ard, Jr.
DeVan D. Ard, Jr.
Chief Executive Officer
(Principal Executive Officer)



Document

EXHIBIT 31.2


CERTIFICATIONS

I, Jerry Cooksey, certify that:
1.I have reviewed this report on Form 10-Q of Reliant Bancorp, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and



EXHIBIT 31.2

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
November 5, 2020/ s/ Jerry Cooksey
Jerry Cooksey
Chief Financial Officer
(Principal Financial Officer)




Document

EXHIBIT 32.1


CERTIFICATIONS OF CEO AND CFO PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT

CERTIFICATIONS PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with the Quarterly Report of Reliant Bancorp, Inc., a Tennessee corporation (the “Company”), on Form 10-Q for the quarter ended September 30, 2020, as filed with the Securities and Exchange Commission (the “Report”), each of DeVan D. Ard, Jr., Chief Executive Officer of the Company, and Jerry Cooksey, Chief Financial Officer of the Company, do hereby certify, pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350), that to his knowledge:
(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
November 5, 2020/ s/ DeVan D. Ard, Jr.
DeVan D. Ard, Jr.
Chief Executive Officer
(Principal Executive Officer)
November 5, 2020
/ s/ Jerry Cooksey
Jerry Cooksey
Chief Financial Officer
(Principal Financial Officer)



v3.20.2
Cover Page - shares
9 Months Ended
Sep. 30, 2020
Nov. 03, 2020
Cover [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Sep. 30, 2020  
Document Transition Report false  
Entity File Number 001-37391  
Entity Registrant Name Reliant Bancorp, Inc.  
Entity Incorporation, State or Country Code TN  
Entity Tax Identification Number 37-1641316  
Entity Address, Address Line One 1736 Carothers Parkway,  
Entity Address, Address Line Two Suite 100,  
Entity Address, City or Town Brentwood,  
Entity Address, State or Province TN  
Entity Address, Postal Zip Code 37027  
City Area Code 615  
Local Phone Number 221-2020  
Title of 12(b) Security Common Stock, $1.00 par value per share  
Trading Symbol RBNC  
Security Exchange Name NASDAQ  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company true  
Entity Ex Transition Period false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   16,297,676
Entity Central Index Key 0001606440  
Current Fiscal Year End Date --12-31  
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q3  
Amendment Flag false  
v3.20.2
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Sep. 30, 2020
Dec. 31, 2019
ASSETS    
Cash and due from banks $ 14,050 $ 7,953
Interest-bearing deposits in financial institutions 61,349 43,644
Federal funds sold 12,273 52
Total cash and cash equivalents 87,672 51,649
Securities available for sale 273,893 260,293
Loans 2,357,898 1,409,952
Less: Allowance for loan losses (19,834) (12,578)
Loans, net 2,338,064 1,397,374
Mortgage loans held for sale, net 99,587 37,476
Accrued interest receivable 14,615 7,188
Premises and equipment, net 33,319 21,064
Operating leases right of use assets 14,619  
Restricted equity securities, at cost 17,367 11,279
Other real estate, net 1,326 750
Cash surrender value of life insurance contracts 68,109 46,632
Deferred tax assets, net 8,523 3,933
Goodwill 51,506 43,642
Core deposit intangibles 11,820 7,270
Other assets 24,092 13,292
TOTAL ASSETS 3,044,512 1,901,842
Deposits    
Noninterest-bearing demand 538,844 260,681
Interest-bearing demand 272,805 152,718
Savings and money market deposit accounts 813,001 408,724
Time 940,852 762,330
Total deposits 2,565,502 1,584,453
Accrued interest payable 3,744 2,022
Federal funds purchased 5,000 0
Subordinated debentures 70,389 70,883
Federal Home Loan Bank advances 40,555 10,737
Operating leases liabilities 15,756  
Other liabilities 36,480 9,994
TOTAL LIABILITIES 2,737,426 1,678,089
Preferred stock, $1 par value; 10,000,000 shares authorized, no shares issued to date 0 0
Common stock, $1 par value; 30,000,000 shares authorized; 16,634,572 and 11,206,254 shares issued and outstanding at September 30, 2020, and December 31, 2019, respectively 16,635 11,206
Additional paid-in capital 232,738 167,006
Retained earnings 55,206 40,472
Accumulated other comprehensive income 2,507 5,069
TOTAL SHAREHOLDERS’ EQUITY 307,086 223,753
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 3,044,512 $ 1,901,842
v3.20.2
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Sep. 30, 2020
Dec. 31, 2019
Statement of Financial Position [Abstract]    
Preferred stock, par value (in dollars per share) $ 1 $ 1
Preferred stock, shares authorized (in shares) 10,000,000 10,000,000
Preferred stock, shares issued (in shares) 0 0
Common stock, par value (in dollars per share) $ 1 $ 1
Common stock, shares authorized (in shares) 30,000,000 30,000,000
Common stock, shares issued (in shares) 16,634,572 11,206,254
Common stock, shares outstanding (in shares) 16,634,572 11,206,254
v3.20.2
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
INTEREST INCOME        
Interest and fees on loans $ 32,895 $ 17,502 $ 86,987 $ 50,631
Interest and fees on loans held for sale 1,037 263 2,412 614
Interest on investment securities, taxable 399 549 978 1,639
Interest on investment securities, nontaxable 1,186 1,576 3,874 4,944
Federal funds sold and other 250 321 738 918
TOTAL INTEREST INCOME 35,767 20,211 94,989 58,746
Deposits        
Demand 236 81 554 278
Savings and money market deposit accounts 1,162 976 3,668 3,156
Time 2,736 4,825 9,577 12,850
Federal Home Loan Bank advances and other 104 66 613 534
Subordinated debentures 992 199 2,967 590
TOTAL INTEREST EXPENSE 5,230 6,147 17,379 17,408
NET INTEREST INCOME 30,537 14,064 77,610 41,338
PROVISION FOR LOAN LOSSES 1,500 606 7,400 806
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 29,037 13,458 70,210 40,532
NONINTEREST INCOME        
Service charges on deposit accounts 1,583 976 4,172 2,796
Gains on mortgage loans sold, net 3,783 1,385 7,605 3,170
Gain on securities transactions, net 0 0 327 306
Other noninterest income 635 399 1,602 1,124
TOTAL NONINTEREST INCOME 6,001 2,760 13,706 7,396
NONINTEREST EXPENSE        
Salaries and employee benefits 12,184 7,634 33,885 22,605
Occupancy 2,054 1,359 5,566 4,069
Data processing and software 2,240 1,553 6,085 4,538
Professional fees 775 404 1,933 1,836
Regulatory Fees 365 (17) 1,356 596
Merger expenses 78 299 6,895 302
Other operating expense 2,637 1,815 6,476 4,973
TOTAL NONINTEREST EXPENSE 20,333 13,047 62,196 38,919
INCOME BEFORE PROVISION FOR INCOME TAXES 14,705 3,171 21,720 9,009
INCOME TAX EXPENSE 2,800 557 3,524 1,430
CONSOLIDATED NET INCOME 11,905 2,614 18,196 7,579
NONCONTROLLING INTEREST IN NET (INCOME) LOSS OF SUBSIDIARY (374) 1,386 990 4,484
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 11,531 $ 4,000 $ 19,186 $ 12,063
Basic net income attributable to common shareholders, per share (in dollars per share) $ 0.70 $ 0.36 $ 1.27 $ 1.07
Diluted net income attributable to common shareholders, per share (in dollars per share) $ 0.69 $ 0.36 $ 1.27 $ 1.07
v3.20.2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - UNAUDITED - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Statement of Comprehensive Income [Abstract]        
Consolidated net income $ 11,905 $ 2,614 $ 18,196 $ 7,579
Other comprehensive income (loss)        
Net unrealized gains on available-for-sale securities, net of tax of ($357) and ($973) for the three months ended September 30, 2020 and 2019, respectively, and ($864) and ($3,935) for the nine months ended September 30, 2020 and 2019, respectively 1,008 2,736 2,442 11,122
Net unrealized losses on interest rate swap derivatives net of tax of ($133) and $98 for the three months ended September 30, 2020 and 2019, respectively, and $1,685 and $569 for the nine months ended September 30, 2020 and 2019, respectively 375 (275) (4,762) (1,606)
Net unrealized losses on interest rate swap derivatives net of tax of ($133) and $98 for the three months ended September 30, 2020 and 2019, respectively, and $1,685 and $569 for the nine months ended September 30, 2020 and 2019, respectively   (275)   (1,606)
Reclassification adjustment for gains included in net income, net of tax of $0 and $0 for the three months ended September 30, 2020 and 2019, respectively, and $85 and $80 for the nine months ended September 30, 2020 and 2019, respectively 0 0 (242) (226)
TOTAL OTHER COMPREHENSIVE INCOME (LOSS) 1,383 2,461 (2,562) 9,290
TOTAL COMPREHENSIVE INCOME $ 13,288 $ 5,075 $ 15,634 $ 16,869
v3.20.2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - UNAUDITED (Parenthetical) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Statement of Comprehensive Income [Abstract]        
Net unrealized gains on available-for-sale securities, tax $ (357) $ (973) $ (864) $ (3,935)
Net unrealized loss on interest rate swap derivatives, tax (133) 98 1,685 569
Reclassification adjustment for gains included in net income, tax $ 0 $ 0 $ 85 $ 80
v3.20.2
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY - UNAUDITED - USD ($)
$ in Thousands
Total
Cumulative Effect, Period of Adoption, Adjustment
COMMON STOCK
ADDITIONAL PAID-IN CAPITAL
RETAINED EARNINGS
RETAINED EARNINGS
Cumulative Effect, Period of Adoption, Adjustment
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
NONCONTROLLING INTEREST
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Cumulative effect of lease standard adoption $ 208,414   $ 11,531 $ 173,238 $ 27,329   $ (3,684) $ 0
Balance (in shares) at Dec. 31, 2018     11,530,810          
Balance at Dec. 31, 2018 208,414   $ 11,531 173,238 27,329   (3,684) 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Stock based compensation expense 250     250        
Exercise of stock options (in shares)     2,183          
Exercise of stock options 28   $ 2 26        
Restricted stock awards (in shares)     3,000          
Restricted stock awards 0   $ 3 (3)        
Restricted stock forfeiture (in shares)     (3,750)          
Restricted stock forfeiture 1   $ (4) 4 1      
Common stock shares redeemed (in shares)     (29,958)          
Common stock shares redeemed (659)   $ (30) (629)        
Noncontrolling interest contributions 1,543             1,543
Cash dividend declared to common shareholders (1,035)       (1,035)      
Cumulative effect of lease standard adoption 215,119   $ 11,502 172,886 30,119   612 0
Net income (loss) 2,281       3,824     (1,543)
Other comprehensive income (loss) 4,296           4,296  
Balance (in shares) at Mar. 31, 2019     11,502,285          
Balance at Mar. 31, 2019 215,119   $ 11,502 172,886 30,119   612 0
Balance (in shares) at Dec. 31, 2018     11,530,810          
Balance at Dec. 31, 2018 208,414   $ 11,531 173,238 27,329   (3,684) 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Cumulative effect of lease standard adoption 219,652   $ 11,195 166,512 36,339   5,606 0
Net income (loss) 7,579              
Other comprehensive income (loss) 9,290              
Balance (in shares) at Sep. 30, 2019     11,195,062          
Balance at Sep. 30, 2019 219,652   $ 11,195 166,512 36,339   5,606 0
Balance (in shares) at Dec. 31, 2018     11,530,810          
Balance at Dec. 31, 2018 208,414   $ 11,531 173,238 27,329   (3,684) 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Cumulative effect of lease standard adoption $ 208,414 $ 100 $ 11,531 173,238 27,329 $ 100 (3,684) 0
Balance (in shares) at Dec. 31, 2019 11,206,254   11,206,254          
Balance at Dec. 31, 2019 $ 223,753 100 $ 11,206 167,006 40,472 100 5,069 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Accounting Standards Update [Extensible List] us-gaap:AccountingStandardsUpdate201602Member              
Cumulative effect of lease standard adoption $ 215,119   $ 11,502 172,886 30,119   612 0
Balance (in shares) at Mar. 31, 2019     11,502,285          
Balance at Mar. 31, 2019 215,119   $ 11,502 172,886 30,119   612 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Stock based compensation expense 280     280        
Exercise of stock options (in shares)     24,523          
Exercise of stock options 323   $ 25 298        
Employee stock purchase plan stock issuance (in shares)     4,728          
Employee Stock Purchase Plan stock issuance 90   $ 5 85        
Restricted stock awards (in shares)     5,000          
Restricted stock awards 0   $ 5 (5)        
Restricted stock and dividend forfeiture (in shares)     (4,000)          
Restricted stock and dividend forfeiture 0   $ (4) 4        
Common stock shares redeemed (in shares)     (335,973)          
Common stock shares redeemed (7,632)   $ (336) (7,296)        
Noncontrolling interest contributions 1,555             1,555
Cash dividend declared to common shareholders (1,009)       (1,009)      
Cumulative effect of lease standard adoption 213,943   $ 11,197 166,252 33,349   3,145 0
Net income (loss) 2,684       4,239     (1,555)
Other comprehensive income (loss) 2,533           2,533  
Balance (in shares) at Jun. 30, 2019     11,196,563          
Balance at Jun. 30, 2019 213,943   $ 11,197 166,252 33,349   3,145 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Cumulative effect of lease standard adoption 213,943   $ 11,197 166,252 33,349   3,145 0
Stock based compensation expense 337     337        
Exercise of stock options (in shares)     600          
Exercise of stock options 9   $ 1 8        
Restricted stock awards (in shares)     1,500          
Restricted stock awards 0   $ 1 (1)        
Restricted shares withheld for taxes (in shares)     (3,601)          
Restricted shares withheld for taxes 88   $ 4 84        
Noncontrolling interest contributions 1,386             1,386
Cash dividend declared to common shareholders (1,010)       (1,010)      
Cumulative effect of lease standard adoption 219,652   $ 11,195 166,512 36,339   5,606 0
Net income (loss) 2,614       4,000     (1,386)
Other comprehensive income (loss) 2,461           2,461  
Balance (in shares) at Sep. 30, 2019     11,195,062          
Balance at Sep. 30, 2019 219,652   $ 11,195 166,512 36,339   5,606 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Cumulative effect of lease standard adoption 219,652   11,195 166,512 36,339   5,606 0
Cumulative effect of lease standard adoption $ 223,753 100 $ 11,206 167,006 40,472 100 5,069 0
Balance (in shares) at Dec. 31, 2019 11,206,254   11,206,254          
Balance at Dec. 31, 2019 $ 223,753 100 $ 11,206 167,006 40,472 100 5,069 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Stock based compensation expense 349     349        
Exercise of stock options (in shares)     868          
Exercise of stock options 8   $ 1 7        
Restricted stock and dividend forfeiture (in shares)     (3,837)          
Restricted stock and dividend forfeiture (73)   $ (4) (69)        
Conversion shares issued to shareholders (in shares)     811,210          
Conversion shares issued to shareholders 18,041   $ 811 17,230        
Noncontrolling interest contributions 976             976
Cash dividend declared to common shareholders (1,207)       (1,207)      
Cumulative effect of lease standard adoption 234,672 100 $ 12,014 184,523 39,150 100 (1,015) 0
Net income (loss) (1,191)       (215)     (976)
Other comprehensive income (loss) (6,084)           (6,084)  
Balance (in shares) at Mar. 31, 2020     12,014,495          
Balance at Mar. 31, 2020 $ 234,672   $ 12,014 184,523 39,150   (1,015) 0
Balance (in shares) at Dec. 31, 2019 11,206,254   11,206,254          
Balance at Dec. 31, 2019 $ 223,753 100 $ 11,206 167,006 40,472 100 5,069 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Exercise of stock options (in shares) 6,544              
Cumulative effect of lease standard adoption $ 307,086 $ 100 $ 16,635 232,738 55,206 $ 100 2,507 0
Net income (loss) 18,196              
Other comprehensive income (loss) $ (2,562)              
Balance (in shares) at Sep. 30, 2020 16,634,572   16,634,572          
Balance at Sep. 30, 2020 $ 307,086   $ 16,635 232,738 55,206   2,507 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Accounting Standards Update [Extensible List] us-gaap:AccountingStandardsUpdate201602Member              
Cumulative effect of lease standard adoption $ 234,672   $ 12,014 184,523 39,150   (1,015) 0
Balance (in shares) at Mar. 31, 2020     12,014,495          
Balance at Mar. 31, 2020 234,672   $ 12,014 184,523 39,150   (1,015) 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Stock based compensation expense 485     485        
Exercise of stock options (in shares)     1,021          
Exercise of stock options 15   $ 1 14        
Employee stock purchase plan stock issuance (in shares)     8,344          
Employee Stock Purchase Plan stock issuance 116   $ 8 108        
Restricted stock awards (in shares)     3,022          
Restricted stock awards 0   $ 3 (3)        
Restricted stock and dividend forfeiture (in shares)     (1,697)          
Restricted stock and dividend forfeiture 0   $ (1) 1        
Conversion shares issued to shareholders (in shares)     4,606,419          
Conversion shares issued to shareholders 51,915   $ 4,607 47,308        
Noncontrolling interest contributions 388             388
Cash dividend declared to common shareholders (1,667)       (1,667)      
Cumulative effect of lease standard adoption 295,543   $ 16,632 232,436 45,351   1,124 0
Net income (loss) 7,480       7,868     (388)
Other comprehensive income (loss) 2,139           2,139  
Balance (in shares) at Jun. 30, 2020     16,631,604          
Balance at Jun. 30, 2020 295,543   $ 16,632 232,436 45,351   1,124 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Cumulative effect of lease standard adoption 295,543   $ 16,632 232,436 45,351   1,124 0
Stock based compensation expense 349     349        
Exercise of stock options (in shares)     4,655          
Exercise of stock options 66   $ 5 61        
Restricted stock units vesting, net of taxes withheld (in shares)     8,030          
Restricted stock units vesting, net of taxes withheld (6)   $ 8 (14)        
Restricted stock and dividend forfeiture (in shares)     (9,717)          
Restricted stock and dividend forfeiture (103)   $ (10) (94)        
Noncontrolling interest contributions (374)             (374)
Cash dividend declared to common shareholders (1,676)       (1,676)      
Cumulative effect of lease standard adoption 307,086   $ 16,635 232,738 55,206   2,507 0
Net income (loss) 11,905       11,531     374
Other comprehensive income (loss) $ 1,383           1,383  
Balance (in shares) at Sep. 30, 2020 16,634,572   16,634,572          
Balance at Sep. 30, 2020 $ 307,086   $ 16,635 232,738 55,206   2,507 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Cumulative effect of lease standard adoption $ 307,086   $ 16,635 $ 232,738 $ 55,206   $ 2,507 $ 0
v3.20.2
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY - UNAUDITED (Parenthetical) - $ / shares
3 Months Ended
Sep. 30, 2020
Jun. 30, 2020
Mar. 31, 2020
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Statement of Stockholders' Equity [Abstract]            
Cash dividends declared to common shareholders (in dollars per share) $ 0.10 $ 0.10 $ 0.10 $ 0.09 $ 0.09 $ 0.09
v3.20.2
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED - USD ($)
$ in Thousands
9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
OPERATING ACTIVITIES    
Consolidated net income $ 18,196 $ 7,579
Adjustments to reconcile consolidated net income to net cash (used in) provided by operating activities    
Provision for loan losses 7,400 806
Deferred income taxes 2,003 3,686
Gain on disposal of premises and equipment (1) 0
Depreciation and amortization of premises and equipment 2,084 1,486
Net amortization of securities 1,980 2,302
Net realized gains on sales of securities (327) (306)
Gains on mortgage loans sold, net (7,605) (3,170)
Stock-based compensation expense 1,183 867
Gain on other real estate (24) 0
Increase in cash surrender value of life insurance contracts (1,073) (838)
Mortgage loans originated for resale (327,521) (106,520)
Proceeds from sale of mortgage loans 278,893 108,756
Cash payments arising from operating leases 2,327  
Other accretion, net of other amortization (10,748) (477)
Change in    
Accrued interest receivable (4,094) 726
Other assets (4,535) 508
Accrued interest payable (526) 547
Other liabilities 6,497 (6,392)
TOTAL ADJUSTMENTS (54,087) 1,981
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (35,891) 9,560
INVESTING ACTIVITIES    
Cash used to convert shares, and redeem stock options and fractional shares, net of cash received (8,500) 0
Activities in available for sale securities    
Purchases (31,179) (47,870)
Proceeds 103,901 52,434
Maturities, prepayments and calls 10,370 8,587
(Purchases) redemptions of restricted equity securities (1,867) 411
Net increase in loans (146,777) (118,758)
Purchase of premises and equipment (2,709) (843)
Proceeds from sale of premises and equipment 257 0
Proceeds from sale of other real estate 2,273 0
NET CASH USED IN INVESTING ACTIVITIES (74,231) (106,039)
FINANCING ACTIVITIES    
Net change in deposits 163,839 172,741
Proceeds from Federal Home Loan Bank Advances 444,000 163,824
Payments on Federal Home Loan Bank Advances (463,156) (217,353)
Proceeds from Federal Funds Purchased 5,000 0
Issuance of common stock, net of repurchase of restricted shares (177) 272
Issuance of common stock related to exercise of stock options and ESPP 199 90
Redemption of common stock 0 (8,291)
Noncontrolling interest contributions received 990 4,415
Cash dividends paid on common stock (4,550) (3,077)
NET CASH PROVIDED BY FINANCING ACTIVITIES 146,145 112,621
NET CHANGE IN CASH AND CASH EQUIVALENTS 36,023 16,142
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 51,649 35,178
CASH AND CASH EQUIVALENTS - END OF PERIOD 87,672 51,320
Cash paid during the period for    
Interest 20,508 16,861
Taxes 4,565 1,607
Non-cash investing and financing activities    
Change in due to/from noncontrolling interest 990 4,484
Acquired bank facilities no longer in use transferred to other real estate owned and foreclosed assets from premises and equipment 2,420 0
Loans foreclosed and transferred to other real estate owned and foreclosed assets $ 197 $ 943
v3.20.2
Summary of Significant Accounting Policies
9 Months Ended
Sep. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations

Reliant Bancorp, Inc. is a Tennessee corporation and the holding company for and the sole shareholder of Reliant Bank (the "Bank"), collectively, "the Company". Reliant Bancorp is registered as a financial holding company under the Bank Holding Company Act of 1956, as amended ("Bank Holding Company Act"). Reliant Bank is a commercial bank chartered under Tennessee law and a member of the Federal Reserve System (the "Federal Reserve"). The Bank provides a full range of traditional banking products and services to business and consumer clients throughout Middle Tennessee.

Reliant Risk Management, Inc., a wholly-owned insurance captive subsidiary of Reliant Bancorp, that began operations on June 1, 2020, is a Tennessee-based captive insurance company which insures Reliant Bancorp and the Bank against certain risks unique to their operations and for which insurance may not be currently available or economically feasible in today's insurance marketplace. Reliant Risk Management, Inc. pools resources with several other similar insurance company subsidiaries of financial institutions to spread a limited amount of risk among themselves. Reliant Risk Management, Inc. is subject to regulations of the State of Tennessee and undergoes periodic examinations by the Tennessee Department of Commerce and Insurance.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with instructions to Quarterly Report on Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"). All adjustments consisting of normally recurring accruals that, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations for the periods covered by the report have been included.  The accompanying unaudited consolidated financial statements should be read in conjunction with the Company's consolidated financial statements and related notes appearing in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

The consolidated financial statements as of and for the periods presented include Reliant Bancorp, Inc., its wholly-owned direct and indirect subsidiaries and Reliant Mortgage Ventures, LLC ("RMV"), of which the Bank controls 51% of the governance rights. As described in Note 12 to these unaudited consolidated financial statements, Reliant Bancorp, Inc. and TCB Holdings merged effective on January 1, 2020, and Reliant Bancorp, Inc. and FABK merged effective April 1, 2020.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions based on available information. These estimates and assumptions 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 reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to determination of the allowance for loan losses, the valuation of other real estate, the valuation of debt and equity securities, the valuation of deferred tax assets and fair values of financial instruments.

