UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒

þQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended~~September 30~~~~, 2017~~March 31, 2019

☐

¨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

~~COMMERCE Union Bancshares, Inc~~.

Reliant Bancorp, Inc.

(Exact name of registrant as specified in its charter)

~~Tennessee~~		~~37-1641316~~

Tennessee	37-1641316
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)


1736 Carothers Parkway,, Suite 100 Brentwood, Tennessee	37027
(Address of principal executive offices)	(Zip Code)

~~(615)~~ ~~221-2020~~
(615) 221-2020
(~~Registrant~~’sRegistrant’s telephone number, including area code)

Indicate by check mark whether the ~~Registrant~~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 ý ~~Yes ☒~~ No ☐

Indicate by check mark whether the ~~Registrant~~registrant has submitted electronically ~~and posted on its corporate website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files): Yes ý ~~Yes ☒~~ No ☐

Indicate by check mark whether the ~~Registrant~~registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated ~~filer”~~filer,” “accelerated ~~filer”~~filer,” “smaller reporting company,” and ~~“smaller reporting~~“emerging growth company” in Rule ~~12b~~-212b-2 of the Exchange Act:



Large Accelerated Filer ☐ ¨	Accelerated Filer ☒ ý
	Non-Accelerated Filer ☐¨	Smaller Reporting Company ☐ ý
	Emerging growth company ☒ý

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~~Section 13(a) of the Exchange Act. [ ]¨

Indicate by check mark whether the ~~Registrant~~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~~’sregistrant’s common stock, par value $1.00 per share, as of ~~November 8, 2017~~May 6, 2019 was ~~9,022,226.~~

~~DOCUMENTS INCORPORATED BY REFERENCE~~

~~None.~~

11,294,620.

~~Table of Contents~~

TABLE OF CONTENTS

~~Table of Contents~~

FORWARD-LOOKING STATEMENTS

~~This Quarterly Report on Form 10-Q of Commerce Union Bancshares,~~

Reliant Bancorp, Inc. ~~(“we,” “our,~~(“Reliant Bancorp” or ~~“us” on a consolidated basis) contains~~the “Company”) may from time to time make written or oral statements, including statements contained in this report (including, without limitation, certain statements in Item 2 (Management’s Discussion and Analysis of Financial Condition and Results of Operations)), that constitute 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. Such~~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, ~~include projections, predictions, expectations or~~but other statements ~~as to beliefs or future events or results or refer to other matters that are~~ not based on historical ~~facts. Forward-looking~~information may also be considered forward-looking. All forward-looking statements are subject to ~~known and unknown~~ risks, uncertainties and other factors that ~~could~~may cause the actual results, performance or achievements of Reliant Bancorp to differ materially from ~~those contemplated~~any results, performance or achievements expressed or implied by ~~the~~such forward-looking statements. The forward-looking statements contained in this quarterly report are based on various factors and were derived using numerous assumptions. In some cases, you can identify these forward-looking statements by words like “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” or “continue,” or the negative of those wordsSuch risks, uncertainties and other comparable words. You should be aware that those statements reflect only our predictions. If known or unknown risks or uncertainties should materialize, or if any one or more of our material underlying assumptions should prove inaccurate, actual results could differ materially from past results and those anticipated, estimated, or projected. You should bear this in mind when reading this quarterly report and not place undue reliance on these forward-looking statements. Commerce Union’s actual results may differ materially from the results anticipated in forward-looking statements due to a variety of factors. Factors that might cause such differencesfactors include, ~~but are not limited to:~~

~~The possibility that our asset quality declines or that we experience greater loan losses than anticipated;~~among others:

~~Increased levels of other real estate, primarily as a result of foreclosures;~~


(i)	the possibility that our asset quality will decline or that we experience greater loan losses than anticipated;


(ii)	increased levels of other real estate, primarily as a result of foreclosures;


(iii)	the impact of liquidity needs on our results of operations and financial condition;


(iv)	the effect of interest rate increases on the cost of deposits;


(v)	unanticipated weakness in loan demand or loan pricing;


(vi)	greater than anticipated adverse conditions in the national economy or local economies in which we operate, including Middle Tennessee;


(vii)	lack of strategic growth opportunities or our failure to execute on those opportunities;


(viii)	deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses;


(ix)	the ability to grow and retain low-cost core deposits and retain large, uninsured deposits;


(x)	the impact of competition with other financial institutions and financial services providers, including pricing pressures and the resulting impact on Reliant Bancorp’s results, including as a result of compression to net interest margin;