The consolidated financial statements as of September 30, 2020, and for the three and nine months ended September 30, 2020 and 2019, included herein have not been audited. The accounting and reporting policies of the Company conform to U.S. GAAP and Article 8 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, although the Company believes that the disclosures made are adequate to make the information not misleading.

The accompanying consolidated financial statements reflect all adjustments which, in the opinion of management, are necessary to present a fair statement of the results for the interim periods presented. Such adjustments are of a normal recurring nature. The Company evaluates subsequent events through the date of filing. Certain prior period amounts have been reclassified to
conform to the current period presentation. The results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.

Recently Adopted Accounting Pronouncements

Information about certain issued accounting standards updates is presented below. Also refer to Note 1 - Summary of Significant Accounting Policies, “Recent Authoritative Accounting Guidance” in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 for additional information related to previously issued accounting standards updates.

ASU 2016-02, “Leases (Topic 842).” ASU 2016-02 requires lessees to recognize a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis, and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 went into effect for the Company on January 1, 2020 and the Company elected the prospective application approach provided by ASU 2018-11 and did not adjust prior periods for ASC 842. The Company also elected certain practical expedients within the standard and consistent with such elections did not reassess whether any expired or existing contracts are or contain leases, did not reassess the lease classification for any expired or existing leases, and did not reassess any initial direct costs for existing leases. The effect of implementing this pronouncement resulted in right to use assets of $11,973 and a similar corresponding liability, as of January 1, 2020.

ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment.” ASU 2017-04 eliminates Step 2 from the goodwill impairment test which required entities to compute the implied fair value of goodwill. Under ASU 2017-04, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 was early adopted as of January 1, 2020 and did not have a significant impact on the Company's consolidated financial statements as it simplifies the test of impairment of goodwill.

ASU 2020-04, "Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting." In March 2020, the FASB issued Topic 848 amendments to provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. It provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update are effective for all entities as of March 12, 2020 through December 31, 2022. The Company has evaluated the effect of the pronouncement on the consolidated financial statements, noting no significant impact.

Newly Issued not yet Effective Accounting Standards

ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts and requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In addition, ASU 2016-13 amends the accounting for credit losses on available for sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 is expected to be effective for the Company on January 1, 2023. We are currently evaluating the potential impact of ASU 2016-13 on the Company's financial statements by developing an implementation plan to include assessment of processes, portfolio segmentation, model development, system requirements and the identification of data and resource needs, among other things. The adoption of ASU 2016-13 could result in an increase in the allowance for loan losses as a result of changing from an “incurred loss” model, which encompasses allowances for current known and inherent losses within the portfolio, to an “expected loss” model, which encompasses allowances for losses expected to be incurred over the life of the portfolio. Furthermore, ASU 2016-13 will necessitate that we establish an allowance for expected credit losses for certain debt securities and other financial assets. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Financial Instruments - Credit Losses (ASC 326), Derivatives and Hedging (ASC 815), and Financial Instruments (ASC 825). The amendments in this ASU improve the codification by eliminating inconsistencies and providing clarifications. The amended guidance in this ASU related to credit losses is expected to be effective for the Company in conjunction with the adoption of the standard on January 1, 2023. The Company is currently evaluating the impact of these ASUs on the Company’s consolidated financial statements. While we are currently unable to
reasonably estimate the impact of adopting these ASUs, we expect that the impact of adoption will be significantly influenced by the composition, characteristics and quality of the Company's loan and securities portfolios as well as the prevailing economic conditions and forecasts as of the adoption date.
v3.20.2
Securities
9 Months Ended
Sep. 30, 2020
Investments, Debt and Equity Securities [Abstract]  
SECURITIES SECURITIES
The amortized cost and fair value of available for sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income at September 30, 2020 and December 31, 2019 were as follows:
September 30, 2020
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
U. S. Treasury and other U. S. government agencies$12,117 $$(1)$12,117 
State and municipal175,976 14,717 (70)190,623 
Corporate bonds15,750 167 (108)15,809 
Mortgage-backed securities 41,240 348 (1,212)40,376 
Asset-backed securities15,199 — (231)14,968
Total$260,282 $15,233 $(1,622)$273,893 

December 31, 2019
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
U. S. Treasury and other U. S. government agencies$59 $— $— $59 
State and municipal186,283 10,413 (36)196,660 
Corporate bonds7,880 97 (132)7,845 
Mortgage-backed securities 38,126 296 (661)37,761 
Asset-backed securities18,374 — (406)17,968 
Total$250,722 $10,806 $(1,235)$260,293 

Securities pledged at September 30, 2020 and December 31, 2019 had a carrying amount of $43,406 and $46,918, respectively, and were pledged to collateralize Federal Home Loan Bank ("FHLB") advances, Federal Reserve Bank ("FRB") advances and municipal deposits.

The fair values of available for sale debt securities at September 30, 2020 by contractual maturity are provided below. Actual maturities may differ from contractual maturities for mortgage- and asset-backed securities since the underlying asset may be called or prepaid with or without penalty. Securities not due at a single maturity date are shown separately.

Results from sales of securities were as follows:
Nine months ended
September 30, 2020September 30, 2019
Proceeds$103,901 $52,434 
Gross gains810 475 
Gross losses(483)(169)
Amortized
Cost
Estimated
Fair Value
Due within one year$12,567 $12,565 
Due in one to five years2,175 2,186 
Due in five to ten years17,222 17,965 
Due after ten years171,879 185,833 
Mortgage-backed securities41,240 40,376 
Asset-backed securities15,199 14,968 
Total$260,282 $273,893 

The following table shows available for sale securities with unrealized losses and their estimated fair value aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2020 and December 31, 2019, respectively:
Less than 12 months12 months or moreTotal
Estimated
Fair Value
Unrealized
Loss
Estimated
Fair Value
Unrealized
Loss
Estimated
Fair Value
Unrealized
Loss
September 30, 2020
U. S. Treasury and other
U. S. government agencies
$12,066 $$— $— $12,066 $
State and municipal7,319 70 — — 7,319 70 
Corporate bonds9,142 107 500 9,642 108 
Mortgage-backed securities 6,613 282 20,982 930 27,595 1,212 
Asset-backed securities790 14,092 230 14,882 231 
Total temporarily impaired$35,930 $461 $35,574 $1,161 $71,504 $1,622 

December 31, 2019
U. S. Treasury and other
U. S. government agencies
$— $— $— $— $— $— 
State and municipal1,960 36 — — 1,960 36 
Corporate bonds— — 2,499 132 2,499 132 
Mortgage-backed securities 16,104 286 9,081 375 25,185 661 
Asset-backed securities— — 17,682 406 17,682 406 
Total temporarily impaired$18,064 $322 $29,262 $913 $47,326 $1,235 

Management has the intent and ability to hold all securities in an unrealized loss position for the foreseeable future, and the decline in fair value is largely due to changes in interest rates. As the fair value is expected to recover as the securities approach their maturity date and/or market rates decline, we do not consider these securities to be other-than-temporarily impaired at September 30, 2020. There were 43 and 47 securities in an unrealized loss position as of September 30, 2020 and December 31, 2019, respectively.
v3.20.2
Loans and Allowance for Loan Losses
9 Months Ended
Sep. 30, 2020
Receivables [Abstract]  
LOANS AND ALLOWANCE FOR LOAN LOSSES LOANS AND ALLOWANCE FOR LOAN LOSSES
Loans at September 30, 2020 and December 31, 2019 were comprised as follows:
September 30,
2020
December 31, 2019
Commercial, Industrial and Agricultural$477,785 $245,515 
Real Estate
    1-4 Family Residential334,730 227,529 
    1-4 Family HELOC101,492 96,228 
    Multi-family and Commercial864,756 536,845 
    Construction, Land Development and Farmland366,760 273,872 
Consumer209,071 16,855 
Other8,259 13,180 
Gross loans2,362,853 1,410,024 
    Less: Deferred loan fees 4,955 72 
    Less: Allowance for loan losses19,834 12,578 
Loans, net$2,338,064 $1,397,374 

Activity in the allowance for loan losses by portfolio segment was as follows for the three months ended September 30, 2020 and September 30, 2019, respectively:

Commercial Industrial and AgriculturalMulti-family
and
Commercial
Real Estate
Construction
Land
Development and Farmland
1-4 Family
Residential
Real Estate
1-4 Family HELOCConsumerOtherTotal
Beginning balance at June 30, 2020
$4,675 $8,407 $2,126 $1,454 $975 $584 $16 $18,237 
Charge-offs— — — (8)— (60)— (68)
Recoveries88 22 12 30 — 165 
Provision249 (169)(175)821 498 272 1,500 
Ending balance at
September 30, 2020
$5,012 $8,247 $1,955 $2,289 $1,485 $826 $20 $19,834 

Beginning balance at June 30, 2019
$1,881 $4,713 $2,707 $1,455 $686 $188 $36 $11,666 
Charge-offs(2)— — (12)— (16)(21)(51)
Recoveries48 (201)— 16 200 70 
Provision372 472 (64)18 (18)(181)606 
Ending balance at
September 30, 2019
$2,299 $5,188 $2,513 $1,383 $704 $170 $34 $12,291 
Activity in the allowance for loan losses by portfolio segment was as follows for the nine months ended September 30, 2020 and September 30, 2019, respectively:
Commercial Industrial and AgriculturalMulti-family
and
Commercial
Real Estate
Construction
Land
Development and Farmland
1-4 Family
Residential
Real Estate
1-4 Family HELOCConsumerOtherTotal
Beginning balance at December 31, 2019$2,529 $5,285 $2,649 $1,280 $624 $177 $34 $12,578 
Charge-offs(507)— (114)(68)(98)(355)— (1,142)
Recoveries126 20 769 15 60 — 998 
Provision2,864 2,942 (588)308 944 944 (14)7,400 
Ending balance at
September 30, 2020
$5,012 $8,247 $1,955 $2,289 $1,485 $826 $20 $19,834 

Beginning balance at December 31, 2018$1,751 $4,429 $2,500 $1,333 $656 $184 $39 $10,892 
Charge-offs(170)— — (29)— (37)(34)(270)
Recoveries342 62 — 220 11 28 200 863 
Provision376 697 13 (141)37 (5)(171)806 
Ending balance at
September 30, 2019
$2,299 $5,188 $2,513 $1,383 $704 $170 $34 $12,291 

The allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of September 30, 2020 were as follows:
Commercial Industrial and AgriculturalMulti-family
and
Commercial
Real Estate
Construction
Land
Development and Farmland
1-4 Family
Residential
Real Estate
1-4 Family HELOCConsumerOtherTotal
Allowance for loan losses
Individually evaluated for impairment$764 $— $— $— $— $— $— $764 
Acquired with credit impairment— — — — — — — — 
Collectively evaluated for impairment 4,248 8,247 1,955 2,289 1,485 82620 19,070 
Total$5,012 $8,247 $1,955 $2,289 $1,485 $826 $20 $19,834 
Loans
Individually evaluated for impairment$1,084 $2,537 $1,777 $1,687 $316 $592 $— $7,993 
Acquired with credit impairment257 1,211 787 934 14 1,330 — 4,533 
Collectively evaluated for impairment 476,444 861,008 364,196 332,109 101,162 207,1498,259 2,350,327 
Total$477,785 $864,756 $366,760 $334,730 $101,492 $209,071 $8,259 $2,362,853 
 
The allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2019 were as follows:
Commercial Industrial and AgriculturalMulti-family
and
Commercial
Real Estate
Construction
Land
Development and Farmland
1-4 Family
Residential
Real Estate
1-4 Family HELOCConsumerOtherTotal
Allowance for loan losses
Individually evaluated for impairment$755 $— $17 $— $— $— $— $772 
Acquired with credit impairment— — — — — — — — 
Collectively evaluated for impairment 1,774 5,285 2,632 1,280 624 177 34 11,806 
Total$2,529 $5,285 $2,649 $1,280 $624 $177 $34 $12,578 
Loans
Individually evaluated for impairment$1,154 $3,439 $1,217 $1,536 $374 $28 $— $7,748 
Acquired with credit impairment— 215 813 195 — — — 1,223 
Collectively evaluated for impairment 244,361 533,191 271,842 225,798 95,854 16,827 13,180 1,401,053 
Total$245,515 $536,845 $273,872 $227,529 $96,228 $16,855 $13,180 $1,410,024 



Non-accrual loans by class of loan were as follows at September 30, 2020 and December 31, 2019:
September 30, 2020December 31, 2019
Commercial, Industrial and Agricultural$791 $572 
Multi-family and Commercial Real Estate1,532 1,276 
Construction, Land Development and Farmland1,100 555 
1-4 Family Residential Real Estate1,591 1,344 
1-4 Family HELOC239 296 
Consumer1,485 28 
Total$6,738 $4,071 

Performing non-accrual loans totaled $2,926 and $1,332 at September 30, 2020 and December 31, 2019, respectively.
Individually impaired loans by class of loans were as follows at September 30, 2020:
Unpaid
Principal
Balance
Recorded
Investment
with no
Allowance for Loan Losses
Recorded
Recorded
Investment
with
Allowance for Loan Losses
Recorded
Total
Recorded
Investment
Related
Allowance for Loan Losses
Commercial, Industrial and Agricultural$2,575 $436 $905 $1,341 $764 
Multi-family and Commercial Real Estate5,837 3,748 — 3,748 — 
Construction, Land Development and Farmland3,032 2,564 — 2,564 — 
1-4 Family Residential Real Estate3,322 2,621 — 2,621 — 
1-4 Family HELOC436 330 — 330 — 
Consumer3,819 1,922 — 1,922 — 
Total $19,021 $11,621 $905 $12,526 $764 

Individually impaired loans by class of loans were as follows at December 31, 2019:
Unpaid
Principal
Balance
Recorded
Investment
with no
Allowance for Loan Losses
Recorded
Recorded
Investment
with
Allowance for Loan Losses
Recorded
Total
Recorded
Investment
Related
Allowance for Loan Losses
Commercial, Industrial and Agricultural$1,154 $$1,149 $1,154 $755 
Multi-family and Commercial Real Estate3,746 3,654 — 3,654 — 
Construction, Land Development and Farmland2,347 1,859 171 2,030 17 
1-4 Family Residential Real Estate1,852 1,731 — 1,731 — 
1-4 Family HELOC376 374 — 374 — 
Consumer31 28 — 28 — 
Total $9,506 $7,651 $1,320 $8,971 $772 
The average balances of impaired loans and the interest income recognized for the three and nine months ended September 30, 2020 and 2019 were as follows:
Three Months Ended September 30,
Nine Months Ended September 30,
2020201920202019
Average Recorded InvestmentInterest Income RecognizedAverage Recorded InvestmentInterest Income RecognizedAverage Recorded InvestmentInterest Income RecognizedAverage Recorded InvestmentInterest Income Recognized
Impaired loans with an allowance
Commercial, Industrial and Agricultural$947 $6$2,435 $112$975 $32$1,384 $342
Multi-family and Commercial Real Estate— — — — — — — — 
Construction, Land Development and Farmland— — 172 — 43 — 172 — 
1-4 Family Residential Real Estate— — — — — — — — 
1-4 Family HELOC— — 25 — — — 13 
Consumer— — — — — — — 
Subtotal947 2,631 112 1,019 32 1,568 343 
Impaired loans with no allowance
Commercial, Industrial and Agricultural594 42 672 356 56 537 33 
Multi-family and Commercial Real Estate4,375 63 3,474 46 4,138 278 2,838 141 
Construction, Land Development and Farmland2,949 28 1,797 21 2,471 115 2,399 168 
1-4 Family Residential Real Estate3,002 54 2,124 26 2,631 154 1,924 88 
1-4 Family HELOC331 — 296 — 367 — 148 
Consumer2,118 68 15 1,076 205 16 
Subtotal$13,369 $255$8,378 $103$11,039 $808$7,862 $436 
Total$14,316 $261 $11,009 $215 $12,058 $840$9,430 $779 

The Company utilizes a risk grading system to monitor the credit quality of the Company’s commercial loan portfolio which consists of commercial, industrial and agricultural, commercial real estate and construction loans. Loans are graded on a scale of 1 to 9. Grades 1 to 5 are pass credits, grade 6 is special mention, grade 7 is substandard, grade 8 is doubtful and grade 9 is loss. A description of the risk grades are as follows:

    Grade 6 - Special Mention
Special mention assets have potential weaknesses that may, if not checked or corrected, weaken the asset or inadequately protect the Company’s position at some future date. These assets pose elevated risk, but their weakness does not yet justify a substandard classification. Borrowers may be experiencing adverse operating trends (declining revenues or margins) or an ill proportioned balance sheet (e.g., increasing inventory without an increase in sales, high leverage, tight liquidity). Adverse economic or market conditions, such as interest rate increases or the entry of a new competitor, may also support a special mention rating. Nonfinancial reasons for rating a credit exposure special mention include management problems, pending litigation, an ineffective loan agreement or other material structural weakness, and any other significant deviation from prudent lending practices. The special mention rating is designed to identify a specific level of risk and concern about asset quality. Although a special mention asset has a higher probability of default than a pass asset, its default is not imminent.

    Grade 7 - Substandard
A ‘‘substandard’’ extension of credit is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Extensions of credit so classified should have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard credits, does not have to exist in individual extensions of credit classified substandard. Substandard assets have a high probability of payment default, or they have other well-defined weaknesses. They require more intensive supervision by Company management. Substandard assets are generally characterized by
current or expected unprofitable operations, inadequate debt service coverage, inadequate liquidity, or marginal capitalization. Repayment may depend on collateral or other credit risk mitigation.
    
Grade 8 - Doubtful
An extension of credit classified ‘‘doubtful’’ has all the weaknesses inherent in one classified substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors that may work to the advantage of and strengthen the credit, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors may include a proposed merger or acquisition, liquidation proceedings, capital injection, perfecting liens on additional collateral, or refinancing plans. Generally, the doubtful classification should not extend for a long period of time because in most cases the pending factors or events that warranted the doubtful classification should be resolved either positively or negatively in a reasonable period of time.

    Grade 9 - Loss
Extensions of credit classified ‘‘loss’’ are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the credit has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be effected in the future. Amounts classified loss should be promptly charged off. The Company will not attempt long term recoveries while the credit remains on the Company’s books. Losses should be taken in the period in which they surface as uncollectible. With loss assets, the underlying borrowers are often in bankruptcy, have formally suspended debt repayments, or have otherwise ceased normal business operations. Once an asset is classified loss, there is little prospect of collecting either its principal or interest.

Loans not falling in the criteria above are considered to be pass-rated loans.

Non-commercial purpose loans are initially assigned a default loan grade of 99 (Pass) and are risk graded (Grade 6, 7, or 8) according to delinquency status when applicable.

Credit quality indicators by class of loan were as follows at September 30, 2020:
PassSpecial
Mention
SubstandardTotal
Commercial, Industrial and Agricultural$474,199 $1,534 $2,052 $477,785 
1-4 Family Residential Real Estate331,930 2,795 334,730 
1-4 Family HELOC101,176 — 316 101,492 
Multi-family and Commercial Real Estate859,739 663 4,354 864,756 
Construction, Land Development and Farmland365,135 — 1,625 366,760 
Consumer 207,016 2,048 209,071 
Other6,739 1,520 — 8,259 
Total $2,345,934 $3,729 $13,190 $2,362,853 
Credit quality indicators by class of loan were as follows at December 31, 2019:
PassSpecial
Mention
SubstandardTotal
Commercial, Industrial and Agricultural$241,089 $2,382 $2,044 $245,515 
1-4 Family Residential Real Estate225,809 — 1,720 227,529 
1-4 Family HELOC95,678 — 550 96,228 
Multi-family and Commercial Real Estate531,055 1,519 4,271 536,845 
Construction, Land Development and Farmland272,440 — 1,432 273,872 
Consumer 16,634 — 221 16,855 
Other13,180 — — 13,180 
Total $1,395,885 $3,901 $10,238 $1,410,024 

None of the Company's loans had a risk rating of "Doubtful" or "Loss" as of September 30, 2020 or December 31, 2019.

Past due status by class of loan was as follows at September 30, 2020:
30-59 Days
Past Due
60-89 Days
Past Due
90+ Days
Past Due
Total
Past Due
CurrentTotal Loans
Commercial, Industrial and Agricultural$219 $— $412 $631 $477,154 $477,785 
1-4 Family Residential Real Estate1,006 544 318 1,868 332,862 334,730 
1-4 Family HELOC— — 198 198 101,294 101,492 
Multi-family and Commercial Real Estate— — 1,023 1,023 863,733 864,756 
Construction, Land Development and Farmland— 684 205 889 365,871 366,760 
Consumer 389 767 617 1,773 207,298 209,071 
Other— — — — 8,259 8,259 
Total$1,614 $1,995 $2,773 $6,382 $2,356,471 $2,362,853 

Past due status by class of loan was as follows at December 31, 2019:
30-59 Days
Past Due
60-89 Days
Past Due
90+ Days
Past Due
Total
Past Due
CurrentTotal Loans
Commercial, Industrial and Agricultural$79 $$572 $655 $244,860 $245,515 
1-4 Family Residential Real Estate501 236 229 966 226,563 227,529 
1-4 Family HELOC— — 296 296 95,932 96,228 
Multi-family and Commercial Real Estate485 — 558 1,043 535,802 536,845 
Construction, Land Development and Farmland255 — 339 594 273,278 273,872 
Consumer 38 26 64 128 16,727 16,855 
Other— — — — 13,180 13,180 
Total$1,358 $266 $2,058 $3,682 $1,406,342 $1,410,024 

There was one loan past due 90 days or more and still accruing interest at September 30, 2020 totaling $38. At December 31, 2019, there was one loan totaling $64 past due 90 days or more and still accruing interest.
The following table presents loans by class modified as troubled debt restructurings ("TDRs") during the first nine months of 2020. There were no modifications in the three months ending September 30, 2020. There were no loans that were modified as TDRs during the three or nine months ended September 30, 2019.
Number of ContractsPre-Modification Outstanding Recorded InvestmentsPost-Modification Outstanding Recorded Investments
September 30, 2020
Commercial, Industrial and Agricultural$150 $150 
Multi-family and Commercial Real Estate721 721 
1-4 Family Residential394 394 
Total$1,265 $1,265 

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was signed into law on March 27, 2020, and subsequent regulatory guidance provide that financial institutions may elect to account for certain loan modifications due to COVID-19 as not TDRs. The Company had applied this guidance to approve initial modifications in April and May 2020 for loans with principal balances of $530.7 million. The majority of these modifications were for a period of up to three months and contained either interest-only periods or full payment deferrals. Through September 30, 2020, further modifications were approved for $21.8 million of the loans previously modified. Additional modifications of these loans are likely to be executed in the fourth quarter of 2020.

The CARES Act provides over $2.0 trillion in emergency economic relief to individuals and businesses impacted by the COVID-19 pandemic. The CARES Act authorized the Small Business Administration (“SBA”) to administer new loan programs including, but not limited to, the guarantee of loans under a new 7(a) loan program called the Paycheck Protection Program (“PPP”). Upon completion of the FABK Transaction as disclosed in Note 12, we assumed their qualified SBA lender status. The Company originated 893 loans amounting to $83 million of PPP loans in 2020 which are included in the commercial, industrial, and agricultural segment. PPP loans do not have a corresponding allowance as they are fully guaranteed by the SBA. Fees range from 1% to 5% of the loan and are deferred and amortized over the life of the loan. As PPP loans are forgiven, any deferred loan fee or cost is recognized related to each individual loan.