(xi)	our ability to effectively manage problem credits;


(xii)	our ability to successfully implement efficiency initiatives on time and in amounts projected;


(xiii)	our ability to successfully develop and market new products and technology;


(xiv)	the impact of negative developments in the financial industry and U.S. and global capital and credit markets;


(xv)	our ability to retain the services of key personnel;


(xvi)	our ability to adapt to technological changes;


(xvii)	risks associated with litigation, including the applicability of insurance coverage;


(xviii)	the vulnerability of Reliant Bank’s network and online banking portals, and the systems of parties with whom Reliant Bancorp and Reliant Bank contract, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss, and other security breaches;


(xix)	changes in state and federal laws, rules, regulations or policies applicable to banks or bank or financial holding companies, including regulatory or legislative developments;


(xx)	adverse results (including costs, fines, reputational harm and/or other negative effects) from current or future litigation, regulatory examinations or other legal and/or regulatory actions; and


(xxi)	general competitive, economic, political and market conditions, including economic conditions in the local markets where we operate.

~~The impact of liquidity needs on our results of operations and financial condition;~~

~~Competition from financial institutions and other financial service providers;~~

~~Economic conditions in the local markets where we operate;~~

The negative impact on profitability imposed on us by a compressed net interest margin on loans and other extensions of credit, which affects our ability to lend profitably and to price loans effectively in the face of competitive pressures;

~~A merger or acquisition, like our merger with Community First, Inc.~~

~~The effect of legislative or regulatory developments, including changes in laws concerning banking, securities, taxes, insurance, and other aspects of the financial services industry;~~

~~Our ability to attract, develop, and retain qualified banking professionals;~~

~~A significant number of our customers failing to perform under their loans and other terms of credit agreements;~~

~~The growing concern on the impact of a future rise in interest rates, affecting both our pricing of credit and our investments;~~

~~Failure to attract or retain stable deposits at reasonable cost that is competitive with the larger international, national, and regional financial service providers with which we compete;~~

~~International, national, and local disasters such as terrorist attacks, natural disasters, or the effects of pandemic flu, or other pandemic illness;~~

~~Incorrect responses to, or assumptions based on, experiences and circumstances, such as responses to known or perceived changes in the economy;~~

~~Volatility and disruption in financial, credit, and securities markets;~~

~~Difficulties encountered in our merger with Community First, Inc. with customers, employees or other business relationships;~~

~~Risk that integrating Community First, Inc. with and into Commerce Union could be delayed, or substantially more expensive than anticipated;~~

~~The dilution caused by our issuance of shares to investors in the private placement discussed herein;~~

~~Deterioration in the financial markets that may result in other-than-temporary impairment charges relating to securities owned by the Reliant Bank;~~

The effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting Standards Board, the Securities and Exchange Commission (the “SEC”), the Public Company Accounting Oversight Board, and other regulatory agencies; and

~~The effect of fiscal and governmental policies of the United States federal government.~~

You should also consider carefully the risk factors discussed in ~~Item 1A of Part II of this Form 10-Q referencing Item 1A of~~ Part I of our most recent Annual Report on Form 10-K, which address additional factors that could cause our actual results to differ from those set forth in the 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.~~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 there listed may develop or, if currently extant, we may not have yet recognized them.

The 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.

~~Table of Contents~~

PART I – FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements (Unaudited).

~~COMMERCE UNION BANCSHARES,~~

RELIANT BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

~~SEPTEMBER 30, 2017~~

MARCH 31, 2019 (UNAUDITED) AND DECEMBER 31, ~~2016~~

2018

(Dollar amounts in thousands except per share amounts)

September 30,
2017

December 31,
2016

ASSETS

Cash and due from banks
$ 18,277 $ 23,413
Federal funds sold
669 830
Total cash and cash equivalents
18,946 24,243
Securities available for sale
192,277 146,813
Loans, net
739,738 657,701
Mortgage loans held for sale, net
19,475 11,831
Accrued interest receivable
4,999 3,786
Premises and equipment, net
9,558 9,093
Restricted equity securities, at cost
7,163 7,133
Cash surrender value of life insurance contracts
29,422 24,827
Deferred tax assets, net
2,776 3,437
Goodwill
11,404 11,404
Core deposit intangibles
1,336 1,582
Other assets
4,086 10,134