The Company has acquired loans for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The outstanding balance and carrying amount of the purchased credit impaired loans were as follows at September 30, 2020 and December 31, 2019:

September 30, 2020December 31, 2019
Commercial, Industrial and Agricultural$989 $— 
Multi-family and Commercial Real Estate2,243 217 
Construction, Land Development and Farmland1,003 1,021 
1-4 Family Residential Real Estate1,211 231 
1-4 Family HELOC18 — 
Consumer2,105 — 
Total outstanding balance7,569 1,469 
Less remaining purchase discount3,036 246 
Allowance for loan losses— — 
Carrying amount, net of allowance for loan losses and remaining purchase discounts$4,533 $1,223 
Activity related to the accretable portion of the purchase discount on loans acquired with deteriorated credit quality is as follows for the nine months ended September 30, 2020 and 2019:
20202019
Balance at January 1,$98 $110 
New loans purchased870 — 
Year-to-date settlements(137)(12)
Balance at September 30,
$831 $98 
Year-to-date settlements include both loans that were charged-off as well as loans that were paid off.
v3.20.2
Leases
9 Months Ended
Sep. 30, 2020
Leases [Abstract]  
Leases LEASES
On January 1, 2020, the Company adopted ASU No. 2016-02 “Leases (Topic 842)” and all subsequent ASUs that modified Topic 842. The Company elected the prospective application approach provided by ASU 2018-11 and did not adjust prior periods for ASC 842. Leases with initial terms of less than one year are not recorded on the balance sheet.

The Company’s long-term lease agreements are classified as operating leases. Certain of these leases offer the option to extend the lease term and the Company has included such extensions in its calculation of the lease liabilities to the extent the options are reasonably assured of being exercised. The lease agreements do not provide for residual value guarantees and have no restrictions or covenants that would impact dividends or require incurring additional financial obligations.

The implementation of the new standard resulted in recognition of a right-of-use asset of $12.0 million and a lease liability of $11.9 million at the date of adoption, which is related to the Company’s lease of premises used in operations. The Company used a discount rate of 4.5% in determining the right-of-use asset and lease liability as of January 1, 2020.

Information related to the Company's operating leases is presented below:
September 30, 2020
Operating leases right of use assets$14,619 
Operating leases liabilities$15,756 
Weighted average remaining lease term (in years)6.14
Weighted average discount rate4.34 %

The components of lease expense included in occupancy expenses for the three and nine months ended September 30, 2020, were as follows:

Three Months Ended September 30, 2020
Nine Months Ended September 30, 2020
Operating lease cost $851 $2,333 
Short-term lease cost
Variable lease cost98276 
Total lease cost$951 $2,611 

The Company does not separate lease and non-lease components and instead elects to account for them as a single lease component. Variable lease cost primarily represents variable payments such as common area maintenance, utilities, and property taxes.

Lease expense for the three and nine months ended September 30, 2019, prior to the adoption of ASU 2016-02, was $669 and $2,039, respectively.
A maturity analysis of operating lease liabilities and a reconciliation of undiscounted cash flows to the total operating lease liability is as follows:

Lease payments due on or beforeSeptember 30, 2020
September 30, 2021$3,155 
September 30, 20222,755 
September 30, 20232,716 
September 30, 20242,703 
September 30, 20252,372 
Thereafter4,289 
Total undiscounted cash flows17,990 
Discount on cash flows(2,234)
Total lease liability$15,756 

As of September 30, 2020, the Company entered into a five year lease with a related party that commences January 1, 2021 and has a base annual rental of $211,000, with a 2.5% per year increase. This lease may be terminated December 31, 2021 with a 90-day notice. As the lease has not yet commenced, it is not included in the lease payments due above.
v3.20.2
Derivatives
9 Months Ended
Sep. 30, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVES DERIVATIVES
The Company utilizes interest rate swap agreements as part of its asset liability management strategy to help manage its interest rate risk position. The notional amount of the interest rate swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and other terms of the individual interest rate swap agreements.

Interest Rate Swaps Designated as Cash Flow Hedges

Interest rate swaps with notional amounts totaling $160,000 as of September 30, 2020 were designated as cash flow hedges of certain short-term interest-bearing liabilities and subordinated debentures, which are fully effective. As such, no amount of ineffectiveness has been included in net income. Therefore, the aggregate fair value of the swaps is recorded in other assets (liabilities) with changes in fair value recorded in other comprehensive income (loss). The amount included in accumulated other comprehensive income (loss) would be reclassified to current earnings should the hedges no longer be considered effective. The Company expects the hedges to remain fully effective during the remaining terms of the swap agreements. No gains or losses were reclassified from accumulated other comprehensive income into net income during the periods presented.


Summary information related to the interest rate swaps designated as cash flow hedges as of September 30, 2020, is as follows:
Notional amounts$160,000 
Weighted average pay rates2.050 %
Weighted average receive rates0.390 %
Weighted average maturity 3.35 years
Unrealized losses$8,526 
The following table reflects the cash flow hedges included in the Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019, respectively:
September 30, 2020December 31, 2019
Notional AmountFair ValueNotional AmountFair Value
Included in other liabilities:
Interest rate swaps related to:
Subordinated debentures$10,000 $(750)$10,000 $(439)
Short-term interest-bearing liabilities150,000 (7,776)100,000 (1,639)
Total included in other liabilities$160,000 $(8,526)$110,000 $(2,078)

The following table presents the net gains (losses) recorded in accumulated other comprehensive income and the Consolidated Statements of Income, net of tax, relating to the cash flow derivative instruments for the three and nine months ended September 30, 2020 and 2019, respectively:

Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss)
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Interest rate swaps-subordinate debentures$51 $(42)$(230)$(264)
Interest rate swaps-interest-bearing liabilities324 (233)(4,532)(1,342)
$375 $(275)$(4,762)$(1,606)

Fair Value Hedges

Summary information related to the fair value hedges as of September 30, 2020, is as follows:
Notional amounts$19,345 
Weighted average pay rates3.51 %
Weighted average receive rates1.21 %
Weighted average maturity 8.34 years
Unrealized losses$1,690 

The following table reflects the fair value hedges included in the Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019, respectively:
September 30, 2020December 31, 2019
Notional AmountFair ValueNotional AmountFair Value
Included in other liabilities:
Interest rate swaps related to investments19,345 (1,690)19,605 (630)
Total included in other liabilities$19,345 $(1,690)$19,605 $(630)

The following table reflects the fair value hedges and the underlying hedged items included in the Consolidated Statements of Income for the three and nine months ended September 30, 2020 and 2019, respectively:
Three Months Ended September 30,Nine Months Ended September 30,
ItemLocation2020201920202019
Interest rate swaps - securitiesInterest on investment securities, nontaxable$(118)$(20)$(243)$(21)
Hedged item - securitiesInterest on investment securities, nontaxable$118 $20 $243 $21 
v3.20.2
Stock-based Compensation
9 Months Ended
Sep. 30, 2020
Share-based Payment Arrangement [Abstract]  
STOCK-BASED COMPENSATION STOCK-BASED COMPENSATION
In 2006, the board of directors and shareholders of the Bank (then known as "Commerce Union Bank") approved the Commerce Union Bank Stock Option Plan (the “Plan”). The Plan provided for the granting of stock options for up to 625,000 shares of Bank common stock to employees and organizers and authorized the issuance of Bank common stock upon the exercise of such options. As part of the Bank's reorganization into a holding company corporate structure in 2012, all Bank options were replaced with Commerce Union Bancshares, Inc. (now known as "Reliant Bancorp, Inc.") options with no change in terms.

On March 10, 2015, the shareholders of Reliant Bancorp (then known as "Commerce Union Bancshares, Inc.") approved the Commerce Union Bancshares, Inc. Amended and Restated Stock Option Plan (the “A&R Plan”), which permits the grant of awards with respect to up to 1,250,000 shares of Reliant Bancorp common stock in the form of stock options. As part of the merger of Commerce Union Bank and Reliant Bank in 2015, all outstanding stock options of Reliant Bank were converted to stock options of Reliant Bancorp (then known as "Commerce Union Bancshares, Inc.") under the A&R Plan. Under the A&R Plan, stock option awards may be granted in the form of incentive stock options or non-statutory stock options, and are generally exercisable for up to 10 years following the date such option awards are granted. Exercise prices of incentive stock options must be equal to or greater than the fair market value of Reliant Bancorp's common stock on the grant date.
    
On June 18, 2015, the shareholders of Reliant Bancorp (then known as "Commerce Union Bancshares, Inc.") approved the Commerce Union Bancshares, Inc. 2015 Equity Incentive Plan, which reserves up to 900,000 shares of Reliant Bancorp common stock to be subject to awards under the plan, including awards in the form of stock options, restricted stock grants, performance-based awards, and other awards denominated or payable by reference to or based on or related to Reliant Bancorp common stock.

The Company has recognized stock-based compensation expense, within salaries and employee benefits for employees, and within other non-interest expense for directors, in the consolidated statement of income as follows:

Three Months Ended September 30,
Nine Months Ended September 30,
2020201920202019
Stock-based compensation expense before income taxes$349 $337 $1,183 $867 
Less: deferred tax benefit(91)(88)(309)(227)
Reduction of net income$258 $249 $874 $640 

Common Stock Options
    
A summary of stock option activity for the nine months ended September 30, 2020 is as follows:
SharesWeighted Average Exercise PriceWeighted Average Remaining Contractual TermAggregate Intrinsic Value
Outstanding at January 1, 2020149,293$18.81 6.68 years$553 
Granted— $— 
Exercised(6,544)$12.03 26
Forfeited or expired(20,007)$21.02 
Outstanding at September 30, 2020122,742$18.81 5.95 years$73 
Exercisable at September 30, 202083,042$16.43 5.03 years$73 
SharesWeighted Average
Grant-Date Fair Value
Non-vested options at January 1, 202074,600 $6.08
Granted— $—
Vested(23,400)$5.23
Forfeited(11,500)$6.37
Non-vested options at September 30, 202039,700 $6.56
    
As of September 30, 2020, there was $235 of unrecognized future compensation expense to be recognized related to stock options. The cost is expected to be recognized over a weighted-average period of 3.08 years.

Restricted Stock and Restricted Stock Unit Awards

The following table shows the activity related to non-vested restricted stock and restricted stock unit awards for the nine months ended September 30, 2020:
Restricted Stock UnitsRestricted Stock
Underlying SharesWeighted Average Grant-Date
Fair Value
SharesWeighted Average Grant-Date
Fair Value
Non-vested units/shares at January 1, 202047,750 $23.30 90,960 $25.31 
Granted102,400 14.02 — — 
Vested(12,500)22.57 (48,550)23.99 
Forfeited(2,000)10.25 — 
Non-vested units/shares at September 30, 2020135,650 $16.55 42,410 $26.82 

As of September 30, 2020, there was $2,096 of unrecognized compensation cost related to non-vested restricted stock and restricted stock unit awards. The cost is expected to be recognized over a weighted-average period of 2.11 years. The total fair value of shares vested during the nine months ended September 30, 2020 was $970.
v3.20.2
Regulatory Capital Requirements
9 Months Ended
Sep. 30, 2020
Banking and Thrift, Other Disclosures [Abstract]  
REGULATORY CAPITAL REQUIREMENTS REGULATORY CAPITAL REQUIREMENTS
The Company and the Bank are subject to regulatory capital requirements administered by the federal and state banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action or affect the amount of dividends the Company and the Bank may distribute. Management believes that as of September 30, 2020, the Company and the Bank met all capital adequacy requirements to which they were subject.

Capital amounts and ratios for Reliant Bancorp and the Bank (required) are presented below as of September 30, 2020 and December 31, 2019.
Actual
Regulatory
Capital
Minimum Required
Capital Including
Capital Conservation
Buffer
To Be Well
Capitalized Under
Prompt Corrective
Action Provisions
AmountRatioAmountRatioAmountRatio
September 30, 2020
Reliant Bancorp
Tier I leverage$253,534 8.72 %$116,300 4.00 %$145,375 5.00 %
Common equity tier I241,786 9.77 %173,235 7.00 %160,861 6.50 %
Tier I risk-based capital253,534 10.25 %210,248 8.50 %197,880 8.00 %
Total risk-based capital332,434 13.44 %259,714 10.50 %247,347 10.00 %
Bank
Tier I leverage$304,376 10.48 %$116,174 4.00 %$145,218 5.00 %
Common equity tier I304,376 12.33 %172,801 7.00 %160,458 6.50 %
Tier I risk-based capital304,376 12.33 %209,829 8.50 %197,486 8.00 %
Total risk-based capital324,635 13.15 %259,214 10.50 %246,871 10.00 %
December 31, 2019
Reliant Bancorp
Tier I leverage$176,748 9.74 %$72,586 4.00 %$90,733 5.00 %
Common equity tier I165,063 10.55 %109,520 7.00 %101,698 6.50 %
Tier I risk-based capital176,748 11.30 %132,952 8.50 %125,131 8.00 %
Total risk-based capital249,751 15.97 %164,207 10.50 %156,388 10.00 %
Bank
Tier I leverage$186,734 10.30 %$72,518 4.00 %$90,648 5.00 %
Common equity tier I186,734 11.95 %109,384 7.00 %101,571 6.50 %
Tier I risk-based capital186,734 11.95 %132,823 8.50 %125,010 8.00 %
Total risk-based capital199,737 12.79 %163,975 10.50 %156,167 10.00 %
v3.20.2
Earnings Per Share
9 Months Ended
Sep. 30, 2020
Earnings Per Share [Abstract]  
EARNINGS PER SHARE EARNINGS PER SHARE
The following is a summary of the components comprising basic and diluted earnings per common share of stock ("EPS"):
Three Months EndedNine Months Ended
September 30,September 30,
2020201920202019
Basic EPS Computation
Net income attributable to common shareholders$11,531 $4,000 $19,186 $12,063 
Weighted average common shares outstanding16,587,274 11,104,918 15,053,087 11,247,921 
Basic earnings per common share$0.70 $0.36 $1.27 $1.07 
Diluted EPS Computation
Net income attributable to common shareholders$11,531 $4,000 $19,186 $12,063 
Weighted average common shares outstanding16,587,274 11,104,918 15,053,087 11,247,921 
Dilutive effect of stock options, restricted stock shares and units, and employee stock purchase plan62,399 72,449 67,616 66,445 
Adjusted weighted average common shares outstanding16,649,673 11,177,367 15,120,703 11,314,366 
Diluted earnings per common share$0.69 $0.36 $1.27 $1.07 
v3.20.2
Fair Values of Assets and Liabilities
9 Months Ended
Sep. 30, 2020
Fair Value Disclosures [Abstract]  
FAIR VALUES OF ASSETS AND LIABILITIES FAIR VALUES OF ASSETS AND LIABILITIES
 
Financial accounting standards relating to fair value measurements establish a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1    Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.

Level 2    Inputs to the valuation methodology include:

Quoted prices for similar assets or liabilities in active markets;
Quoted prices for identical or similar assets or liabilities in inactive markets;
Inputs other than quoted prices that are observable for the asset or liability; and
Inputs that are derived principally from or corroborated by the observable market data by correlation or other means.

If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3    Inputs to the valuation methodology are unobservable and reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

An asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques should maximize the use of observable inputs and minimize the use of unobservable inputs.

Following is a description of the valuation methodologies used for assets and liabilities measured at fair value on a recurring basis:

Securities available for sale: The fair values of securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). The Company obtains fair value measurements for securities available for sale from an independent pricing service. The fair value measurements consider observable data that may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, cash flows and reference data, including market research publications, among other things.

Interest rate swaps: The fair values of interest rate swaps and fair value hedges are determined based on discounted future cash flows.

Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). Assets and liabilities measured at fair value on a nonrecurring basis include the following:

Impaired Loans: The fair value of an impaired loan with specific allocations of the allowance for loan losses is generally based on the present value of expected payments using the loan’s effective rate as the discount rate or recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the
appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value.

Other Real Estate: The fair value of other real estate is generally based on recent real estate appraisals less estimated disposition cost. These appraisals may use a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in Level 3 classification of the inputs for determining fair value.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company’s valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates.

The following table sets forth the Company’s major categories of assets and liabilities measured at fair value on a recurring basis, by level within the fair value hierarchy, as of September 30, 2020 and December 31, 2019:
Fair ValueQuoted
Prices in
Active
Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
September 30, 2020
Assets
U. S. Treasury and other U. S. government agencies $12,117 $— $12,117 $— 
State and municipal190,623 — 190,623 — 
Corporate bonds15,809 — 15,809 — 
Mortgage backed securities 40,376 — 40,376 — 
Asset backed securities14,968 — 14,968 — 
Liabilities
Derivative liabilities$10,216 $— $10,216 $— 
December 31, 2019
Assets
U. S. Treasury and other U. S. government agencies $59 $— $59 $— 
State and municipal196,660 — 196,660 — 
Corporate bonds7,845 — 7,845 — 
Mortgage backed securities 37,761 — 37,761 — 
Asset backed securities17,968 — 17,968 — 
Derivative assets688 — 688 — 
Liabilities
Derivative liabilities$3,396 $— $3,396 $— 
The following table sets forth the Company’s major categories of assets and liabilities measured at fair value on a nonrecurring basis, by level within the fair value hierarchy, as of September 30, 2020 and December 31, 2019:

Fair ValueQuoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
September 30, 2020    
Assets    
Impaired loans$141 $— $— $141 
Other real estate1,326 — — 1,326 
Other repossessions1,603 — — 1,603 
December 31, 2019    
Assets    
Impaired loans$553 $— $— $553 
Other real estate750— — 750 
Other repossessions— — — 



The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which we have utilized Level 3 inputs to determine fair value at September 30, 2020 and December 31, 2019:
Valuation
Techniques (1)
Significant
Unobservable Inputs
Range
(Weighted Average)
Impaired loansAppraisalEstimated costs to sell10%
Other real estateAppraisalEstimated costs to sell10%
Other repossessionsThird-party guidelinesEstimated costs to sell10%
(1)The fair value is generally determined through independent appraisals of the underlying collateral, which may include Level 3 inputs that are not identifiable, or by using the discounted cash flow method if the loan is not collateral dependent. Estimated cash flows change and appraised values of the assets or collateral underlying the loans will be sensitive to changes.
Carrying amounts and estimated fair values of financial instruments not reported at fair value at September 30, 2020 and December 31, 2019 were as follows:
September 30, 2020Carrying
Amount
Estimated
Fair
Value
Quoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
Financial assets
Cash and due from banks$14,050 $14,050 $14,050 $— $— 
Federal funds sold12,273 12,273 — 12,273 — 
Loans, net2,338,064 2,336,300 — — 2,336,300 
Mortgage loans held for sale99,587 99,587 — 99,587 — 
Accrued interest receivable14,615 14,615 — 14,615 — 
Restricted equity securities17,367 17,367 — 17,367 — 
Financial liabilities
Deposits$2,565,502 $2,571,305 $— $— $2,571,305 
Accrued interest payable3,744 3,744 — 3,744 — 
Subordinate debentures70,389 69,237 — — 69,237 
Federal Home Loan Bank advances40,555 40,887 — — 40,887 

December 31, 2019
Financial assets
Cash and due from banks$7,953 $7,953 $7,953 $— $— 
Federal funds sold52 52 — 52 — 
Loans, net1,397,374 1,383,719 — — 1,383,719 
Mortgage loans held for sale37,476 38,379 — 38,379 — 
Accrued interest receivable7,188 7,188 — 7,188 — 
Restricted equity securities11,279 11,279 — 11,279 — 
Financial liabilities
Deposits$1,584,453 $1,582,781 $— $— $1,582,781 
Accrued interest payable2,022 2,022 — 2,022 — 
Subordinate debentures70,883 71,454 — — 71,454 
Federal Home Loan Bank advances10,737 10,755 — — 10,755 

The methods and assumptions used to estimate fair value are described as follows:

Carrying amount is the estimated fair value for cash and cash equivalents, accrued interest receivable and payable, restricted equity securities, federal funds sold or purchased, demand deposits, and variable rate loans or deposits that re-price frequently and fully. For fixed rate loans or deposits and for variable rate loans or deposits with infrequent re-pricing or re-pricing limits, fair value is based on discounted cash flows using current market rates applied to the estimated life and credit risk. Fair value of debt is based on discounted cash flows using current rates for similar financing.
v3.20.2
Segment Reporting
9 Months Ended
Sep. 30, 2020
Segment Reporting [Abstract]  
SEGMENT REPORTING SEGMENT REPORTINGThe Company has two reportable business segments: commercial banking and residential mortgage banking. Segment information is derived from the internal reporting system utilized by management. Revenues and expenses for segments reflect those which can be specifically identified and have been assigned based on internally developed allocation methods. Financial results have been presented, to the extent practicable, as if each segment operated on a stand-alone basis.
Commercial Banking provides deposit and lending services to consumer and business customers within our primary geographic markets. Our customers are serviced through branch locations, ATMs, online banking, and mobile banking.

Residential Mortgage Banking originates traditional first lien residential mortgage loans and first lien home equity lines of credit throughout the United States. The traditional first lien residential mortgage loans are typically underwritten to government agency standards and sold to third-party secondary market mortgage investors. The home equity lines of credit are typically sold to participating banks or other investor groups and are underwritten to their standards.

During the second quarter of 2019, RMV began acquiring loans from approved correspondent lenders and reselling them in the secondary market. These loans are not government agency-qualified loans and are of higher risk, such as jumbo loans or senior position home equity lines of credit.

The following presents summarized results of operations for the Company’s business segments for the periods indicated:
Three Months Ended
September 30, 2020
Commercial BankingResidential
Mortgage
Banking
Elimination
Entries
Consolidated
Net interest income$29,729 $808 $— $30,537 
Provision for loan losses1,500 — — 1,500 
Noninterest income2,218 3,797 (14)6,001 
Noninterest expense (excluding merger expense)16,065 4,190 — 20,255 
Merger expense78 — — 78 
Income tax expense (benefit)2,773 27 — 2,800 
Net income (loss)11,531 388 (14)11,905 
Noncontrolling interest in net income of subsidiary— (388)14 (374)
Net income attributable to common shareholders$11,531 $— $— $11,531 

 Three Months Ended
September 30, 2019
 Commercial BankingResidential Mortgage BankingElimination EntriesConsolidated
Net interest income$13,910 $154 $— $14,064 
Provision for loan losses606 — — 606 
Noninterest income1,375 1,377 2,760 
Noninterest expense (excluding merger expense)9,726 3,022 — 12,748 
Merger expense299 — — 299 
Income tax expense (benefit)654 (97)— 557 
Net income (loss)4,000 (1,394)2,614 
Noncontrolling interest in net loss of subsidiary— 1,394 (8)1,386 
Net income attributable to common shareholders$4,000 $— $— $4,000 
Nine Months Ended September 30, 2020
Commercial BankingResidential Mortgage BankingElimination EntriesConsolidated
Net interest income$75,933 $1,677 $— $77,610 
Provision for loan losses7,400 — — 7,400 
Noninterest income6,102 7,601 13,706 
Noninterest expense (excluding merger expense)44,961 10,340 — 55,301 
Merger expense6,895 — — 6,895 
Income tax expense (benefit)3,593 (69)— 3,524 
Net income (loss)19,186 (993)18,196 
Noncontrolling interest in net loss of subsidiary— 993 (3)990 
Net income attributable to common shareholders$19,186 $— $— $19,186 

Nine Months Ended September 30, 2019
Commercial BankingResidential Mortgage BankingElimination EntriesConsolidated
Net interest income$40,986 $352 $— $41,338 
Provision for loan losses806 — — 806 
Noninterest income4,226 3,187 (17)7,396 
Noninterest expense (excluding merger expense)30,300 8,317 — 38,617 
Merger expense302 — — 302 
Income tax expense (benefit)1,741 (311)— 1,430 
Net income (loss)12,063 (4,467)(17)7,579 
Noncontrolling interest in net loss of subsidiary— 4,467 17 4,484 
Net income attributable to common shareholders$12,063 $— $— $12,063 
v3.20.2
Income Taxes
9 Months Ended
Sep. 30, 2020
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXESIncome tax expense for the three and nine months ended September 30, 2020 totaled $2,800 and $3,524, respectively, compared to $557 and $1,430, respectively, for the three and nine months ended September 30, 2019. The effective tax rate for the three and nine months ended September 30, 2020 was 19.0% and 16.2%, respectively, compared to 17.6% and 15.9%, respectively, for the three and nine months ended September 30, 2019.
v3.20.2
Business Combinations
9 Months Ended
Sep. 30, 2020
Business Combinations [Abstract]  
BUSINESS COMBINATIONS BUSINESS COMBINATIONS
Tennessee Community Bank Holdings, Inc.