TOTAL ASSETS
$ 1,041,180 $ 911,984

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES

Deposits

Demand
$ 132,058 $ 134,792
Interest-bearing demand
79,439 85,478
Savings and money market deposit accounts
197,521 183,788
Time
431,430 359,776
Total deposits
840,448 763,834
Accrued interest payable
220 107
Federal funds purchased
- 3,671
Federal Home Loan Bank advances
56,720 32,287
Dividends payable
541 1,711
Other liabilities
5,307 3,455

TOTAL LIABILITIES
903,236 805,065

STOCKHOLDERS’ EQUITY

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; 9,022,098 and 7,778,309 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively
9,022 7,778
Additional paid-in capital
112,202 89,045
Retained earnings
16,821 12,212
Accumulated other comprehensive loss
(101 ) (2,116 )

TOTAL STOCKHOLDERS’ EQUITY
137,944 106,919

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$ 1,041,180 $ 911,984



	March 31, 2019		December 31, 2018
	Unaudited		Audited
ASSETS
Cash and due from banks	$	34,796	$	34,807
Federal funds sold	409		371
Total cash and cash equivalents	35,205		35,178
Securities available for sale	310,305		296,323
Loans, net	1,250,806		1,220,184
Mortgage loans held for sale, net	9,990		15,823
Accrued interest receivable	8,389		8,214
Premises and equipment, net	21,970		22,033
Restricted equity securities, at cost	11,499		11,690
Other real estate, net	1,000		1,000
Cash surrender value of life insurance contracts	45,791		45,513
Deferred tax assets, net	4,730		7,428
Goodwill	43,642		43,642
Core deposit intangibles	7,982		8,219
Other assets	10,617		9,091

TOTAL ASSETS	$	1,761,926	$	1,724,338
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Deposits
Demand	$	220,966	$	216,937
Interest-bearing demand	144,166		154,218
Savings and money market deposit accounts	398,366		401,308
Time	747,823		665,440
Total deposits	1,511,321		1,437,903
Accrued interest payable	990		1,063
Subordinated debentures	11,624		11,603
Federal Home Loan Bank advances	15,309		57,498
Dividends payable	1,035		1,036
Other liabilities	6,528		6,821

TOTAL LIABILITIES	1,546,807		1,515,924
STOCKHOLDERS’ EQUITY
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; 11,502,285 and 11,530,810 shares issued and outstanding at March 31, 2019, and December 31, 2018, respectively	11,502		11,531
Additional paid-in capital	172,886		173,238
Retained earnings	30,119		27,329
Accumulated other comprehensive gain (loss)	612		(3,684		)

TOTAL STOCKHOLDERS’ EQUITY	215,119		208,414

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,761,926	$	1,724,338

See accompanying notes to consolidated financial statements

~~Table of Contents~~RELIANT BANCORP, INC.

~~COMMERCE UNION BANCSHARES, INC.~~

CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~

INCOME

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER 30, 2017~~MARCH 31, 2019 AND ~~2016~~

2018

(Dollar amounts in thousands except per share amounts)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

INTEREST INCOME

Interest and fees on loans
$ 9,078 $ 7,729 $ 25,193 $ 24,011
Interest and fees on loans held for sale
211 109 420 663
Interest on investment securities, taxable
179 137 514 589
Interest on investment securities, nontaxable
1,022 578 2,796 1,506
Federal funds sold and other
137 103 381 298

TOTAL INTEREST INCOME
10,627 8,656 29,304 27,067

INTEREST EXPENSE

Deposits

Demand
42 46 131 137
Savings and money market deposit accounts
207 151 557 480
Time
1,117 430 2,663 1,260
Federal Home Loan Bank advances and other
165 194 383 581

TOTAL INTEREST EXPENSE
1,531 821 3,734 2,458

NET INTEREST INCOME
9,096 7,835 25,570 24,609

PROVISION FOR LOAN LOSSES
540 145 1,195 760

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
8,556 7,690 24,375 23,849

NONINTEREST INCOME

Service charges on deposit accounts
309 320 936 926
Gains on mortgage loans sold, net
1,571 551 2,751 5,675
Gain on securities transactions, net
- 296 59 356
Gain on sale of other real estate
1 145 26 301
Loss on disposal of premises and equipment
(50 ) - (50 ) -
Other
256 263 735 673

TOTAL NONINTEREST INCOME
2,087 1,575 4,457 7,931

NONINTEREST EXPENSE

Salaries and employee benefits
4,880 4,017 13,634 14,294
Occupancy
850 767 2,482 2,406
Information technology
732 586 1,924 1,849
Advertising and public relations
81 117 204 542
Audit, legal and consulting
1,046 328 1,647 993
Federal deposit insurance
100 109 320 349
Provision for losses on other real estate
- 17 - 70
Other operating
808 942 2,423 3,044