Effective January 1, 2020, Reliant Bancorp completed the acquisition of TCB Holdings pursuant to the Agreement and Plan of Merger, dated September 16, 2019 (the “TCB Holdings Agreement”), by and among Reliant Bancorp, TCB Holdings, and Community Bank & Trust, a Tennessee-chartered commercial bank and wholly owned subsidiary of TCB Holdings (“CBT”). On the terms and subject to the conditions set forth in the TCB Holdings Agreement, TCB Holdings merged with and into Reliant Bancorp (the “TCB Holdings Transaction”), with Reliant Bancorp as the surviving corporation. Immediately following the TCB Holdings Transaction, CBT merged with and into the Bank, with the Bank continuing as the surviving banking corporation. Pursuant to the TCB Holdings Agreement, at the effective time of the TCB Holdings Transaction, each outstanding share of TCB Holdings common stock, par value $1.00 per share (other than certain excluded shares), was converted into and canceled in exchange for the right to receive (i) $17.13 in cash, without interest, and (ii) 0.769 shares of the Reliant Bancorp’s common stock, par value $1.00 per share (“Reliant Bancorp Common Stock”). The aggregate consideration payable by Reliant
Bancorp in respect of shares of TCB Holdings common stock as consideration for the TCB Holdings Transaction was 811,210 shares of Reliant Bancorp Common Stock and approximately $18,073 in cash. Reliant Bancorp did not issue fractional shares of Reliant Bancorp Common Stock in connection with the TCB Holdings Transaction, but paid cash in lieu of fractional shares based on the volume weighted average closing price per share of the Reliant Bancorp Common Stock on The Nasdaq Capital Market for the 10 consecutive trading days ending on and including December 30, 2019 (calculated as $22.36). At the effective time of the TCB Holdings Transaction, each outstanding option to purchase TCB Holdings common stock was canceled in exchange for a cash payment in an amount equal to the product of (i) $34.25 minus the per share exercise price of the option multiplied by (ii) the number of shares of TCB Holdings common stock subject to the option (to the extent not previously exercised). Reliant Bancorp paid aggregate consideration to holders of unexercised options of approximately $430. All shares of Reliant Bancorp’s common stock outstanding immediately prior to the TCB Holdings Transaction were unaffected by the TCB Holdings Transaction.

The following table details the financial impact of the TCB Holdings Transaction, including the calculation of the purchase price, the allocation of the purchase price to the fair values of net assets assumed and goodwill recognized:
Calculation of Purchase Price
Shares of Tennessee Community Bank Holdings, Inc. common stock outstanding as of January 1, 20201,055,041 
Exchange ratio for Reliant Bancorp, Inc. common stock0.769 
Reliant Bancorp, Inc. common stock shares issued811,210 
Reliant Bancorp, Inc. share price at January 1, 2020$22.24 
Estimated value of Reliant Bancorp, Inc. shares issued18,041
Cash settlement for Tennessee Community Bank Holdings, Inc. common stock ($17.13 per share)
18,073 
Cash settlement for Tennessee Community Bank Holdings, Inc.'s 26,450 outstanding stock options ($34.25 settlement price less weighted average exercise price of $18.00)
430 
Cash settlement for Reliant Bancorp, Inc. fractional shares ($22.36 per pro rata fractional share)
Estimated fair value of Tennessee Community Bank Holdings, Inc.$36,547 
Allocation of Purchase Price
Total consideration above$36,547 
Fair value of assets acquired and liabilities assumed
Cash and cash equivalents11,026 
Investment securities available for sale56,336 
Loans, net of unearned income171,445 
Accrued interest receivable948 
Premises and equipment6,401 
Cash surrender value of life insurance contracts5,629 
Restricted equity securities909 
Core deposit intangible3,617 
Other assets833 
Deposits(210,538)
Deferred tax liability(337)
Borrowings(58)
FHLB advances(13,102)
Other liabilities(3,682)
Total fair value of net assets acquired29,427 
Goodwill$7,120 

CBT was a Tennessee-based full-service community bank with operations in Ashland City, Kingston Springs, Pegram, Pleasant View, and Springfield, Tennessee. These communities lie on the northwest perimeter of Nashville, Tennessee.

First Advantage Bancorp

Effective April 1, 2020, Reliant Bancorp completed the acquisition of FABK pursuant to the Agreement and Plan of Merger, dated October 22, 2019 (the “FABK Agreement”), by and among Reliant Bancorp, FABK, and PG Merger Sub, Inc., a Tennessee corporation and wholly owned subsidiary of Reliant Bancorp ("Merger Sub"). On the terms and subject to the conditions set forth in the FABK Agreement, Merger Sub merged with and into FABK (the "FABK Transaction"), with FABK as the surviving corporation, followed immediately by the merger of FABK with and into Reliant Bancorp, with Reliant Bancorp as the surviving corporation. Immediately following the merger of FABK into Reliant Bancorp, First Advantage Bank, a Tennessee-chartered commercial bank and wholly owned subsidiary of FABK ("FAB"), merged with and into the Bank, with the Bank continuing as the surviving banking corporation. Pursuant to the FABK Agreement, at the effective time of the FABK Transaction, each outstanding share of FABK common stock, par value $0.01 per share (the “FABK Common Stock”), other than certain excluded shares, was converted into the right to receive (i) 1.17 shares of Reliant Bancorp Common Stock and (ii) $3.00 in cash, without interest. In lieu of the issuance of fractional shares of Reliant Bancorp Common Stock, Reliant Bancorp agreed to pay cash in lieu of fractional shares based on the volume-weighted average closing price per share of Reliant Bancorp Common Stock on The Nasdaq Capital Market for the 10 consecutive trading days ending on and including March 30, 2020 (calculated as $11.74). Based on the April 1, 2020 opening price for Reliant Bancorp Common Stock of $11.27 per share and 3,935,165 shares of FABK Common Stock outstanding on April 1, 2020, the consideration for the FABK Transaction was approximately $64,094, in the aggregate, or $16.28 per share of FABK Common Stock.

The following table details the financial impact of the FABK Transaction, including the calculation of the purchase price, the allocation of the purchase price to the fair values of net assets assumed and goodwill recognized:
Calculation of Purchase Price
Shares of First Advantage Bancorp common stock outstanding as of April 1, 20203,935,165 
Conversion of restricted stock units to shares of common stock of First Advantage Bancorp as of April 1, 20202,000 
Total First Advantage Bancorp common stock outstanding as of April 1, 20203,937,165 
Exchange ratio for Reliant Bancorp, Inc. common stock1.17
Reliant Bancorp, Inc. common stock shares issued4,606,483 
Remove fractional shares(64)
Reliant Bancorp, Inc. common stock shares issued4,606,419
Reliant Bancorp, Inc. share price at April 1, 2020$11.27 
Estimated value of Reliant Bancorp, Inc. shares issued51,914 
Cash settlement for Reliant Bancorp, Inc. fractional shares ($11.74 per pro rata fractional share)
1
Cash settlement for First Advantage Bancorp common stock ($3.00 per share)
11,805
Cash settlement for First Advantage Bancorp restricted stock units ($3.00 per share)
6
Cash settlement for First Advantage Bancorp's 34,800 outstanding stock options ($30.00 settlement price less weighted average exercise price of $19.44)
368
Estimated fair value of First Advantage Bancorp$64,094 

Allocation of Purchase Price
Total consideration above$64,094 
Fair value of assets acquired and liabilities assumed
Cash and cash equivalents11,159 
Investment securities available for sale35,970 
Loans, net of unearned income622,423 
Mortgage loans held for sale, net5,878 
Premises and equipment7,905 
Deferred tax asset6,024 
Cash surrender value of life insurance contracts14,776 
Other real estate and repossessed assets1,259 
Core deposit intangible2,280 
Operating lease right-of-use assets6,536 
Other assets10,934 
Deposits(608,690)
Borrowings(35,962)
Operating lease liabilities(6,536)
Other liabilities(10,606)
Total fair value of net assets acquired63,350 
Goodwill$744 

FAB was a Tennessee-based full-service community bank headquartered in Clarksville, Tennessee. FAB operated branch offices in Montgomery, Davidson and Williamson counties, Tennessee and operated a loan production office in Knoxville, Tennessee primarily originating manufactured housing loans.
Supplemental Pro Forma Combined Condensed Statements of Income

Pro forma data for the three and nine months ended September 30, 2020 and 2019 in the table below presents information as if the TCB Holdings Transaction and FABK Transaction occurred on January 1, 2019. These results combine the historical results of TCB Holdings and FABK into the Company's consolidated statement of income and, while certain adjustments were made for the estimated impact of certain fair value adjustments, they are not indicative of what would have occurred had the acquisitions taken place on the indicated date nor are they intended to represent or be indicative of future results of operations. In particular, no adjustments have been made to eliminate the amount of TCB Holdings' or FABK's provision for credit losses for the first three and nine months of 2019 that may not have been necessary had the acquired loans been recorded at fair value as of the beginning of 2019. Additionally, these financials were not adjusted for non-recurring expenses, such as merger-related charges incurred by either the Company, TCB Holdings or FABK. The Company expects to achieve operating cost savings and other business synergies as a result of the acquisitions which are also not reflected in the pro forma amounts.


Three Months EndedNine Months Ended
September 30,September 30,
2020201920202019
Revenue(1)
$35,881 $29,478 $106,771 $86,217 
Net interest income$29,880 $25,232 $85,741 $74,835 
Net income attributable to common shareholders$11,117 $9,182 $17,715 $28,545 
(1) Net interest income plus noninterest income
v3.20.2
Summary of Significant Accounting Policies (Policies)
9 Months Ended
Sep. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Nature of Operations
Nature of Operations

Reliant Bancorp, Inc. is a Tennessee corporation and the holding company for and the sole shareholder of Reliant Bank (the "Bank"), collectively, "the Company". Reliant Bancorp is registered as a financial holding company under the Bank Holding Company Act of 1956, as amended ("Bank Holding Company Act"). Reliant Bank is a commercial bank chartered under Tennessee law and a member of the Federal Reserve System (the "Federal Reserve"). The Bank provides a full range of traditional banking products and services to business and consumer clients throughout Middle Tennessee.

Reliant Risk Management, Inc., a wholly-owned insurance captive subsidiary of Reliant Bancorp, that began operations on June 1, 2020, is a Tennessee-based captive insurance company which insures Reliant Bancorp and the Bank against certain risks unique to their operations and for which insurance may not be currently available or economically feasible in today's insurance marketplace. Reliant Risk Management, Inc. pools resources with several other similar insurance company subsidiaries of financial institutions to spread a limited amount of risk among themselves. Reliant Risk Management, Inc. is subject to regulations of the State of Tennessee and undergoes periodic examinations by the Tennessee Department of Commerce and Insurance.
Basis of Presentation
Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with instructions to Quarterly Report on Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"). All adjustments consisting of normally recurring accruals that, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations for the periods covered by the report have been included.  The accompanying unaudited consolidated financial statements should be read in conjunction with the Company's consolidated financial statements and related notes appearing in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
The consolidated financial statements as of and for the periods presented include Reliant Bancorp, Inc., its wholly-owned direct and indirect subsidiaries and Reliant Mortgage Ventures, LLC ("RMV"), of which the Bank controls 51% of the governance rights. As described in Note 12 to these unaudited consolidated financial statements, Reliant Bancorp, Inc. and TCB Holdings merged effective on January 1, 2020, and Reliant Bancorp, Inc. and FABK merged effective April 1, 2020.
Use of Estimates
Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions based on available information. These estimates and assumptions 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 reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to determination of the allowance for loan losses, the valuation of other real estate, the valuation of debt and equity securities, the valuation of deferred tax assets and fair values of financial instruments.

The consolidated financial statements as of September 30, 2020, and for the three and nine months ended September 30, 2020 and 2019, included herein have not been audited. The accounting and reporting policies of the Company conform to U.S. GAAP and Article 8 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, although the Company believes that the disclosures made are adequate to make the information not misleading.

The accompanying consolidated financial statements reflect all adjustments which, in the opinion of management, are necessary to present a fair statement of the results for the interim periods presented. Such adjustments are of a normal recurring nature. The Company evaluates subsequent events through the date of filing. Certain prior period amounts have been reclassified to
conform to the current period presentation. The results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.
Recently Adopted Accounting Pronouncements and Newly Issued not yet Effective Accounting Standards
Recently Adopted Accounting Pronouncements

Information about certain issued accounting standards updates is presented below. Also refer to Note 1 - Summary of Significant Accounting Policies, “Recent Authoritative Accounting Guidance” in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 for additional information related to previously issued accounting standards updates.

ASU 2016-02, “Leases (Topic 842).” ASU 2016-02 requires lessees to recognize a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis, and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 went into effect for the Company on January 1, 2020 and the Company elected the prospective application approach provided by ASU 2018-11 and did not adjust prior periods for ASC 842. The Company also elected certain practical expedients within the standard and consistent with such elections did not reassess whether any expired or existing contracts are or contain leases, did not reassess the lease classification for any expired or existing leases, and did not reassess any initial direct costs for existing leases. The effect of implementing this pronouncement resulted in right to use assets of $11,973 and a similar corresponding liability, as of January 1, 2020.

ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment.” ASU 2017-04 eliminates Step 2 from the goodwill impairment test which required entities to compute the implied fair value of goodwill. Under ASU 2017-04, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 was early adopted as of January 1, 2020 and did not have a significant impact on the Company's consolidated financial statements as it simplifies the test of impairment of goodwill.

ASU 2020-04, "Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting." In March 2020, the FASB issued Topic 848 amendments to provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. It provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update are effective for all entities as of March 12, 2020 through December 31, 2022. The Company has evaluated the effect of the pronouncement on the consolidated financial statements, noting no significant impact.

Newly Issued not yet Effective Accounting Standards

ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts and requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In addition, ASU 2016-13 amends the accounting for credit losses on available for sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 is expected to be effective for the Company on January 1, 2023. We are currently evaluating the potential impact of ASU 2016-13 on the Company's financial statements by developing an implementation plan to include assessment of processes, portfolio segmentation, model development, system requirements and the identification of data and resource needs, among other things. The adoption of ASU 2016-13 could result in an increase in the allowance for loan losses as a result of changing from an “incurred loss” model, which encompasses allowances for current known and inherent losses within the portfolio, to an “expected loss” model, which encompasses allowances for losses expected to be incurred over the life of the portfolio. Furthermore, ASU 2016-13 will necessitate that we establish an allowance for expected credit losses for certain debt securities and other financial assets. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Financial Instruments - Credit Losses (ASC 326), Derivatives and Hedging (ASC 815), and Financial Instruments (ASC 825). The amendments in this ASU improve the codification by eliminating inconsistencies and providing clarifications. The amended guidance in this ASU related to credit losses is expected to be effective for the Company in conjunction with the adoption of the standard on January 1, 2023. The Company is currently evaluating the impact of these ASUs on the Company’s consolidated financial statements. While we are currently unable to
reasonably estimate the impact of adopting these ASUs, we expect that the impact of adoption will be significantly influenced by the composition, characteristics and quality of the Company's loan and securities portfolios as well as the prevailing economic conditions and forecasts as of the adoption date.
v3.20.2
Securities (Tables)
9 Months Ended
Sep. 30, 2020
Investments, Debt and Equity Securities [Abstract]  
Available-for-Sale Securities
The amortized cost and fair value of available for sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income at September 30, 2020 and December 31, 2019 were as follows:
September 30, 2020
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
U. S. Treasury and other U. S. government agencies$12,117 $$(1)$12,117 
State and municipal175,976 14,717 (70)190,623 
Corporate bonds15,750 167 (108)15,809 
Mortgage-backed securities 41,240 348 (1,212)40,376 
Asset-backed securities15,199 — (231)14,968
Total$260,282 $15,233 $(1,622)$273,893 

December 31, 2019
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
U. S. Treasury and other U. S. government agencies$59 $— $— $59 
State and municipal186,283 10,413 (36)196,660 
Corporate bonds7,880 97 (132)7,845 
Mortgage-backed securities 38,126 296 (661)37,761 
Asset-backed securities18,374 — (406)17,968 
Total$250,722 $10,806 $(1,235)$260,293 
Results from sales of securities were as follows:
Nine months ended
September 30, 2020September 30, 2019
Proceeds$103,901 $52,434 
Gross gains810 475 
Gross losses(483)(169)
Fair Value of Available for Sale Maturities by Contractual Maturity
Amortized
Cost
Estimated
Fair Value
Due within one year$12,567 $12,565 
Due in one to five years2,175 2,186 
Due in five to ten years17,222 17,965 
Due after ten years171,879 185,833 
Mortgage-backed securities41,240 40,376 
Asset-backed securities15,199 14,968 
Total$260,282 $273,893 
Securities in Unrealized Loss Position
The following table shows available for sale securities with unrealized losses and their estimated fair value aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2020 and December 31, 2019, respectively:
Less than 12 months12 months or moreTotal
Estimated
Fair Value
Unrealized
Loss
Estimated
Fair Value
Unrealized
Loss
Estimated
Fair Value
Unrealized
Loss
September 30, 2020
U. S. Treasury and other
U. S. government agencies
$12,066 $$— $— $12,066 $
State and municipal7,319 70 — — 7,319 70 
Corporate bonds9,142 107 500 9,642 108 
Mortgage-backed securities 6,613 282 20,982 930 27,595 1,212 
Asset-backed securities790 14,092 230 14,882 231 
Total temporarily impaired$35,930 $461 $35,574 $1,161 $71,504 $1,622 

December 31, 2019
U. S. Treasury and other
U. S. government agencies
$— $— $— $— $— $— 
State and municipal1,960 36 — — 1,960 36 
Corporate bonds— — 2,499 132 2,499 132 
Mortgage-backed securities 16,104 286 9,081 375 25,185 661 
Asset-backed securities— — 17,682 406 17,682 406 
Total temporarily impaired$18,064 $322 $29,262 $913 $47,326 $1,235 
v3.20.2
Loans and Allowance for Loan Losses (Tables)
9 Months Ended
Sep. 30, 2020
Receivables [Abstract]  
Summary of Loans and Allowance for Loan Losses
Loans at September 30, 2020 and December 31, 2019 were comprised as follows:
September 30,
2020
December 31, 2019
Commercial, Industrial and Agricultural$477,785 $245,515 
Real Estate
    1-4 Family Residential334,730 227,529 
    1-4 Family HELOC101,492 96,228 
    Multi-family and Commercial864,756 536,845 
    Construction, Land Development and Farmland366,760 273,872 
Consumer209,071 16,855 
Other8,259 13,180 
Gross loans2,362,853 1,410,024 
    Less: Deferred loan fees 4,955 72 
    Less: Allowance for loan losses19,834 12,578 
Loans, net$2,338,064 $1,397,374 
Activity in the Allowance for Loan Losses By Portfolio Segment
Activity in the allowance for loan losses by portfolio segment was as follows for the three months ended September 30, 2020 and September 30, 2019, respectively:

Commercial Industrial and AgriculturalMulti-family
and
Commercial
Real Estate
Construction
Land
Development and Farmland
1-4 Family
Residential
Real Estate
1-4 Family HELOCConsumerOtherTotal
Beginning balance at June 30, 2020
$4,675 $8,407 $2,126 $1,454 $975 $584 $16 $18,237 
Charge-offs— — — (8)— (60)— (68)
Recoveries88 22 12 30 — 165 
Provision249 (169)(175)821 498 272 1,500 
Ending balance at
September 30, 2020
$5,012 $8,247 $1,955 $2,289 $1,485 $826 $20 $19,834 

Beginning balance at June 30, 2019
$1,881 $4,713 $2,707 $1,455 $686 $188 $36 $11,666 
Charge-offs(2)— — (12)— (16)(21)(51)
Recoveries48 (201)— 16 200 70 
Provision372 472 (64)18 (18)(181)606 
Ending balance at
September 30, 2019
$2,299 $5,188 $2,513 $1,383 $704 $170 $34 $12,291 
Activity in the allowance for loan losses by portfolio segment was as follows for the nine months ended September 30, 2020 and September 30, 2019, respectively:
Commercial Industrial and AgriculturalMulti-family
and
Commercial
Real Estate
Construction
Land
Development and Farmland
1-4 Family
Residential
Real Estate
1-4 Family HELOCConsumerOtherTotal
Beginning balance at December 31, 2019$2,529 $5,285 $2,649 $1,280 $624 $177 $34 $12,578 
Charge-offs(507)— (114)(68)(98)(355)— (1,142)
Recoveries126 20 769 15 60 — 998 
Provision2,864 2,942 (588)308 944 944 (14)7,400 
Ending balance at
September 30, 2020
$5,012 $8,247 $1,955 $2,289 $1,485 $826 $20 $19,834 

Beginning balance at December 31, 2018$1,751 $4,429 $2,500 $1,333 $656 $184 $39 $10,892 
Charge-offs(170)— — (29)— (37)(34)(270)
Recoveries342 62 — 220 11 28 200 863 
Provision376 697 13 (141)37 (5)(171)806 
Ending balance at
September 30, 2019
$2,299 $5,188 $2,513 $1,383 $704 $170 $34 $12,291 
Schedule of Allowance for Credit Losses and Recorded Investments in Loans By Portfolio and By Impairment Method
The allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of September 30, 2020 were as follows:
Commercial Industrial and AgriculturalMulti-family
and
Commercial
Real Estate
Construction
Land
Development and Farmland
1-4 Family
Residential
Real Estate
1-4 Family HELOCConsumerOtherTotal
Allowance for loan losses
Individually evaluated for impairment$764 $— $— $— $— $— $— $764 
Acquired with credit impairment— — — — — — — — 
Collectively evaluated for impairment 4,248 8,247 1,955 2,289 1,485 82620 19,070 
Total$5,012 $8,247 $1,955 $2,289 $1,485 $826 $20 $19,834 
Loans
Individually evaluated for impairment$1,084 $2,537 $1,777 $1,687 $316 $592 $— $7,993 
Acquired with credit impairment257 1,211 787 934 14 1,330 — 4,533 
Collectively evaluated for impairment 476,444 861,008 364,196 332,109 101,162 207,1498,259 2,350,327 
Total$477,785 $864,756 $366,760 $334,730 $101,492 $209,071 $8,259 $2,362,853 
 
The allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2019 were as follows:
Commercial Industrial and AgriculturalMulti-family
and
Commercial
Real Estate
Construction
Land
Development and Farmland
1-4 Family
Residential
Real Estate
1-4 Family HELOCConsumerOtherTotal
Allowance for loan losses
Individually evaluated for impairment$755 $— $17 $— $— $— $— $772 
Acquired with credit impairment— — — — — — — — 
Collectively evaluated for impairment 1,774 5,285 2,632 1,280 624 177 34 11,806 
Total$2,529 $5,285 $2,649 $1,280 $624 $177 $34 $12,578 
Loans
Individually evaluated for impairment$1,154 $3,439 $1,217 $1,536 $374 $28 $— $7,748 
Acquired with credit impairment— 215 813 195 — — — 1,223 
Collectively evaluated for impairment 244,361 533,191 271,842 225,798 95,854 16,827 13,180 1,401,053 
Total$245,515 $536,845 $273,872 $227,529 $96,228 $16,855 $13,180 $1,410,024 
Non-Accrual Loans By Class of Loan
Non-accrual loans by class of loan were as follows at September 30, 2020 and December 31, 2019:
September 30, 2020December 31, 2019
Commercial, Industrial and Agricultural$791 $572 
Multi-family and Commercial Real Estate1,532 1,276 
Construction, Land Development and Farmland1,100 555 
1-4 Family Residential Real Estate1,591 1,344 
1-4 Family HELOC239 296 
Consumer1,485 28 
Total$6,738 $4,071 
Individually Impaired Loans by Class of Loans
Individually impaired loans by class of loans were as follows at September 30, 2020:
Unpaid
Principal
Balance
Recorded
Investment
with no
Allowance for Loan Losses
Recorded
Recorded
Investment
with
Allowance for Loan Losses
Recorded
Total
Recorded
Investment
Related
Allowance for Loan Losses
Commercial, Industrial and Agricultural$2,575 $436 $905 $1,341 $764 
Multi-family and Commercial Real Estate5,837 3,748 — 3,748 — 
Construction, Land Development and Farmland3,032 2,564 — 2,564 — 
1-4 Family Residential Real Estate3,322 2,621 — 2,621 — 
1-4 Family HELOC436 330 — 330 — 
Consumer3,819 1,922 — 1,922 — 
Total $19,021 $11,621 $905 $12,526 $764 

Individually impaired loans by class of loans were as follows at December 31, 2019:
Unpaid
Principal
Balance
Recorded
Investment
with no
Allowance for Loan Losses
Recorded
Recorded
Investment
with
Allowance for Loan Losses
Recorded
Total
Recorded
Investment
Related
Allowance for Loan Losses
Commercial, Industrial and Agricultural$1,154 $$1,149 $1,154 $755 
Multi-family and Commercial Real Estate3,746 3,654 — 3,654 — 
Construction, Land Development and Farmland2,347 1,859 171 2,030 17 
1-4 Family Residential Real Estate1,852 1,731 — 1,731 — 
1-4 Family HELOC376 374 — 374 — 
Consumer31 28 — 28 — 
Total $9,506 $7,651 $1,320 $8,971 $772 
Average Balances of Impaired Loans and Interest Income Recognized
The average balances of impaired loans and the interest income recognized for the three and nine months ended September 30, 2020 and 2019 were as follows:
Three Months Ended September 30,
Nine Months Ended September 30,
2020201920202019
Average Recorded InvestmentInterest Income RecognizedAverage Recorded InvestmentInterest Income RecognizedAverage Recorded InvestmentInterest Income RecognizedAverage Recorded InvestmentInterest Income Recognized
Impaired loans with an allowance
Commercial, Industrial and Agricultural$947 $6$2,435 $112$975 $32$1,384 $342
Multi-family and Commercial Real Estate— — — — — — — — 
Construction, Land Development and Farmland— — 172 — 43 — 172 — 
1-4 Family Residential Real Estate— — — — — — — — 
1-4 Family HELOC— — 25 — — — 13 
Consumer— — — — — — — 
Subtotal947 2,631 112 1,019 32 1,568 343 
Impaired loans with no allowance
Commercial, Industrial and Agricultural594 42 672 356 56 537 33 
Multi-family and Commercial Real Estate4,375 63 3,474 46 4,138 278 2,838 141 
Construction, Land Development and Farmland2,949 28 1,797 21 2,471 115 2,399 168 
1-4 Family Residential Real Estate3,002 54 2,124 26 2,631 154 1,924 88 
1-4 Family HELOC331 — 296 — 367 — 148 
Consumer2,118 68 15 1,076 205 16 
Subtotal$13,369 $255$8,378 $103$11,039 $808$7,862 $436 
Total$14,316 $261 $11,009 $215 $12,058 $840$9,430 $779 
Credit Quality Indicators By Class of Loan
Credit quality indicators by class of loan were as follows at September 30, 2020:
PassSpecial
Mention
SubstandardTotal
Commercial, Industrial and Agricultural$474,199 $1,534 $2,052 $477,785 
1-4 Family Residential Real Estate331,930 2,795 334,730 
1-4 Family HELOC101,176 — 316 101,492 
Multi-family and Commercial Real Estate859,739 663 4,354 864,756 
Construction, Land Development and Farmland365,135 — 1,625 366,760 
Consumer 207,016 2,048 209,071 
Other6,739 1,520 — 8,259 
Total $2,345,934 $3,729 $13,190 $2,362,853 
Credit quality indicators by class of loan were as follows at December 31, 2019:
PassSpecial
Mention
SubstandardTotal
Commercial, Industrial and Agricultural$241,089 $2,382 $2,044 $245,515 
1-4 Family Residential Real Estate225,809 — 1,720 227,529 
1-4 Family HELOC95,678 — 550 96,228 
Multi-family and Commercial Real Estate531,055 1,519 4,271 536,845 
Construction, Land Development and Farmland272,440 — 1,432 273,872 
Consumer 16,634 — 221 16,855 
Other13,180 — — 13,180 
Total $1,395,885 $3,901 $10,238 $1,410,024 
Past Due Status By Class of Loan
Past due status by class of loan was as follows at September 30, 2020:
30-59 Days
Past Due
60-89 Days
Past Due
90+ Days
Past Due
Total
Past Due
CurrentTotal Loans
Commercial, Industrial and Agricultural$219 $— $412 $631 $477,154 $477,785 
1-4 Family Residential Real Estate1,006 544 318 1,868 332,862 334,730 
1-4 Family HELOC— — 198 198 101,294 101,492 
Multi-family and Commercial Real Estate— — 1,023 1,023 863,733 864,756 
Construction, Land Development and Farmland— 684 205 889 365,871 366,760 
Consumer 389 767 617 1,773 207,298 209,071 
Other— — — — 8,259 8,259 
Total$1,614 $1,995 $2,773 $6,382 $2,356,471 $2,362,853 

Past due status by class of loan was as follows at December 31, 2019:
30-59 Days
Past Due
60-89 Days
Past Due
90+ Days
Past Due
Total
Past Due
CurrentTotal Loans
Commercial, Industrial and Agricultural$79 $$572 $655 $244,860 $245,515 
1-4 Family Residential Real Estate501 236 229 966 226,563 227,529 
1-4 Family HELOC— — 296 296 95,932 96,228 
Multi-family and Commercial Real Estate485 — 558 1,043 535,802 536,845 
Construction, Land Development and Farmland255 — 339 594 273,278 273,872 
Consumer 38 26 64 128 16,727 16,855 
Other— — — — 13,180 13,180 
Total$1,358 $266 $2,058 $3,682 $1,406,342 $1,410,024 
Schedule of Troubles Debt Loans by Class of Loans
The following table presents loans by class modified as troubled debt restructurings ("TDRs") during the first nine months of 2020. There were no modifications in the three months ending September 30, 2020. There were no loans that were modified as TDRs during the three or nine months ended September 30, 2019.
Number of ContractsPre-Modification Outstanding Recorded InvestmentsPost-Modification Outstanding Recorded Investments
September 30, 2020
Commercial, Industrial and Agricultural$150 $150 
Multi-family and Commercial Real Estate721 721 
1-4 Family Residential394 394 
Total$1,265 $1,265 
Outstanding Balance And Carrying Amount of the Purchased Credit Impaired Loans The outstanding balance and carrying amount of the purchased credit impaired loans were as follows at September 30, 2020 and December 31, 2019:
September 30, 2020December 31, 2019
Commercial, Industrial and Agricultural$989 $— 
Multi-family and Commercial Real Estate2,243 217 
Construction, Land Development and Farmland1,003 1,021 
1-4 Family Residential Real Estate1,211 231 
1-4 Family HELOC18 — 
Consumer2,105 — 
Total outstanding balance7,569 1,469 
Less remaining purchase discount3,036 246 
Allowance for loan losses— — 
Carrying amount, net of allowance for loan losses and remaining purchase discounts$4,533 $1,223 
Activity Related to Accretable Portion of the Purchase Discount on Loans Acquired With Deteriorated Credit Quality
Activity related to the accretable portion of the purchase discount on loans acquired with deteriorated credit quality is as follows for the nine months ended September 30, 2020 and 2019:
20202019
Balance at January 1,$98 $110 
New loans purchased870 — 
Year-to-date settlements(137)(12)
Balance at September 30,
$831 $98 
v3.20.2
Leases (Tables)
9 Months Ended
Sep. 30, 2020
Leases [Abstract]  
Schedule of Information Related to Operating Leases
Information related to the Company's operating leases is presented below:
September 30, 2020
Operating leases right of use assets$14,619 
Operating leases liabilities$15,756 
Weighted average remaining lease term (in years)6.14
Weighted average discount rate4.34 %
Components of Lease Expense Included in Occupancy Expenses
The components of lease expense included in occupancy expenses for the three and nine months ended September 30, 2020, were as follows:

Three Months Ended September 30, 2020
Nine Months Ended September 30, 2020
Operating lease cost $851 $2,333 
Short-term lease cost
Variable lease cost98276 
Total lease cost$951 $2,611 
Schedule of Maturity Analysis of Operating Lease Liabilities
A maturity analysis of operating lease liabilities and a reconciliation of undiscounted cash flows to the total operating lease liability is as follows:

Lease payments due on or beforeSeptember 30, 2020
September 30, 2021$3,155 
September 30, 20222,755 
September 30, 20232,716 
September 30, 20242,703 
September 30, 20252,372 
Thereafter4,289 
Total undiscounted cash flows17,990 
Discount on cash flows(2,234)
Total lease liability$15,756 
v3.20.2
Derivatives (Tables)
9 Months Ended
Sep. 30, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss)
Summary information related to the interest rate swaps designated as cash flow hedges as of September 30, 2020, is as follows:
Notional amounts$160,000 
Weighted average pay rates2.050 %
Weighted average receive rates0.390 %
Weighted average maturity 3.35 years
Unrealized losses$8,526 
The following table presents the net gains (losses) recorded in accumulated other comprehensive income and the Consolidated Statements of Income, net of tax, relating to the cash flow derivative instruments for the three and nine months ended September 30, 2020 and 2019, respectively:

Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss)
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Interest rate swaps-subordinate debentures$51 $(42)$(230)$(264)
Interest rate swaps-interest-bearing liabilities324 (233)(4,532)(1,342)
$375 $(275)$(4,762)$(1,606)
Cash Flow Hedges Included in the Consolidated Balance Sheets
The following table reflects the cash flow hedges included in the Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019, respectively:
September 30, 2020December 31, 2019
Notional AmountFair ValueNotional AmountFair Value
Included in other liabilities:
Interest rate swaps related to:
Subordinated debentures$10,000 $(750)$10,000 $(439)
Short-term interest-bearing liabilities150,000 (7,776)100,000 (1,639)
Total included in other liabilities$160,000 $(8,526)$110,000 $(2,078)
Schedule of Derivative Instruments for Fair Value hedges
Fair Value Hedges

Summary information related to the fair value hedges as of September 30, 2020, is as follows:
Notional amounts$19,345 
Weighted average pay rates3.51 %
Weighted average receive rates1.21 %
Weighted average maturity 8.34 years
Unrealized losses$1,690 
Fair Value Hedging Included in the Consolidated Balance Sheets
The following table reflects the fair value hedges included in the Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019, respectively:
September 30, 2020December 31, 2019
Notional AmountFair ValueNotional AmountFair Value
Included in other liabilities:
Interest rate swaps related to investments19,345 (1,690)19,605 (630)
Total included in other liabilities$19,345 $(1,690)$19,605 $(630)

The following table reflects the fair value hedges and the underlying hedged items included in the Consolidated Statements of Income for the three and nine months ended September 30, 2020 and 2019, respectively:
Three Months Ended September 30,Nine Months Ended September 30,
ItemLocation2020201920202019
Interest rate swaps - securitiesInterest on investment securities, nontaxable$(118)$(20)$(243)$(21)
Hedged item - securitiesInterest on investment securities, nontaxable$118 $20 $243 $21 
v3.20.2
Stock-based Compensation (Tables)
9 Months Ended
Sep. 30, 2020
Share-based Payment Arrangement [Abstract]  
Schedule of Stock-Based Compensation Expense and Employee Benefit Services
The Company has recognized stock-based compensation expense, within salaries and employee benefits for employees, and within other non-interest expense for directors, in the consolidated statement of income as follows:

Three Months Ended September 30,
Nine Months Ended September 30,
2020201920202019
Stock-based compensation expense before income taxes$349 $337 $1,183 $867 
Less: deferred tax benefit(91)(88)(309)(227)
Reduction of net income$258 $249 $874 $640 
Share-based Compensation, Stock Options, Activity
A summary of stock option activity for the nine months ended September 30, 2020 is as follows:
SharesWeighted Average Exercise PriceWeighted Average Remaining Contractual TermAggregate Intrinsic Value
Outstanding at January 1, 2020149,293$18.81 6.68 years$553 
Granted— $— 
Exercised(6,544)$12.03 26
Forfeited or expired(20,007)$21.02 
Outstanding at September 30, 2020122,742$18.81 5.95 years$73 
Exercisable at September 30, 202083,042$16.43 5.03 years$73 
Schedule of Nonvested Share Activity
SharesWeighted Average
Grant-Date Fair Value
Non-vested options at January 1, 202074,600 $6.08
Granted— $—
Vested(23,400)$5.23
Forfeited(11,500)$6.37
Non-vested options at September 30, 202039,700 $6.56
Activity Related to Non-Vested Restricted Stock
The following table shows the activity related to non-vested restricted stock and restricted stock unit awards for the nine months ended September 30, 2020:
Restricted Stock UnitsRestricted Stock
Underlying SharesWeighted Average Grant-Date
Fair Value
SharesWeighted Average Grant-Date
Fair Value
Non-vested units/shares at January 1, 202047,750 $23.30 90,960 $25.31 
Granted102,400 14.02 — — 
Vested(12,500)22.57 (48,550)23.99 
Forfeited(2,000)10.25 — 
Non-vested units/shares at September 30, 2020135,650 $16.55 42,410 $26.82 
v3.20.2
Regulatory Capital Requirements (Tables)
9 Months Ended
Sep. 30, 2020
Banking and Thrift, Other Disclosures [Abstract]  
Actual and Required Capital Amounts and Ratios Capital amounts and ratios for Reliant Bancorp and the Bank (required) are presented below as of September 30, 2020 and December 31, 2019.
Actual
Regulatory
Capital
Minimum Required
Capital Including
Capital Conservation
Buffer
To Be Well
Capitalized Under
Prompt Corrective
Action Provisions
AmountRatioAmountRatioAmountRatio
September 30, 2020
Reliant Bancorp
Tier I leverage$253,534 8.72 %$116,300 4.00 %$145,375 5.00 %
Common equity tier I241,786 9.77 %173,235 7.00 %160,861 6.50 %
Tier I risk-based capital253,534 10.25 %210,248 8.50 %197,880 8.00 %
Total risk-based capital332,434 13.44 %259,714 10.50 %247,347 10.00 %
Bank
Tier I leverage$304,376 10.48 %$116,174 4.00 %$145,218 5.00 %
Common equity tier I304,376 12.33 %172,801 7.00 %160,458 6.50 %
Tier I risk-based capital304,376 12.33 %209,829 8.50 %197,486 8.00 %
Total risk-based capital324,635 13.15 %259,214 10.50 %246,871 10.00 %
December 31, 2019
Reliant Bancorp
Tier I leverage$176,748 9.74 %$72,586 4.00 %$90,733 5.00 %
Common equity tier I165,063 10.55 %109,520 7.00 %101,698 6.50 %
Tier I risk-based capital176,748 11.30 %132,952 8.50 %125,131 8.00 %
Total risk-based capital249,751 15.97 %164,207 10.50 %156,388 10.00 %
Bank
Tier I leverage$186,734 10.30 %$72,518 4.00 %$90,648 5.00 %
Common equity tier I186,734 11.95 %109,384 7.00 %101,571 6.50 %
Tier I risk-based capital186,734 11.95 %132,823 8.50 %125,010 8.00 %
Total risk-based capital199,737 12.79 %163,975 10.50 %156,167 10.00 %
v3.20.2
Earnings Per Share (Tables)
9 Months Ended
Sep. 30, 2020
Earnings Per Share [Abstract]  
Summary of the Components Comprising Basic and Diluted Earnings Per Share
The following is a summary of the components comprising basic and diluted earnings per common share of stock ("EPS"):
Three Months EndedNine Months Ended
September 30,September 30,
2020201920202019
Basic EPS Computation
Net income attributable to common shareholders$11,531 $4,000 $19,186 $12,063 
Weighted average common shares outstanding16,587,274 11,104,918 15,053,087 11,247,921 
Basic earnings per common share$0.70 $0.36 $1.27 $1.07 
Diluted EPS Computation
Net income attributable to common shareholders$11,531 $4,000 $19,186 $12,063 
Weighted average common shares outstanding16,587,274 11,104,918 15,053,087 11,247,921 
Dilutive effect of stock options, restricted stock shares and units, and employee stock purchase plan62,399 72,449 67,616 66,445 
Adjusted weighted average common shares outstanding16,649,673 11,177,367 15,120,703 11,314,366 
Diluted earnings per common share$0.69 $0.36 $1.27 $1.07 
v3.20.2
Fair Values of Assets and Liabilities (Tables)
9 Months Ended
Sep. 30, 2020
Fair Value Disclosures [Abstract]  
Assets and Liabilities Measured at Fair Value on a Recurring and Nonrecurring Basis
The following table sets forth the Company’s major categories of assets and liabilities measured at fair value on a recurring basis, by level within the fair value hierarchy, as of September 30, 2020 and December 31, 2019:
Fair ValueQuoted
Prices in
Active
Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
September 30, 2020
Assets
U. S. Treasury and other U. S. government agencies $12,117 $— $12,117 $— 
State and municipal190,623 — 190,623 — 
Corporate bonds15,809 — 15,809 — 
Mortgage backed securities 40,376 — 40,376 — 
Asset backed securities14,968 — 14,968 — 
Liabilities
Derivative liabilities$10,216 $— $10,216 $— 
December 31, 2019
Assets
U. S. Treasury and other U. S. government agencies $59 $— $59 $— 
State and municipal196,660 — 196,660 — 
Corporate bonds7,845 — 7,845 — 
Mortgage backed securities 37,761 — 37,761 — 
Asset backed securities17,968 — 17,968 — 
Derivative assets688 — 688 — 
Liabilities
Derivative liabilities$3,396 $— $3,396 $— 
The following table sets forth the Company’s major categories of assets and liabilities measured at fair value on a nonrecurring basis, by level within the fair value hierarchy, as of September 30, 2020 and December 31, 2019:

Fair ValueQuoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
September 30, 2020    
Assets    
Impaired loans$141 $— $— $141 
Other real estate1,326 — — 1,326 
Other repossessions1,603 — — 1,603 
December 31, 2019    
Assets    
Impaired loans$553 $— $— $553 
Other real estate750— — 750 
Other repossessions— — — 
Level 3 Input Information for Assets Measured at Fair Value on a Nonrecurring Basis
The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which we have utilized Level 3 inputs to determine fair value at September 30, 2020 and December 31, 2019:
Valuation
Techniques (1)
Significant
Unobservable Inputs
Range
(Weighted Average)
Impaired loansAppraisalEstimated costs to sell10%
Other real estateAppraisalEstimated costs to sell10%
Other repossessionsThird-party guidelinesEstimated costs to sell10%
(1)The fair value is generally determined through independent appraisals of the underlying collateral, which may include Level 3 inputs that are not identifiable, or by using the discounted cash flow method if the loan is not collateral dependent. Estimated cash flows change and appraised values of the assets or collateral underlying the loans will be sensitive to changes.
Carrying Amounts And Estimated Fair Values of Financial instruments Not Reported at Fair Value
Carrying amounts and estimated fair values of financial instruments not reported at fair value at September 30, 2020 and December 31, 2019 were as follows:
September 30, 2020Carrying
Amount
Estimated
Fair
Value
Quoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
Financial assets
Cash and due from banks$14,050 $14,050 $14,050 $— $— 
Federal funds sold12,273 12,273 — 12,273 — 
Loans, net2,338,064 2,336,300 — — 2,336,300 
Mortgage loans held for sale99,587 99,587 — 99,587 — 
Accrued interest receivable14,615 14,615 — 14,615 — 
Restricted equity securities17,367 17,367 — 17,367 — 
Financial liabilities
Deposits$2,565,502 $2,571,305 $— $— $2,571,305 
Accrued interest payable3,744 3,744 — 3,744 — 
Subordinate debentures70,389 69,237 — — 69,237 
Federal Home Loan Bank advances40,555 40,887 — — 40,887 

December 31, 2019
Financial assets
Cash and due from banks$7,953 $7,953 $7,953 $— $— 
Federal funds sold52 52 — 52 — 
Loans, net1,397,374 1,383,719 — — 1,383,719 
Mortgage loans held for sale37,476 38,379 — 38,379 — 
Accrued interest receivable7,188 7,188 — 7,188 — 
Restricted equity securities11,279 11,279 — 11,279 — 
Financial liabilities
Deposits$1,584,453 $1,582,781 $— $— $1,582,781 
Accrued interest payable2,022 2,022 — 2,022 — 
Subordinate debentures70,883 71,454 — — 71,454 
Federal Home Loan Bank advances10,737 10,755 — — 10,755 
v3.20.2
Segment Reporting (Tables)
9 Months Ended
Sep. 30, 2020
Segment Reporting [Abstract]  
Summarized Results of Operations by Business Segment
The following presents summarized results of operations for the Company’s business segments for the periods indicated:
Three Months Ended
September 30, 2020
Commercial BankingResidential
Mortgage
Banking
Elimination
Entries
Consolidated
Net interest income$29,729 $808 $— $30,537 
Provision for loan losses1,500 — — 1,500 
Noninterest income2,218 3,797 (14)6,001 
Noninterest expense (excluding merger expense)16,065 4,190 — 20,255 
Merger expense78 — — 78 
Income tax expense (benefit)2,773 27 — 2,800 
Net income (loss)11,531 388 (14)11,905 
Noncontrolling interest in net income of subsidiary— (388)14 (374)
Net income attributable to common shareholders$11,531 $— $— $11,531 

 Three Months Ended
September 30, 2019
 Commercial BankingResidential Mortgage BankingElimination EntriesConsolidated
Net interest income$13,910 $154 $— $14,064 
Provision for loan losses606 — — 606 
Noninterest income1,375 1,377 2,760 
Noninterest expense (excluding merger expense)9,726 3,022 — 12,748 
Merger expense299 — — 299 
Income tax expense (benefit)654 (97)— 557 
Net income (loss)4,000 (1,394)2,614 
Noncontrolling interest in net loss of subsidiary— 1,394 (8)1,386 
Net income attributable to common shareholders$4,000 $— $— $4,000 
Nine Months Ended September 30, 2020
Commercial BankingResidential Mortgage BankingElimination EntriesConsolidated
Net interest income$75,933 $1,677 $— $77,610 
Provision for loan losses7,400 — — 7,400 
Noninterest income6,102 7,601 13,706 
Noninterest expense (excluding merger expense)44,961 10,340 — 55,301 
Merger expense6,895 — — 6,895 
Income tax expense (benefit)3,593 (69)— 3,524 
Net income (loss)19,186 (993)18,196 
Noncontrolling interest in net loss of subsidiary— 993 (3)990 
Net income attributable to common shareholders$19,186 $— $— $19,186 

Nine Months Ended September 30, 2019
Commercial BankingResidential Mortgage BankingElimination EntriesConsolidated
Net interest income$40,986 $352 $— $41,338 
Provision for loan losses806 — — 806 
Noninterest income4,226 3,187 (17)7,396 
Noninterest expense (excluding merger expense)30,300 8,317 — 38,617 
Merger expense302 — — 302 
Income tax expense (benefit)1,741 (311)— 1,430 
Net income (loss)12,063 (4,467)(17)7,579 
Noncontrolling interest in net loss of subsidiary— 4,467 17 4,484 
Net income attributable to common shareholders$12,063 $— $— $12,063 
v3.20.2
Business Combinations (Tables)
9 Months Ended
Sep. 30, 2020
Business Combinations [Abstract]  
Calculation and Allocation of Purchase Price
The following table details the financial impact of the TCB Holdings Transaction, including the calculation of the purchase price, the allocation of the purchase price to the fair values of net assets assumed and goodwill recognized:
Calculation of Purchase Price
Shares of Tennessee Community Bank Holdings, Inc. common stock outstanding as of January 1, 20201,055,041 
Exchange ratio for Reliant Bancorp, Inc. common stock0.769 
Reliant Bancorp, Inc. common stock shares issued811,210 
Reliant Bancorp, Inc. share price at January 1, 2020$22.24 
Estimated value of Reliant Bancorp, Inc. shares issued18,041
Cash settlement for Tennessee Community Bank Holdings, Inc. common stock ($17.13 per share)
18,073 
Cash settlement for Tennessee Community Bank Holdings, Inc.'s 26,450 outstanding stock options ($34.25 settlement price less weighted average exercise price of $18.00)
430 
Cash settlement for Reliant Bancorp, Inc. fractional shares ($22.36 per pro rata fractional share)
Estimated fair value of Tennessee Community Bank Holdings, Inc.$36,547 
Allocation of Purchase Price
Total consideration above$36,547 
Fair value of assets acquired and liabilities assumed
Cash and cash equivalents11,026 
Investment securities available for sale56,336 
Loans, net of unearned income171,445 
Accrued interest receivable948 
Premises and equipment6,401 
Cash surrender value of life insurance contracts5,629 
Restricted equity securities909 
Core deposit intangible3,617 
Other assets833 
Deposits(210,538)
Deferred tax liability(337)
Borrowings(58)
FHLB advances(13,102)
Other liabilities(3,682)
Total fair value of net assets acquired29,427 
Goodwill$7,120 
The following table details the financial impact of the FABK Transaction, including the calculation of the purchase price, the allocation of the purchase price to the fair values of net assets assumed and goodwill recognized:
Calculation of Purchase Price
Shares of First Advantage Bancorp common stock outstanding as of April 1, 20203,935,165 
Conversion of restricted stock units to shares of common stock of First Advantage Bancorp as of April 1, 20202,000 
Total First Advantage Bancorp common stock outstanding as of April 1, 20203,937,165 
Exchange ratio for Reliant Bancorp, Inc. common stock1.17
Reliant Bancorp, Inc. common stock shares issued4,606,483 
Remove fractional shares(64)
Reliant Bancorp, Inc. common stock shares issued4,606,419
Reliant Bancorp, Inc. share price at April 1, 2020$11.27 
Estimated value of Reliant Bancorp, Inc. shares issued51,914 
Cash settlement for Reliant Bancorp, Inc. fractional shares ($11.74 per pro rata fractional share)
1
Cash settlement for First Advantage Bancorp common stock ($3.00 per share)
11,805
Cash settlement for First Advantage Bancorp restricted stock units ($3.00 per share)
6
Cash settlement for First Advantage Bancorp's 34,800 outstanding stock options ($30.00 settlement price less weighted average exercise price of $19.44)
368
Estimated fair value of First Advantage Bancorp$64,094 

Allocation of Purchase Price
Total consideration above$64,094 
Fair value of assets acquired and liabilities assumed
Cash and cash equivalents11,159 
Investment securities available for sale35,970 
Loans, net of unearned income622,423 
Mortgage loans held for sale, net5,878 
Premises and equipment7,905 
Deferred tax asset6,024 
Cash surrender value of life insurance contracts14,776 
Other real estate and repossessed assets1,259 
Core deposit intangible2,280 
Operating lease right-of-use assets6,536 
Other assets10,934 
Deposits(608,690)
Borrowings(35,962)
Operating lease liabilities(6,536)
Other liabilities(10,606)
Total fair value of net assets acquired63,350 
Goodwill$744 
Schedule of Operating Cost Savings and Other Business Synergies The Company expects to achieve operating cost savings and other business synergies as a result of the acquisitions which are also not reflected in the pro forma amounts.
Three Months EndedNine Months Ended
September 30,September 30,
2020201920202019
Revenue(1)
$35,881 $29,478 $106,771 $86,217 
Net interest income$29,880 $25,232 $85,741 $74,835 
Net income attributable to common shareholders$11,117 $9,182 $17,715 $28,545 
(1) Net interest income plus noninterest income
v3.20.2
Summary of Significant Accounting Policies (Details) - USD ($)
$ in Thousands
9 Months Ended 12 Months Ended
Sep. 30, 2020
Dec. 31, 2019
Jan. 01, 2020
Noncontrolling Interest [Line Items]      
Accounting Standards Update [Extensible List] us-gaap:AccountingStandardsUpdate201602Member us-gaap:AccountingStandardsUpdate201602Member  
Operating leases right of use assets $ 14,619   $ 11,973
Operating leases liabilities $ 15,756   $ 11,900
Reliant Mortgage Ventures, LLC      
Noncontrolling Interest [Line Items]      
Governance rights control by the Bank (in percent) 51.00%    
v3.20.2
Securities - Available-for-sale Securities (Details) - USD ($)
$ in Thousands
Sep. 30, 2020
Dec. 31, 2019
Debt Securities, Available-for-sale [Line Items]    
Total $ 260,282 $ 250,722
Gross Unrealized Gains 15,233 10,806
Gross Unrealized Losses (1,622) (1,235)
Estimated Fair Value 273,893 260,293
U. S. Treasury and other U. S. government agencies    
Debt Securities, Available-for-sale [Line Items]    
Total 12,117 59
Gross Unrealized Gains 1 0
Gross Unrealized Losses (1) 0
Estimated Fair Value 12,117 59
State and municipal    
Debt Securities, Available-for-sale [Line Items]    
Total 175,976 186,283
Gross Unrealized Gains 14,717 10,413
Gross Unrealized Losses (70) (36)
Estimated Fair Value 190,623 196,660
Corporate bonds    
Debt Securities, Available-for-sale [Line Items]    
Total 15,750 7,880
Gross Unrealized Gains 167 97
Gross Unrealized Losses (108) (132)
Estimated Fair Value 15,809 7,845
Mortgage-backed securities    
Debt Securities, Available-for-sale [Line Items]    
Total 41,240 38,126
Gross Unrealized Gains 348 296
Gross Unrealized Losses (1,212) (661)
Estimated Fair Value 40,376 37,761
Asset-backed securities    
Debt Securities, Available-for-sale [Line Items]    
Total 15,199 18,374
Gross Unrealized Gains 0 0
Gross Unrealized Losses (231) (406)
Estimated Fair Value $ 14,968 $ 17,968
v3.20.2
Securities - Narrative (Details)
$ in Thousands
Sep. 30, 2020
USD ($)
security
Dec. 31, 2019
USD ($)
security
Investments, Debt and Equity Securities [Abstract]    
Securities pledged, carrying amount | $ $ 43,406 $ 46,918
Number of securities in unrealized loss position | security 43 47
v3.20.2
Securities - Results from Sales of Securities (Details) - USD ($)
$ in Thousands
9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Investments, Debt and Equity Securities [Abstract]    
Proceeds $ 103,901 $ 52,434
Gross gains 810 475
Gross losses $ (483) $ (169)
v3.20.2
Securities - Available-for-sale Securities Classified by Contractual Maturity Date (Details) - USD ($)
$ in Thousands
Sep. 30, 2020
Dec. 31, 2019
Amortized Cost    
Due within one year $ 12,567  
Due in one to five years 2,175  
Due in five to ten years 17,222  
Due after ten years 171,879  
Total 260,282 $ 250,722
Estimated Fair Value    
Due within one year 12,565  
Due in one to five years 2,186  
Due in five to ten years 17,965  
Due after ten years 185,833  
Total 273,893 260,293
Mortgage-backed securities    
Amortized Cost    
Securities 41,240  
Total 41,240 38,126
Estimated Fair Value    
Securities 40,376  
Total 40,376 37,761
Asset-backed securities    
Amortized Cost    
Securities 15,199  
Total 15,199 18,374
Estimated Fair Value    
Securities 14,968  
Total $ 14,968 $ 17,968
v3.20.2
Securities - Schedule of Temporary Impairment Losses, Investments (Details) - USD ($)
$ in Thousands
Sep. 30, 2020
Dec. 31, 2019
Estimated Fair Value    
Less than 12 months $ 35,930 $ 18,064
12 months or more 35,574 29,262
Total 71,504 47,326
Unrealized Loss    
Less than 12 months 461 322
12 months or more 1,161 913
Total 1,622 1,235
U. S. Treasury and other U. S. government agencies    
Estimated Fair Value    
Less than 12 months 12,066 0
12 months or more 0 0
Total 12,066 0
Unrealized Loss    
Less than 12 months 1 0
12 months or more 0 0
Total 1 0
State and municipal    
Estimated Fair Value    
Less than 12 months 7,319 1,960
12 months or more 0 0
Total 7,319 1,960
Unrealized Loss    
Less than 12 months 70 36
12 months or more 0 0
Total 70 36
Corporate bonds    
Estimated Fair Value    
Less than 12 months 9,142 0
12 months or more 500 2,499
Total 9,642 2,499
Unrealized Loss    
Less than 12 months 107 0
12 months or more 1 132
Total 108 132
Mortgage-backed securities    
Estimated Fair Value    
Less than 12 months 6,613 16,104
12 months or more 20,982 9,081
Total 27,595 25,185
Unrealized Loss    
Less than 12 months 282 286
12 months or more 930 375
Total 1,212 661
Asset-backed securities    
Estimated Fair Value    
Less than 12 months 790 0
12 months or more 14,092 17,682
Total 14,882 17,682
Unrealized Loss    
Less than 12 months 1 0
12 months or more 230 406
Total $ 231 $ 406
v3.20.2
Loans and Allowance for Loan Losses - Schedule of Loans and Financial Receivables (Details) - USD ($)
$ in Thousands
Sep. 30, 2020
Jun. 30, 2020
Dec. 31, 2019
Sep. 30, 2019
Jun. 30, 2019
Dec. 31, 2018
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loans $ 2,362,853   $ 1,410,024      
Less: Deferred loan fees 4,955   72      
Less: Allowance for loan losses 19,834 $ 18,237 12,578 $ 12,291 $ 11,666 $ 10,892
Loans, net 2,338,064   1,397,374      
Commercial, Industrial and Agricultural            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loans 477,785   245,515      
Less: Allowance for loan losses 5,012 4,675 2,529 2,299 1,881 1,751
Real Estate | Multi-family and Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loans 864,756   536,845      
Less: Allowance for loan losses 8,247 8,407 5,285 5,188 4,713 4,429
Real Estate | Construction, Land Development and Farmland            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loans 366,760   273,872      
Less: Allowance for loan losses 1,955 2,126 2,649 2,513 2,707 2,500
Real Estate | 1-4 Family Residential            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loans 334,730   227,529      
Less: Allowance for loan losses 2,289 1,454 1,280 1,383 1,455 1,333
Real Estate | 1-4 Family HELOC            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loans 101,492   96,228      
Less: Allowance for loan losses 1,485 975 624 704 686 656
Consumer            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loans 209,071   16,855      
Less: Allowance for loan losses 826 584 177 170 188 184
Other            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loans 8,259   13,180      
Less: Allowance for loan losses $ 20 $ 16 $ 34 $ 34 $ 36 $ 39
v3.20.2
Loans and Allowance for Loan Losses - Schedule of Allowances for Loan Losses by Portfolio Segment (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Financing Receivable, Allowance for Credit Loss [Roll Forward]        
Beginning balance $ 18,237 $ 11,666 $ 12,578 $ 10,892
Charge-offs (68) (51) (1,142) (270)
Recoveries 165 70 998 863
Provision 1,500 606 7,400 806
Ending balance 19,834 12,291 19,834 12,291
Commercial, Industrial and Agricultural        
Financing Receivable, Allowance for Credit Loss [Roll Forward]        
Beginning balance 4,675 1,881 2,529 1,751
Charge-offs 0 (2) (507) (170)
Recoveries 88 48 126 342
Provision 249 372 2,864 376
Ending balance 5,012 2,299 5,012 2,299
Real Estate | Multi-family and Commercial        
Financing Receivable, Allowance for Credit Loss [Roll Forward]        
Beginning balance 8,407 4,713 5,285 4,429
Charge-offs 0 0 0 0
Recoveries 9 3 20 62
Provision (169) 472 2,942 697
Ending balance 8,247 5,188 8,247 5,188
Real Estate | Construction, Land Development and Farmland        
Financing Receivable, Allowance for Credit Loss [Roll Forward]        
Beginning balance 2,126 2,707 2,649 2,500
Charge-offs 0 0 (114) 0
Recoveries 4 (201) 8 0
Provision (175) 7 (588) 13
Ending balance 1,955 2,513 1,955 2,513
Real Estate | 1-4 Family Residential        
Financing Receivable, Allowance for Credit Loss [Roll Forward]        
Beginning balance 1,454 1,455 1,280 1,333
Charge-offs (8) (12) (68) (29)
Recoveries 22 4 769 220
Provision 821 (64) 308 (141)
Ending balance 2,289 1,383 2,289 1,383
Real Estate | 1-4 Family HELOC        
Financing Receivable, Allowance for Credit Loss [Roll Forward]        
Beginning balance 975 686 624 656
Charge-offs 0 0 (98) 0
Recoveries 12 0 15 11
Provision 498 18 944 37
Ending balance 1,485 704 1,485 704
Consumer        
Financing Receivable, Allowance for Credit Loss [Roll Forward]        
Beginning balance 584 188 177 184
Charge-offs (60) (16) (355) (37)
Recoveries 30 16 60 28
Provision 272 (18) 944 (5)
Ending balance 826 170 826 170
Other        
Financing Receivable, Allowance for Credit Loss [Roll Forward]        
Beginning balance 16 36 34 39
Charge-offs 0 (21) 0 (34)
Recoveries 0 200 0 200
Provision 4 (181) (14) (171)
Ending balance $ 20 $ 34 $ 20 $ 34
v3.20.2
Loans and Allowance for Loan Losses - Allowance for Loan Losses and Recorded Investment by Portfolio Segment (Details) - USD ($)
$ in Thousands
Sep. 30, 2020
Jun. 30, 2020
Dec. 31, 2019
Sep. 30, 2019
Jun. 30, 2019
Dec. 31, 2018
Allowance for loan losses            
Individually evaluated for impairment $ 764   $ 772      
Acquired with credit impairment 0   0      
Collectively evaluated for impairment 19,070   11,806      
Total 19,834 $ 18,237 12,578 $ 12,291 $ 11,666 $ 10,892
Loans            
Individually evaluated for impairment 7,993   7,748      
Acquired with credit impairment 4,533   1,223      
Collectively evaluated for impairment 2,350,327   1,401,053      
Total 2,362,853   1,410,024      
Commercial, Industrial and Agricultural            
Allowance for loan losses            
Individually evaluated for impairment 764   755      
Acquired with credit impairment 0   0      
Collectively evaluated for impairment 4,248   1,774      
Total 5,012 4,675 2,529 2,299 1,881 1,751
Loans            
Individually evaluated for impairment 1,084   1,154      
Acquired with credit impairment 257   0      
Collectively evaluated for impairment 476,444   244,361      
Total 477,785   245,515      
Real Estate | Multi-family and Commercial            
Allowance for loan losses            
Individually evaluated for impairment 0   0      
Acquired with credit impairment 0   0      
Collectively evaluated for impairment 8,247   5,285      
Total 8,247 8,407 5,285 5,188 4,713 4,429
Loans            
Individually evaluated for impairment 2,537   3,439      
Acquired with credit impairment 1,211   215      
Collectively evaluated for impairment 861,008   533,191      
Total 864,756   536,845      
Real Estate | Construction, Land Development and Farmland            
Allowance for loan losses            
Individually evaluated for impairment 0   17      
Acquired with credit impairment 0   0      
Collectively evaluated for impairment 1,955   2,632      
Total 1,955 2,126 2,649 2,513 2,707 2,500
Loans            
Individually evaluated for impairment 1,777   1,217      
Acquired with credit impairment 787   813      
Collectively evaluated for impairment 364,196   271,842      
Total 366,760   273,872      
Real Estate | 1-4 Family Residential            
Allowance for loan losses            
Individually evaluated for impairment 0   0      
Acquired with credit impairment 0   0      
Collectively evaluated for impairment 2,289   1,280      
Total 2,289 1,454 1,280 1,383 1,455 1,333
Loans            
Individually evaluated for impairment 1,687   1,536      
Acquired with credit impairment 934   195      
Collectively evaluated for impairment 332,109   225,798      
Total 334,730   227,529      
Real Estate | 1-4 Family HELOC            
Allowance for loan losses            
Individually evaluated for impairment 0   0      
Acquired with credit impairment 0   0      
Collectively evaluated for impairment 1,485   624      
Total 1,485 975 624 704 686 656
Loans            
Individually evaluated for impairment 316   374      
Acquired with credit impairment 14   0      
Collectively evaluated for impairment 101,162   95,854      
Total 101,492   96,228      
Consumer            
Allowance for loan losses            
Individually evaluated for impairment 0   0      
Acquired with credit impairment 0   0      
Collectively evaluated for impairment 826   177      
Total 826 584 177 170 188 184
Loans            
Individually evaluated for impairment 592   28      
Acquired with credit impairment 1,330   0      
Collectively evaluated for impairment 207,149   16,827      
Total 209,071   16,855      
Other            
Allowance for loan losses            
Individually evaluated for impairment 0   0      
Acquired with credit impairment 0   0      
Collectively evaluated for impairment 20   34      
Total 20 $ 16 34 $ 34 $ 36 $ 39
Loans            
Individually evaluated for impairment 0   0      
Acquired with credit impairment 0   0      
Collectively evaluated for impairment 8,259   13,180      
Total $ 8,259   $ 13,180      
v3.20.2
Loans and Allowance for Loan Losses - Narrative (Details)
2 Months Ended 3 Months Ended 9 Months Ended
May 31, 2020
USD ($)
Sep. 30, 2020
USD ($)
loan
Sep. 30, 2020
USD ($)
loan
Sep. 30, 2019
USD ($)
Dec. 31, 2019
USD ($)
loan
Accounts, Notes, Loans and Financing Receivable [Line Items]          
Non-accrual loans   $ 6,738,000 $ 6,738,000   $ 4,071,000
Recorded investment, 90 days past due and still accruing, Number of loans | loan   1 1   1
Recorded investment, 90 days past due and still accruing   $ 38,000 $ 38,000   $ 64,000
Modified loan amount   0   $ 0  
CARES Act          
Accounts, Notes, Loans and Financing Receivable [Line Items]          
Financing receivable modification amount $ 530,700,000   21,800,000    
Commercial, Industrial and Agricultural          
Accounts, Notes, Loans and Financing Receivable [Line Items]          
Non-accrual loans   $ 791,000 $ 791,000   572,000
Number of loans | loan   893 893    
SBA authorizations for PPP loans, amount     $ 83,000,000    
Performing Financial Instruments          
Accounts, Notes, Loans and Financing Receivable [Line Items]          
Non-accrual loans   $ 2,926,000 $ 2,926,000   $ 1,332,000
v3.20.2
Loans and Allowance for Loan Losses - Summary of Non-accrual Loans by Class of Loan (Details) - USD ($)
$ in Thousands
Sep. 30, 2020
Dec. 31, 2019
Financing Receivable, Nonaccrual [Line Items]    
Non-accrual loans $ 6,738 $ 4,071
Commercial, Industrial and Agricultural    
Financing Receivable, Nonaccrual [Line Items]    
Non-accrual loans 791 572
Real Estate | Multi-family and Commercial    
Financing Receivable, Nonaccrual [Line Items]    
Non-accrual loans 1,532 1,276
Real Estate | Construction, Land Development and Farmland    
Financing Receivable, Nonaccrual [Line Items]    
Non-accrual loans 1,100 555
Real Estate | 1-4 Family Residential    
Financing Receivable, Nonaccrual [Line Items]    
Non-accrual loans 1,591 1,344
Real Estate | 1-4 Family HELOC    
Financing Receivable, Nonaccrual [Line Items]    
Non-accrual loans 239 296
Consumer    
Financing Receivable, Nonaccrual [Line Items]    
Non-accrual loans $ 1,485 $ 28
v3.20.2
Loans and Allowance for Loan Losses - Summary of Individually Impaired Loans by Class of Loans (Details) - USD ($)
$ in Thousands
Sep. 30, 2020
Dec. 31, 2019
Financing Receivable, Impaired [Line Items]    
Unpaid Principal Balance $ 19,021 $ 9,506
Recorded Investment with no Allowance for Loan Losses Recorded 11,621 7,651
Recorded Investment with Allowance for Loan Losses Recorded 905 1,320
Total Recorded Investment 12,526 8,971
Related Allowance for Loan Losses 764 772
Commercial, Industrial and Agricultural    
Financing Receivable, Impaired [Line Items]    
Unpaid Principal Balance 2,575 1,154
Recorded Investment with no Allowance for Loan Losses Recorded 436 5
Recorded Investment with Allowance for Loan Losses Recorded 905 1,149
Total Recorded Investment 1,341 1,154
Related Allowance for Loan Losses 764 755
Real Estate | Multi-family and Commercial    
Financing Receivable, Impaired [Line Items]    
Unpaid Principal Balance 5,837 3,746
Recorded Investment with no Allowance for Loan Losses Recorded 3,748 3,654
Recorded Investment with Allowance for Loan Losses Recorded 0 0
Total Recorded Investment 3,748 3,654
Related Allowance for Loan Losses 0 0
Real Estate | Construction, Land Development and Farmland    
Financing Receivable, Impaired [Line Items]    
Unpaid Principal Balance 3,032 2,347
Recorded Investment with no Allowance for Loan Losses Recorded 2,564 1,859
Recorded Investment with Allowance for Loan Losses Recorded 0 171
Total Recorded Investment 2,564 2,030
Related Allowance for Loan Losses 0 17
Real Estate | 1-4 Family Residential    
Financing Receivable, Impaired [Line Items]    
Unpaid Principal Balance 3,322 1,852
Recorded Investment with no Allowance for Loan Losses Recorded 2,621 1,731
Recorded Investment with Allowance for Loan Losses Recorded 0 0
Total Recorded Investment 2,621 1,731
Related Allowance for Loan Losses 0 0
Real Estate | 1-4 Family HELOC    
Financing Receivable, Impaired [Line Items]    
Unpaid Principal Balance 436 376
Recorded Investment with no Allowance for Loan Losses Recorded 330 374
Recorded Investment with Allowance for Loan Losses Recorded 0 0
Total Recorded Investment 330 374
Related Allowance for Loan Losses 0 0
Consumer    
Financing Receivable, Impaired [Line Items]    
Unpaid Principal Balance 3,819 31
Recorded Investment with no Allowance for Loan Losses Recorded 1,922 28
Recorded Investment with Allowance for Loan Losses Recorded 0 0
Total Recorded Investment 1,922 28
Related Allowance for Loan Losses $ 0 $ 0
v3.20.2
Loans and Allowance for Loan Losses - Summary of Average Balances of Impaired Loans and Interest Income Recognized (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Financing Receivable, Impaired [Line Items]        
Impaired loans with an allowance, Average Recorded Investment, Subtotal $ 947 $ 2,631 $ 1,019 $ 1,568
Impaired loans with an allowance, Interest Income Recognized, Subtotal 6 112 32 343
Imparied loans with no allowance, Average Recorded Investment, Subtotal 13,369 8,378 11,039 7,862
Imparied loans with no allowance, Interest Income Recognized, Subtotal 255 103 808 436
Average Recorded Investment, Total 14,316 11,009 12,058 9,430
Interest Income Recognized, Total 261 215 840 779
Commercial, Industrial and Agricultural        
Financing Receivable, Impaired [Line Items]        
Impaired loans with an allowance, Average Recorded Investment, Subtotal 947 2,435 975 1,384
Impaired loans with an allowance, Interest Income Recognized, Subtotal 6 112 32 342
Imparied loans with no allowance, Average Recorded Investment, Subtotal 594 672 356 537
Imparied loans with no allowance, Interest Income Recognized, Subtotal 42 9 56 33
Real Estate | Multi-family and Commercial        
Financing Receivable, Impaired [Line Items]        
Impaired loans with an allowance, Average Recorded Investment, Subtotal 0 0 0 0
Impaired loans with an allowance, Interest Income Recognized, Subtotal 0 0 0 0
Imparied loans with no allowance, Average Recorded Investment, Subtotal 4,375 3,474 4,138 2,838
Imparied loans with no allowance, Interest Income Recognized, Subtotal 63 46 278 141
Real Estate | Construction, Land Development and Farmland        
Financing Receivable, Impaired [Line Items]        
Impaired loans with an allowance, Average Recorded Investment, Subtotal 0 172 43 172
Impaired loans with an allowance, Interest Income Recognized, Subtotal 0 0 0 0
Imparied loans with no allowance, Average Recorded Investment, Subtotal 2,949 1,797 2,471 2,399
Imparied loans with no allowance, Interest Income Recognized, Subtotal 28 21 115 168
Real Estate | 1-4 Family Residential        
Financing Receivable, Impaired [Line Items]        
Impaired loans with an allowance, Average Recorded Investment, Subtotal 0 0 0 0
Impaired loans with an allowance, Interest Income Recognized, Subtotal 0 0 0 0
Imparied loans with no allowance, Average Recorded Investment, Subtotal 3,002 2,124 2,631 1,924
Imparied loans with no allowance, Interest Income Recognized, Subtotal 54 26 154 88
Real Estate | 1-4 Family HELOC        
Financing Receivable, Impaired [Line Items]        
Impaired loans with an allowance, Average Recorded Investment, Subtotal 0 25 0 13
Impaired loans with an allowance, Interest Income Recognized, Subtotal 0 0 0 1
Imparied loans with no allowance, Average Recorded Investment, Subtotal 331 296 367 148
Imparied loans with no allowance, Interest Income Recognized, Subtotal 0 0 0 4
Consumer        
Financing Receivable, Impaired [Line Items]        
Impaired loans with an allowance, Average Recorded Investment, Subtotal 0 0 1 0
Impaired loans with an allowance, Interest Income Recognized, Subtotal 0 0 0 0
Imparied loans with no allowance, Average Recorded Investment, Subtotal 2,118 15 1,076 16
Imparied loans with no allowance, Interest Income Recognized, Subtotal $ 68 $ 1 $ 205 $ 2
v3.20.2
Loans and Allowance for Loan Losses - Summary of Credit Quality Indicators by Class of Loan (Details) - USD ($)
$ in Thousands
Sep. 30, 2020
Dec. 31, 2019
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans $ 2,362,853 $ 1,410,024
Pass    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans 2,345,934 1,395,885
Special Mention    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans 3,729 3,901
Substandard    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans 13,190 10,238
Commercial, Industrial and Agricultural    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans 477,785 245,515
Commercial, Industrial and Agricultural | Pass    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans 474,199 241,089
Commercial, Industrial and Agricultural | Special Mention    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans 1,534 2,382
Commercial, Industrial and Agricultural | Substandard    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans 2,052 2,044
Real Estate | 1-4 Family Residential    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans 334,730 227,529
Real Estate | 1-4 Family Residential | Pass    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans 331,930 225,809
Real Estate | 1-4 Family Residential | Special Mention    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans 5 0
Real Estate | 1-4 Family Residential | Substandard    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans 2,795 1,720
Real Estate | 1-4 Family HELOC    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans 101,492 96,228
Real Estate | 1-4 Family HELOC | Pass    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans 101,176 95,678
Real Estate | 1-4 Family HELOC | Special Mention    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans 0 0
Real Estate | 1-4 Family HELOC | Substandard    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans 316 550
Real Estate | Multi-family and Commercial    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans 864,756 536,845
Real Estate | Multi-family and Commercial | Pass    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans 859,739 531,055
Real Estate | Multi-family and Commercial | Special Mention    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans 663 1,519
Real Estate | Multi-family and Commercial | Substandard    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans 4,354 4,271
Real Estate | Construction, Land Development and Farmland    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans 366,760 273,872
Real Estate | Construction, Land Development and Farmland | Pass    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans 365,135 272,440
Real Estate | Construction, Land Development and Farmland | Special Mention    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans 0 0
Real Estate | Construction, Land Development and Farmland | Substandard    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans 1,625 1,432
Consumer    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans 209,071 16,855
Consumer | Pass    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans 207,016 16,634
Consumer | Special Mention    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans 7 0
Consumer | Substandard    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans 2,048 221
Other    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans 8,259 13,180
Other | Pass    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans 6,739 13,180
Other | Special Mention    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans 1,520 0
Other | Substandard    
Financing Receivable, Credit Quality Indicator [Line Items]    
Loans $ 0 $ 0
v3.20.2
Loans and Allowance for Loan Losses - Summary of Past Due (Details) - USD ($)
$ in Thousands
Sep. 30, 2020
Dec. 31, 2019
Financing Receivable, Past Due [Line Items]    
Past due $ 6,382 $ 3,682
Current 2,356,471 1,406,342
Total 2,362,853 1,410,024
30-59 Days Past Due    
Financing Receivable, Past Due [Line Items]    
Past due 1,614 1,358
60-89 Days Past Due    
Financing Receivable, Past Due [Line Items]    
Past due 1,995 266
Greater Than 90 Days Past Due    
Financing Receivable, Past Due [Line Items]    
Past due 2,773 2,058
Commercial, Industrial and Agricultural    
Financing Receivable, Past Due [Line Items]    
Past due 631 655
Current 477,154 244,860
Total 477,785 245,515
Commercial, Industrial and Agricultural | 30-59 Days Past Due    
Financing Receivable, Past Due [Line Items]    
Past due 219 79
Commercial, Industrial and Agricultural | 60-89 Days Past Due    
Financing Receivable, Past Due [Line Items]    
Past due 0 4
Commercial, Industrial and Agricultural | Greater Than 90 Days Past Due    
Financing Receivable, Past Due [Line Items]    
Past due 412 572
Real Estate | 1-4 Family Residential    
Financing Receivable, Past Due [Line Items]    
Past due 1,868 966
Current 332,862 226,563
Total 334,730 227,529
Real Estate | 1-4 Family Residential | 30-59 Days Past Due    
Financing Receivable, Past Due [Line Items]    
Past due 1,006 501
Real Estate | 1-4 Family Residential | 60-89 Days Past Due    
Financing Receivable, Past Due [Line Items]    
Past due 544 236
Real Estate | 1-4 Family Residential | Greater Than 90 Days Past Due    
Financing Receivable, Past Due [Line Items]    
Past due 318 229
Real Estate | 1-4 Family HELOC    
Financing Receivable, Past Due [Line Items]    
Past due 198 296
Current 101,294 95,932
Total 101,492 96,228
Real Estate | 1-4 Family HELOC | 30-59 Days Past Due    
Financing Receivable, Past Due [Line Items]    
Past due 0 0
Real Estate | 1-4 Family HELOC | 60-89 Days Past Due    
Financing Receivable, Past Due [Line Items]    
Past due 0 0
Real Estate | 1-4 Family HELOC | Greater Than 90 Days Past Due    
Financing Receivable, Past Due [Line Items]    
Past due 198 296
Real Estate | Multi-family and Commercial    
Financing Receivable, Past Due [Line Items]    
Past due 1,023 1,043
Current 863,733 535,802
Total 864,756 536,845
Real Estate | Multi-family and Commercial | 30-59 Days Past Due    
Financing Receivable, Past Due [Line Items]    
Past due 0 485
Real Estate | Multi-family and Commercial | 60-89 Days Past Due    
Financing Receivable, Past Due [Line Items]    
Past due 0 0
Real Estate | Multi-family and Commercial | Greater Than 90 Days Past Due    
Financing Receivable, Past Due [Line Items]    
Past due 1,023 558
Real Estate | Construction, Land Development and Farmland    
Financing Receivable, Past Due [Line Items]    
Past due 889 594
Current 365,871 273,278
Total 366,760 273,872
Real Estate | Construction, Land Development and Farmland | 30-59 Days Past Due    
Financing Receivable, Past Due [Line Items]    
Past due 0 255
Real Estate | Construction, Land Development and Farmland | 60-89 Days Past Due    
Financing Receivable, Past Due [Line Items]    
Past due 684 0
Real Estate | Construction, Land Development and Farmland | Greater Than 90 Days Past Due    
Financing Receivable, Past Due [Line Items]    
Past due 205 339
Consumer    
Financing Receivable, Past Due [Line Items]    
Past due 1,773 128
Current 207,298 16,727
Total 209,071 16,855
Consumer | 30-59 Days Past Due    
Financing Receivable, Past Due [Line Items]    
Past due 389 38
Consumer | 60-89 Days Past Due    
Financing Receivable, Past Due [Line Items]    
Past due 767 26
Consumer | Greater Than 90 Days Past Due    
Financing Receivable, Past Due [Line Items]    
Past due 617 64
Other    
Financing Receivable, Past Due [Line Items]    
Past due 0 0
Current 8,259 13,180
Total 8,259 13,180
Other | 30-59 Days Past Due    
Financing Receivable, Past Due [Line Items]    
Past due 0 0
Other | 60-89 Days Past Due    
Financing Receivable, Past Due [Line Items]    
Past due 0 0
Other | Greater Than 90 Days Past Due    
Financing Receivable, Past Due [Line Items]    
Past due $ 0 $ 0
v3.20.2
Loans and Allowance for Loan Losses - Troubled Debt Restructurings (Details)
$ in Thousands
9 Months Ended
Sep. 30, 2020
USD ($)
security
Financing Receivable, Troubled Debt Restructuring [Line Items]  
Number of Contracts | security 3
Pre-Modification Outstanding Recorded Investments $ 1,265
Post-Modification Outstanding Recorded Investments $ 1,265
Commercial, Industrial and Agricultural  
Financing Receivable, Troubled Debt Restructuring [Line Items]  
Number of Contracts | security 1
Pre-Modification Outstanding Recorded Investments $ 150
Post-Modification Outstanding Recorded Investments $ 150
Real Estate | Multi-family and Commercial  
Financing Receivable, Troubled Debt Restructuring [Line Items]  
Number of Contracts | security 1
Pre-Modification Outstanding Recorded Investments $ 721
Post-Modification Outstanding Recorded Investments $ 721
Real Estate | 1-4 Family Residential  
Financing Receivable, Troubled Debt Restructuring [Line Items]  
Number of Contracts | security 1
Pre-Modification Outstanding Recorded Investments $ 394
Post-Modification Outstanding Recorded Investments $ 394
v3.20.2
Loans and Allowance for Loan Losses - Summary of Carrying Amount of Loans (Details) - USD ($)
$ in Thousands
Sep. 30, 2020
Dec. 31, 2019
Accounts, Notes, Loans and Financing Receivable [Line Items]    
Total outstanding balance $ 7,569 $ 1,469
Less remaining purchase discount 3,036 246
Allowance for loan losses 0 0
Carrying amount, net of allowance for loan losses and remaining purchase discounts 4,533 1,223
Commercial, Industrial and Agricultural    
Accounts, Notes, Loans and Financing Receivable [Line Items]    
Total outstanding balance 989 0
Real Estate | Multi-family and Commercial    
Accounts, Notes, Loans and Financing Receivable [Line Items]    
Total outstanding balance 2,243 217
Real Estate | Construction, Land Development and Farmland    
Accounts, Notes, Loans and Financing Receivable [Line Items]    
Total outstanding balance 1,003 1,021
Real Estate | 1-4 Family Residential    
Accounts, Notes, Loans and Financing Receivable [Line Items]    
Total outstanding balance 1,211 231
Real Estate | 1-4 Family HELOC    
Accounts, Notes, Loans and Financing Receivable [Line Items]    
Total outstanding balance 18 0
Consumer    
Accounts, Notes, Loans and Financing Receivable [Line Items]    
Total outstanding balance $ 2,105 $ 0
v3.20.2
Loans and Allowance for Loan Losses - Activity Related to Accretable Portion of Loans Acquired (Details) - USD ($)
$ in Thousands
9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]    
Beginning balance $ 98 $ 110
New loans purchased 870 0
Year-to-date settlements (137) (12)
Ending balance $ 831 $ 98
v3.20.2
Leases - Narrative (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Dec. 31, 2019
Jan. 01, 2020
Leases [Abstract]          
Accounting Standards Update [Extensible List]   us-gaap:AccountingStandardsUpdate201602Member   us-gaap:AccountingStandardsUpdate201602Member  
Operating leases right of use assets   $ 14,619     $ 11,973
Operating leases liabilities   $ 15,756     $ 11,900
Discount rate         4.50%
Lease expense $ 669   $ 2,039    
Operating lease term of contract   5 years      
Annual rental payments   $ 211      
Base annual rental percentage increase   2.50%      
v3.20.2
Leases - Operating Lease and Liability (Details) - USD ($)
$ in Thousands
Sep. 30, 2020
Jan. 01, 2020
Leases [Abstract]    
Operating leases right of use assets $ 14,619 $ 11,973
Operating leases liabilities $ 15,756  
Weighted average remaining lease term (in years) 6 years 1 month 20 days  
Weighted average discount rate 4.34%  
v3.20.2
Leases - Components of Lease Expense Included in Occupancy Expenses (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2020
Leases [Abstract]    
Operating lease cost $ 851 $ 2,333
Short-term lease cost 2 2
Variable lease cost 98 276
Total lease cost $ 951 $ 2,611
v3.20.2
Leases - Maturities of Operating Lease Liability (Details) - USD ($)
$ in Thousands
Sep. 30, 2020
Jan. 01, 2020
Lease payments due on or before    
September 30, 2021 $ 3,155  
September 30, 2022 2,755  
September 30, 2023 2,716  
September 30, 2024 2,703  
September 30, 2025 2,372  
Thereafter 4,289  
Total undiscounted cash flows 17,990  
Discount on cash flows (2,234)  
Total lease liability $ 15,756 $ 11,900
v3.20.2
Derivatives - Narrative (Details) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Derivative [Line Items]        
Gain (Loss) reclassified from accumulated other comprehensive income net $ 0 $ 0 $ 0 $ 0
Cash Flow Hedging | Interest Rate Swap        
Derivative [Line Items]        
Notional amounts $ 160,000,000   $ 160,000,000  
v3.20.2
Derivatives - Interest Rate Swaps Designated as Cash Flow Hedges and Fair Value Hedges (Details) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Interest Rate Swap        
Derivative [Line Items]        
Unrealized losses $ 118,000 $ 20,000 $ 243,000 $ 21,000
Cash Flow Hedging | Interest Rate Swap        
Derivative [Line Items]        
Notional amounts 160,000,000   $ 160,000,000  
Weighted average pay rates     2.05%  
Weighted average receive rates     0.39%  
Weighted average maturity     3 years 4 months 6 days  
Unrealized losses for cash flow hedges 8,526,000   $ 8,526,000  
Fair Value Hedging        
Derivative [Line Items]        
Notional amounts $ 19,345,000   $ 19,345,000  
Weighted average pay rates     3.51%  
Weighted average receive rates     1.21%  
Weighted average maturity     8 years 4 months 2 days  
Unrealized losses     $ 1,690,000  
v3.20.2
Derivatives - Cash Flow Hedges and Fair Value Hedges Included in the Consolidated Balance Sheets (Details) - USD ($)
$ in Thousands
Sep. 30, 2020
Dec. 31, 2019
Cash Flow Hedging | Other Liabilities    
Derivative [Line Items]    
Derivative Liability, Notional Amount $ 160,000 $ 110,000
Derivative Liability, Fair Value (8,526) (2,078)
Cash Flow Hedging | Subordinated debentures | Interest Rate Swap    
Derivative [Line Items]    
Derivative Liability, Notional Amount 10,000 10,000
Derivative Liability, Fair Value (750) (439)
Cash Flow Hedging | Federal Home Loan Bank borrowings | Interest Rate Swap    
Derivative [Line Items]    
Derivative Liability, Notional Amount 150,000 100,000
Derivative Liability, Fair Value (7,776) (1,639)
Fair Value Hedging | Other Liabilities    
Derivative [Line Items]    
Derivative Liability, Notional Amount 19,345 19,605
Derivative Liability, Fair Value (1,690) (630)
Fair Value Hedging | Other Liabilities | Interest Rate Swap    
Derivative [Line Items]    
Derivative Liability, Notional Amount 19,345 19,605
Derivative Liability, Fair Value $ (1,690) $ (630)
v3.20.2
Derivatives - Net Gains (Losses) Relating to Cash Flow Derivative Instruments (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Derivative [Line Items]        
Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) $ 375 $ (275) $ (4,762) $ (1,606)
Interest rate swaps-subordinate debentures        
Derivative [Line Items]        
Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) 51 (42) (230) (264)
Interest rate swaps-interest-bearing liabilities | Interest Expense        
Derivative [Line Items]        
Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) $ 324 $ (233) $ (4,532) $ (1,342)
v3.20.2
Derivatives - Fair Value Hedges Included in the Consolidated Statements of Income (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Derivative [Line Items]        
Change in unrealized gain (loss) on fair value hedging instruments $ 118 $ 20 $ 243 $ 21
Interest Rate Swap        
Derivative [Line Items]        
Unrealized losses $ (118) $ (20) $ (243) $ (21)
v3.20.2
Stock-based Compensation - Narrative (Details) - USD ($)
$ in Thousands
9 Months Ended
Mar. 10, 2015
Sep. 30, 2020
Jun. 18, 2015
Dec. 31, 2006
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Unrecognized future compensation expense related to stock options   $ 235    
Equity Incentive Plan 2015        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Number of shares authorized (in shares)     900,000  
Employee Stock Option        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Exercise period for stock option awards 10 years      
Unrecognized compensation cost, weighted-average period for recognition   3 years 29 days    
Employee Stock Option | Commerce Union Bank Stock Option Plan        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Number of shares authorized (in shares)       625,000
Employee Stock Option | Commerce Union Bancshares, Inc. Amended and Restated Stock Option Plan        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Number of shares authorized (in shares) 1,250,000      
Restricted Stock and Restricted Stock Units        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Unrecognized compensation cost, weighted-average period for recognition   2 years 1 month 9 days    
Unrecognized compensation cost, weighted-average period for recognition   $ 2,096    
Fair value of share awards vested   $ 970    
v3.20.2
Stock-based Compensation - Expense and Employee Benefit Services (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Share-based Payment Arrangement [Abstract]        
Stock-based compensation expense before income taxes $ 349 $ 337 $ 1,183 $ 867
Less: deferred tax benefit (91) (88) (309) (227)
Reduction of net income $ 258 $ 249 $ 874 $ 640
v3.20.2
Stock-based Compensation - Stock Option Activity (Details)
$ / shares in Units, $ in Thousands
9 Months Ended 12 Months Ended
Sep. 30, 2020
USD ($)
$ / shares
shares
Dec. 31, 2019
USD ($)
$ / shares
shares
Shares    
Outstanding, Beginning (in shares) | shares 149,293  
Granted (in shares) | shares 0  
Exercised (in shares) | shares (6,544)  
Forfeited or expired (in shares) | shares (20,007)  
Outstanding, Ending (in shares) | shares 122,742 149,293
Exercisable (in shares) | shares 83,042  
Weighted Average Exercise Price    
Outstanding, Beginning (in dollars per share) | $ / shares $ 18.81  
Granted (in dollars per share) | $ / shares 0  
Exercised (in dollars per share) | $ / shares 12.03  
Forfeited or expired (in dollars per share) | $ / shares 21.02  
Outstanding, Ending (in dollars per share) | $ / shares 18.81 $ 18.81
Exercisable (in dollars per share) | $ / shares $ 16.43  
Weighted Average Remaining Contractual Term and Aggregate Intrinsic Value    
Outstanding, Weighted Average Remaining Contractual Term 5 years 11 months 12 days 6 years 8 months 4 days
Exercised, Weighted Average Remaining Contractual Term  
Exercisable, Weighted Average Remaining Contractual Term 5 years 10 days  
Outstanding, Aggregate Intrinsic Value | $ $ 73 $ 553
Exercised, Aggregate Intrinsic Value | $ 26  
Exercisable, Aggregate Intrinsic Value | $ $ 73  
v3.20.2
Stock-based Compensation - Nonvested Stock Option Activity (Details)
9 Months Ended
Sep. 30, 2020
$ / shares
shares
Shares  
Non-vested options, Beginning (in shares) | shares 74,600
Granted (in shares) | shares 0
Vested (in shares) | shares (23,400)
Forfeited (in shares) | shares (11,500)
Non-vested options, Ending (in shares) | shares 39,700
Weighted Average Grant-Date Fair Value  
Non-vested options, beginning (in dollars per share) | $ / shares $ 6.08
Granted (in dollars per share) | $ / shares 0
Vested (in dollars per share) | $ / shares 5.23
Forfeited (in dollars per share) | $ / shares 6.37
Non-vested options, ending (in dollars per share) | $ / shares $ 6.56
v3.20.2
Stock-based Compensation - Nonvested Restricted Stock Activity (Details)
9 Months Ended
Sep. 30, 2020
$ / shares
shares
Restricted Stock Units  
Shares  
Non-vested units/shares, Beginning (in shares) | shares 47,750
Granted (in shares) | shares 102,400
Vested (in shares) | shares (12,500)
Forfeited (in shares) | shares (2,000)
Non-vested units/shares, Ending (in shares) | shares 135,650
Weighted Average Grant-Date Fair Value  
Non-vested units/shares, Beginning (in dollars per share) | $ / shares $ 23.30
Granted (in dollars per share) | $ / shares 14.02
Vested (in dollars per share) | $ / shares 22.57
Forfeited (in dollars per share) | $ / shares 10.25
Non-vested units/shares, Ending (in dollars per share) | $ / shares $ 16.55
Restricted Stock  
Shares  
Non-vested units/shares, Beginning (in shares) | shares 90,960
Granted (in shares) | shares 0
Vested (in shares) | shares (48,550)
Forfeited (in shares) | shares 0
Non-vested units/shares, Ending (in shares) | shares 42,410
Weighted Average Grant-Date Fair Value  
Non-vested units/shares, Beginning (in dollars per share) | $ / shares $ 25.31
Granted (in dollars per share) | $ / shares 0
Vested (in dollars per share) | $ / shares 23.99
Forfeited (in dollars per share) | $ / shares
Non-vested units/shares, Ending (in dollars per share) | $ / shares $ 26.82
v3.20.2
Regulatory Capital Requirements (Details)
$ in Thousands
Sep. 30, 2020
USD ($)
Dec. 31, 2019
USD ($)
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]    
Tier I leverage $ 253,534 $ 176,748
Tier I leverage, ratio 0.0872 0.0974
Tier I leverage, minimum required capital including capital conservation buffer $ 116,300 $ 72,586
Tier I leverage, minimum required capital including capital conservation buffer, ratio 4.00% 4.00%
Tier I leverage, to be well capitalized under prompt corrective action provisions $ 145,375 $ 90,733
Tier I leverage, to be well capitalized under prompt corrective action provisions, ratio 0.0500 0.0500
Common equity tier 1 $ 241,786 $ 165,063
Common equity tier 1, ratio 0.0977 0.1055
Common equity tier 1, minimum required capital including capital conservation buffer $ 173,235 $ 109,520
Common equity tier 1, minimum required capital including capital conservation buffer, ratio 7.00% 7.00%
Common equity tier 1, to be well capitalized under prompt corrective action provisions $ 160,861 $ 101,698
Common equity tier 1, to be well capitalized under prompt corrective action provisions, ratio 6.50% 6.50%
Tier I risk-based capital $ 253,534 $ 176,748
Tier I risk-based capital, ratio 0.1025 0.1130
Tier I risk-based capital, minimum required capital including capital conservation buffer $ 210,248 $ 132,952
Tier I risk-based capital, minimum required capital including capital conservation buffer, ratio 8.50% 8.50%
Tier I risk-based capital, to be well capitalized under prompt corrective action provisions $ 197,880 $ 125,131
Tier I risk-based capital, to be well capitalized under prompt corrective action provisions, ratio 0.0800 0.0800
Total risk-based capital $ 332,434 $ 249,751
Total risk-based capital, ratio 0.1344 0.1597
Total risk-based capital, minimum required capital including capital conservation buffer $ 259,714 $ 164,207
Total risk-based capital, minimum required capital including capital conservation buffer, ratio 10.50% 10.50%
Total risk-based capital, to be well capitalized under prompt corrective action provisions $ 247,347 $ 156,388
Total risk-based capital, to be well capitalized under prompt corrective action provisions, ratio 0.1000 0.1000
Reliant Bank    
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]    
Tier I leverage $ 304,376 $ 186,734
Tier I leverage, ratio 0.1048 0.1030
Tier I leverage, minimum required capital including capital conservation buffer $ 116,174 $ 72,518
Tier I leverage, minimum required capital including capital conservation buffer, ratio 4.00% 4.00%
Tier I leverage, to be well capitalized under prompt corrective action provisions $ 145,218 $ 90,648
Tier I leverage, to be well capitalized under prompt corrective action provisions, ratio 0.0500 0.0500
Common equity tier 1 $ 304,376 $ 186,734
Common equity tier 1, ratio 0.1233 0.1195
Common equity tier 1, minimum required capital including capital conservation buffer $ 172,801 $ 109,384
Common equity tier 1, minimum required capital including capital conservation buffer, ratio 7.00% 7.00%
Common equity tier 1, to be well capitalized under prompt corrective action provisions $ 160,458 $ 101,571
Common equity tier 1, to be well capitalized under prompt corrective action provisions, ratio 6.50% 6.50%
Tier I risk-based capital $ 304,376 $ 186,734
Tier I risk-based capital, ratio 0.1233 0.1195
Tier I risk-based capital, minimum required capital including capital conservation buffer $ 209,829 $ 132,823
Tier I risk-based capital, minimum required capital including capital conservation buffer, ratio 8.50% 8.50%
Tier I risk-based capital, to be well capitalized under prompt corrective action provisions $ 197,486 $ 125,010
Tier I risk-based capital, to be well capitalized under prompt corrective action provisions, ratio 0.0800 0.0800
Total risk-based capital $ 324,635 $ 199,737
Total risk-based capital, ratio 0.1315 0.1279
Total risk-based capital, minimum required capital including capital conservation buffer $ 259,214 $ 163,975
Total risk-based capital, minimum required capital including capital conservation buffer, ratio 10.50% 10.50%
Total risk-based capital, to be well capitalized under prompt corrective action provisions $ 246,871 $ 156,167
Total risk-based capital, to be well capitalized under prompt corrective action provisions, ratio 0.1000 0.1000
v3.20.2
Earnings Per Share (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Basic EPS Computation        
Net income attributable to common shareholders $ 11,531 $ 4,000 $ 19,186 $ 12,063
Weighted average common shares outstanding (in shares) 16,587,274 11,104,918 15,053,087 11,247,921
Basic earnings per common share (in dollars per share) $ 0.70 $ 0.36 $ 1.27 $ 1.07
Diluted EPS Computation        
Net income attributable to common shareholders $ 11,531 $ 4,000 $ 19,186 $ 12,063
Dilutive effect of stock options, restricted stock shares and units and employee stock purchase plan (in shares) 62,399 72,449 67,616 66,445
Adjusted weighted average common shares outstanding (in shares) 16,649,673 11,177,367 15,120,703 11,314,366
Diluted earnings per common share (in dollars per share) $ 0.69 $ 0.36 $ 1.27 $ 1.07
v3.20.2
Fair Values of Assets and Liabilities - Schedule of Fair Value of Assets and Liabilities Measured on Recurring and Non-recurring Basis (Details) - USD ($)
$ in Thousands
Sep. 30, 2020
Dec. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Securities available for sale $ 273,893 $ 260,293
Other real estate 1,326 750
U. S. Treasury and other U. S. government agencies    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Securities available for sale 12,117 59
State and municipal    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Securities available for sale 190,623 196,660
Corporate bonds    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Securities available for sale 15,809 7,845
Mortgage-backed securities    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Securities available for sale 40,376 37,761
Asset-backed securities    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Securities available for sale 14,968 17,968
Recurring    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative assets   688
Derivative liabilities 10,216 3,396
Recurring | U. S. Treasury and other U. S. government agencies    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Securities available for sale 12,117 59
Recurring | State and municipal    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Securities available for sale 190,623 196,660
Recurring | Corporate bonds    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Securities available for sale 15,809 7,845
Recurring | Mortgage-backed securities    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Securities available for sale 40,376 37,761
Recurring | Asset-backed securities    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Securities available for sale 14,968 17,968
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1)    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative assets   0
Derivative liabilities 0 0
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | U. S. Treasury and other U. S. government agencies    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Securities available for sale 0 0
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | State and municipal    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Securities available for sale 0 0
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Corporate bonds    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Securities available for sale 0 0
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Mortgage-backed securities    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Securities available for sale 0 0
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Asset-backed securities    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Securities available for sale 0 0
Recurring | Significant Other Observable Inputs (Level 2)    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative assets   688
Derivative liabilities 10,216 3,396
Recurring | Significant Other Observable Inputs (Level 2) | U. S. Treasury and other U. S. government agencies    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Securities available for sale 12,117 59
Recurring | Significant Other Observable Inputs (Level 2) | State and municipal    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Securities available for sale 190,623 196,660
Recurring | Significant Other Observable Inputs (Level 2) | Corporate bonds    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Securities available for sale 15,809 7,845
Recurring | Significant Other Observable Inputs (Level 2) | Mortgage-backed securities    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Securities available for sale 40,376 37,761
Recurring | Significant Other Observable Inputs (Level 2) | Asset-backed securities    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Securities available for sale 14,968 17,968
Recurring | Significant Unobservable Inputs (Level 3)    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative assets   0
Derivative liabilities 0 0
Recurring | Significant Unobservable Inputs (Level 3) | U. S. Treasury and other U. S. government agencies    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Securities available for sale 0 0
Recurring | Significant Unobservable Inputs (Level 3) | State and municipal    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Securities available for sale 0 0
Recurring | Significant Unobservable Inputs (Level 3) | Corporate bonds    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Securities available for sale 0 0
Recurring | Significant Unobservable Inputs (Level 3) | Mortgage-backed securities    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Securities available for sale 0 0
Recurring | Significant Unobservable Inputs (Level 3) | Asset-backed securities    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Securities available for sale 0 0
Nonrecurring    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Impaired loans 141 553
Other real estate 1,326 750
Other repossessions 1,603 0
Nonrecurring | Quoted Prices in Active Markets for Identical Assets (Level 1)    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Impaired loans 0 0
Other real estate 0 0
Other repossessions 0 0
Nonrecurring | Significant Other Observable Inputs (Level 2)    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Impaired loans 0 0
Other real estate 0 0
Other repossessions 0 0
Nonrecurring | Significant Unobservable Inputs (Level 3)    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Impaired loans 141 553
Other real estate 1,326 750
Other repossessions $ 1,603 $ 0
v3.20.2
Fair Values of Assets and Liabilities - Summary of Quantitative Information of Assets Measured at Fair Value on Nonrecurring Basis by Utilized Level 3 Inputs (Details) - Estimated costs to sell - Range (Weighted Average) - Significant Unobservable Inputs (Level 3) - Nonrecurring
Sep. 30, 2020
Dec. 31, 2019
Appraisal    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Impaired loans 0.10 0.10
Other real estate 0.10 0.10
Third-party guidelines    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Other repossessions 0.10 0.10
v3.20.2
Fair Values of Assets and Liabilities - Estimated Fair Value of Financial Instruments (Details) - USD ($)
$ in Thousands
Sep. 30, 2020
Dec. 31, 2019
Carrying Amount    
Financial assets    
Cash and due from banks $ 14,050 $ 7,953
Federal funds sold 12,273 52
Loans, net 2,338,064 1,397,374
Mortgage loans held for sale 99,587 37,476
Accrued interest receivable 14,615 7,188
Restricted equity securities 17,367 11,279
Financial liabilities    
Deposits 2,565,502 1,584,453
Accrued interest payable 3,744 2,022
Subordinate debentures 70,389 70,883
Federal Home Loan Bank advances 40,555 10,737
Estimated Fair Value    
Financial assets    
Cash and due from banks 14,050 7,953
Federal funds sold 12,273 52
Loans, net 2,336,300 1,383,719
Mortgage loans held for sale 99,587 38,379
Accrued interest receivable 14,615 7,188
Restricted equity securities 17,367 11,279
Financial liabilities    
Deposits 2,571,305 1,582,781
Accrued interest payable 3,744 2,022
Subordinate debentures 69,237 71,454
Federal Home Loan Bank advances 40,887 10,755
Estimated Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1)    
Financial assets    
Cash and due from banks 14,050 7,953
Federal funds sold 0 0
Loans, net 0 0
Mortgage loans held for sale 0 0
Accrued interest receivable 0 0
Restricted equity securities 0 0
Financial liabilities    
Deposits 0 0
Accrued interest payable 0 0
Subordinate debentures 0 0
Federal Home Loan Bank advances 0 0
Estimated Fair Value | Significant Other Observable Inputs (Level 2)    
Financial assets    
Cash and due from banks 0 0
Federal funds sold 12,273 52
Loans, net 0 0
Mortgage loans held for sale 99,587 38,379
Accrued interest receivable 14,615 7,188
Restricted equity securities 17,367 11,279
Financial liabilities    
Deposits 0 0
Accrued interest payable 3,744 2,022
Subordinate debentures 0 0
Federal Home Loan Bank advances 0 0
Estimated Fair Value | Significant Unobservable Inputs (Level 3)    
Financial assets    
Cash and due from banks 0 0
Federal funds sold 0 0
Loans, net 2,336,300 1,383,719
Mortgage loans held for sale 0 0
Accrued interest receivable 0 0
Restricted equity securities 0 0
Financial liabilities    
Deposits 2,571,305 1,582,781
Accrued interest payable 0 0
Subordinate debentures 69,237 71,454
Federal Home Loan Bank advances $ 40,887 $ 10,755
v3.20.2
Segment Reporting - Narrative (Details)
9 Months Ended
Sep. 30, 2020
segment
Segment Reporting [Abstract]  
Number of reportable segments 2
v3.20.2
Segment Reporting - Summary of Results of Operations for Company's Business Segments (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2020
Jun. 30, 2020
Mar. 31, 2020
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Sep. 30, 2020
Sep. 30, 2019
Segment Reporting Information [Line Items]                
Net interest income $ 30,537     $ 14,064     $ 77,610 $ 41,338
Provision for loan losses 1,500     606     7,400 806
Noninterest income 6,001     2,760     13,706 7,396
Noninterest expense (excluding merger expense) 20,255     12,748     55,301 38,617
Merger expenses 78     299     6,895 302
Income tax expense (benefit) 2,800     557     3,524 1,430
CONSOLIDATED NET INCOME 11,905 $ 7,480 $ (1,191) 2,614 $ 2,684 $ 2,281 18,196 7,579
Non controlling interest in net (income) loss of subsidiary (374)     1,386     990 4,484
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS 11,531     4,000     19,186 12,063
Operating Segments | Commercial Banking                
Segment Reporting Information [Line Items]                
Net interest income 29,729     13,910     75,933 40,986
Provision for loan losses 1,500     606     7,400 806
Noninterest income 2,218     1,375     6,102 4,226
Noninterest expense (excluding merger expense) 16,065     9,726     44,961 30,300
Merger expenses 78     299     6,895 302
Income tax expense (benefit) 2,773     654     3,593 1,741
CONSOLIDATED NET INCOME 11,531     4,000     19,186 12,063
Non controlling interest in net (income) loss of subsidiary 0     0     0 0
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS 11,531     4,000     19,186 12,063
Operating Segments | Residential Mortgage Banking                
Segment Reporting Information [Line Items]                
Net interest income 808     154     1,677 352
Provision for loan losses 0     0     0 0
Noninterest income 3,797     1,377     7,601 3,187
Noninterest expense (excluding merger expense) 4,190     3,022     10,340 8,317
Merger expenses 0     0     0 0
Income tax expense (benefit) 27     (97)     (69) (311)
CONSOLIDATED NET INCOME 388     (1,394)     (993) (4,467)
Non controlling interest in net (income) loss of subsidiary (388)     1,394     993 4,467
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS 0     0     0 0
Elimination Entries                
Segment Reporting Information [Line Items]                
Net interest income 0     0     0 0
Provision for loan losses 0     0     0 0
Noninterest income (14)     8     3 (17)
Noninterest expense (excluding merger expense) 0     0     0 0
Merger expenses 0     0     0 0
Income tax expense (benefit) 0     0     0 0
CONSOLIDATED NET INCOME (14)     8     3 (17)
Non controlling interest in net (income) loss of subsidiary 14     (8)     (3) 17
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 0     $ 0     $ 0 $ 0
v3.20.2
Income Taxes (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Income Tax Disclosure [Abstract]        
Income tax expense (benefit) $ 2,800 $ 557 $ 3,524 $ 1,430
Effective income tax rate 19.00% 17.60% 16.20% 15.90%
v3.20.2
Business Combinations - Tennessee Community Bank Holdings TCB (Details) - USD ($)
9 Months Ended
Jan. 01, 2020
Sep. 30, 2020
Sep. 30, 2019
Dec. 31, 2019
Business Acquisition [Line Items]        
Common stock, par value (in dollars per share)   $ 1   $ 1
Cash settlement for Tennessee Community Bank Holdings, Inc. common stock   $ 8,500,000 $ 0  
COMMON STOCK        
Business Acquisition [Line Items]        
Common stock, par value (in dollars per share) $ 1.00      
Business combination, shares issued per acquiree share (in shares) 0.769      
Tennessee Community Bank Holdings        
Business Acquisition [Line Items]        
Common stock, par value (in dollars per share) $ 1.00      
Reliant Bancorp, Inc. common stock shares issued (in shares) 811,210      
Cash settlement for Tennessee Community Bank Holdings, Inc. common stock $ 18,073,000      
Cash in lieu of fractional shares based on volume weighted average closing consecutive 22.36      
Exercise of stock option 34.25      
Aggregate consideration paid to holders of unexercised options $ 430,000 $ 430,000    
Tennessee Community Bank Holdings | COMMON STOCK        
Business Acquisition [Line Items]        
Business acquisition, share price (in dollars per share) $ 17.13      
v3.20.2
Business Combinations - Financial Impact of Merger TCB (Details)
9 Months Ended
Jan. 01, 2020
USD ($)
$ / shares
shares
Sep. 30, 2020
USD ($)
Sep. 30, 2019
USD ($)
Dec. 31, 2019
USD ($)
Calculation of Purchase Price        
Cash settlement for Tennessee Community Bank Holdings, Inc. common stock ($17.13 per share)   $ 8,500,000 $ 0  
Allocation of Purchase Price        
Goodwill   51,506,000   $ 43,642,000
Tennessee Community Bank Holdings        
Calculation of Purchase Price        
Shares of Tennessee Community Bank Holdings, Inc. common stock outstanding as of January 1, 2020 (in shares) | shares 1,055,041      
Exchange ratio for Reliant Bancorp, Inc. common stock 0.769      
Reliant Bancorp, Inc. common stock shares issued (in shares) | shares 811,210      
Reliant Bancorp, Inc. share price at January 1, 2020 (in dollars per share) | $ / shares $ 22.24      
Estimated value of Reliant Bancorp, Inc. shares issued $ 18,041,000      
Cash settlement for Tennessee Community Bank Holdings, Inc. common stock ($17.13 per share) 18,073,000      
Cash settlement for Tennessee Community Bank Holdings, Inc.'s 26,450 outstanding stock options ($34.25 settlement price less weighted average exercise price of $18.00) 430,000 $ 430,000    
Cash settlement for Reliant Bancorp, Inc. fractional shares ($22.36 per pro rata fractional share) 3,000      
Estimated fair value of Tennessee Community Bank Holdings, Inc. $ 36,547,000      
Number of stock options settled (in shares) | shares 26,450      
Exercise of stock option $ 34.25      
Stock options weighted average exercise price (in dollars per share) | $ / shares $ 18.00      
Cash in lieu of fractional shares based on volume weighted average closing consecutive $ 22.36      
Allocation of Purchase Price        
Total consideration above 36,547,000      
Cash and cash equivalents 11,026,000      
Investment securities available for sale 56,336,000      
Loans, net of unearned income 171,445,000      
Accrued interest receivable 948,000      
Premises and equipment 6,401,000      
Cash surrender value of life insurance contracts 5,629,000      
Restricted equity securities 909,000      
Core deposit intangible 3,617,000      
Other assets 833,000      
Deposits (210,538,000)      
Deferred tax liability (337,000)      
Borrowings (58,000)      
FHLB advances (13,102,000)      
Other liabilities (3,682,000)      
Total fair value of net assets acquired 29,427,000      
Goodwill $ 7,120,000      
COMMON STOCK | Tennessee Community Bank Holdings        
Calculation of Purchase Price        
Business acquisition, share price (in dollars per share) | $ / shares $ 17.13      
v3.20.2
Business Combinations - First Advantage Bancorp FABK (Details) - USD ($)
$ / shares in Units, $ in Thousands
Apr. 01, 2020
Sep. 30, 2020
Dec. 31, 2019
Business Acquisition [Line Items]      
Common stock, par value (in dollars per share)   $ 1 $ 1
Common stock, shares outstanding (in shares)   16,634,572 11,206,254
First Advantage Bancorp      
Business Acquisition [Line Items]      
Common stock, par value (in dollars per share) $ 0.01    
Business combination, shares issued per acquiree share (in shares) 1.17    
Business acquisition, share price (in dollars per share) $ 3.00    
Business combination, cash paid in lieu of fractional shares (in dollars per share) 11.74    
Reliant Bancorp, Inc. share price at January 1, 2020 (in dollars per share) $ 11.27    
Common stock, shares outstanding (in shares) 3,935,165    
Total consideration above $ 64,094    
Consideration transferred as price per share (in dollars per share) $ 16.28    
v3.20.2
Business Combinations - Financial Impact of Merger FABK (Details)
9 Months Ended
Apr. 01, 2020
USD ($)
$ / shares
shares
Sep. 30, 2020
USD ($)
Sep. 30, 2019
USD ($)
Dec. 31, 2019
USD ($)
Calculation of Purchase Price        
Cash settlement for First Advantage Bancorp common stock ($3.00 per share)   $ 8,500,000 $ 0  
Allocation of Purchase Price        
Goodwill   $ 51,506,000   $ 43,642,000
First Advantage Bancorp        
Calculation of Purchase Price        
Shares of First Advantage Bancorp common stock outstanding as of April 1, 2020 (in shares) | shares 3,935,165      
Conversion of restricted stock units to shares of common stock of First Advantage Bancorp as of April 1, 2020 (in shares) | shares 2,000      
Total First Advantage Bancorp common stock outstanding as of April, 1, 2020 (in shares) | shares 3,937,165      
Exchange ratio for Reliant Bancorp, Inc. common stock 1.17      
Reliant Bancorp, Inc. common stock shares issued (in shares) | shares 4,606,483      
Remove fractional shares (in shares) | shares (64)      
Reliant Bancorp, Inc. common stock shares issued (in shares) | shares 4,606,419      
Reliant Bancorp, Inc. share price at April 1, 2020 (in dollars per share) | $ / shares $ 11.27      
Estimated value of Reliant Bancorp, Inc. shares issued $ 51,914,000      
Cash settlement for Reliant Bancorp, Inc. fractional shares ($11.74 per pro rata fractional share) 1,000      
Cash settlement for First Advantage Bancorp common stock ($3.00 per share) 11,805,000      
Cash settlement for First Advantage Bancorp restricted stock units ($3.00 per share) 6,000      
Cash settlement for First Advantage Bancorp's 34,800 outstanding stock options ($30.00 settlement price less weighted average exercise price of $19.44) 368,000      
Total consideration above $ 64,094,000      
Business combination, cash paid in lieu of fractional shares (in dollars per share) | $ / shares $ 11.74      
Business acquisition, share price (in dollars per share) | $ / shares $ 3.00      
Number of stock options settled (in shares) | shares 34,800      
Exercise of stock option $ 30.00      
Stock options weighted average exercise price (in dollars per share) | $ / shares $ 19.44      
Allocation of Purchase Price        
Total consideration above $ 64,094,000      
Cash and cash equivalents 11,159,000      
Investment securities available for sale 35,970,000      
Loans, net of unearned income 622,423,000      
Mortgage loans held for sale, net 5,878,000      
Premises and equipment 7,905,000      
Deferred tax asset 6,024,000      
Cash surrender value of life insurance contracts 14,776,000      
Other real estate and repossessed assets 1,259,000      
Core deposit intangible 2,280,000      
Operating lease right-of-use assets 6,536,000      
Other assets 10,934,000      
Deposits (608,690,000)      
Borrowings (35,962,000)      
Operating lease liabilities (6,536,000)      
Other liabilities (10,606,000)      
Total fair value of net assets acquired 63,350,000      
Goodwill $ 744,000      
First Advantage Bancorp | COMMON STOCK        
Calculation of Purchase Price        
Business acquisition, share price (in dollars per share) | $ / shares $ 3.00      
First Advantage Bancorp | Restricted Stock and Restricted Stock Units        
Calculation of Purchase Price        
Business acquisition, share price (in dollars per share) | $ / shares $ 3.00      
v3.20.2
Business Combinations - Pro Forma (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Business Combinations [Abstract]        
Revenue $ 35,881 $ 29,478 $ 106,771 $ 86,217
Net interest income 29,880 25,232 85,741 74,835
Net income attributable to common shareholders $ 11,117 $ 9,182 $ 17,715 $ 28,545