TOTAL NONINTEREST EXPENSE
8,497 6,883 22,634 23,547

INCOME BEFORE PROVISION FOR INCOME TAXES
2,146 2,382 6,198 8,233

INCOME TAX EXPENSE
306 619 1,005 1,775

CONSOLIDATED NET INCOME
1,840 1,763 5,193 6,458

NONCONTROLLING INTEREST IN NET LOSS OF SUBSIDIARY
6 605 898 507

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS
$ 1,846 $ 2,368 $ 6,091 $ 6,965

Basic net income attributable to common shareholders, per share
$ 0.23 $ 0.31 $ 0.77 $ 0.92
Diluted net income attributable to common shareholders, per share
$ 0.22 $ 0.30 $ 0.76 $ 0.91



	Three Months Ended March 31,
	2019		2018
INTEREST INCOME
Interest and fees on loans	$	16,169	$	13,558
Interest and fees on loans held for sale	153		481
Interest on investment securities, taxable	503		507
Interest on investment securities, nontaxable	1,718		1,504
Federal funds sold and other	300		312

TOTAL INTEREST INCOME	18,843		16,362

INTEREST EXPENSE
Deposits
Demand	111		77
Savings and money market deposit accounts	1,130		478
Time	3,571		1,996
Federal Home Loan Bank advances and other	377		272
Subordinated debentures	193		157

TOTAL INTEREST EXPENSE	5,382		2,980

NET INTEREST INCOME	13,461		13,382

PROVISION FOR LOAN LOSSES	—		137

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	13,461		13,245

NONINTEREST INCOME
Service charges on deposit accounts	884		771
Gains on mortgage loans sold, net	560		1,705
Gain on securities transactions, net	131		—
Gain on sale of other real estate	—		89
Other	363		426

TOTAL NONINTEREST INCOME	1,938		2,991

NONINTEREST EXPENSE
Salaries and employee benefits	7,265		6,954
Occupancy	1,352		1,229
Information technology	1,410		1,349
Advertising and public relations	254		89
Audit, legal and consulting	796		623
Federal deposit insurance	195		196
Merger expenses	2		177
Other operating	1,472		1,545

TOTAL NONINTEREST EXPENSE	12,746		12,162

INCOME BEFORE PROVISION FOR INCOME TAXES	2,653		4,074

INCOME TAX EXPENSE	372		797

CONSOLIDATED NET INCOME	2,281		3,277

NONCONTROLLING INTEREST IN NET LOSS OF SUBSIDIARY	1,543		464

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	3,824	$	3,741

Basic net income attributable to common shareholders, per share	$	0.34	$	0.33
Diluted net income attributable to common shareholders, per share	$	0.33	$	0.33

See accompanying notes to consolidated financial statements

~~Table of Contents~~RELIANT BANCORP, INC.

~~COMMERCE UNION BANCSHARES, INC.~~

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER 30, 2017~~MARCH 31, 2019 AND ~~2016~~

2018

(Dollar amounts in thousands except per share amounts)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Consolidated net income
$ 1,840 $ 1,763 $ 5,193 $ 6,458

Other comprehensive income

Net unrealized gains (losses) on available-for-sale securities, net of tax of $257 and $(122) for the three months ended September 30, 2017 and 2016, respectively, and $1,273 and $591 for the nine months ended September 30, 2017 and 2016, respectively
412 (197 ) 2,051 952

Reclassification adjustment for gains included in net income, net of tax of $(113) for the three months ended September 30, 2016, respectively, and $(23) and $(136) for the nine months ended September 30, 2017 and 2016, respectively
- (183 ) (36 ) (220 )

TOTAL OTHER COMPREHENSIVE INCOME (LOSS)
412 (380 ) 2,015 732

TOTAL COMPREHENSIVE INCOME
$ 2,252 $ 1,383 $ 7,208 $ 7,190



	Three Months Ended March 31,
	2019			2018
Consolidated net income	$	2,281		$	3,277
Other comprehensive income (loss)
Net unrealized gains (losses) on available-for-sale securities, net of tax of ($1,721) and $1,579 for the three months ended March 31, 2019 and 2018, respectively	4,863			(4,414		)
Net unrealized losses on interest rate swap derivatives net of tax of $167 for the three months ended March 31, 2019	(470		)	—
Reclassification adjustment for gains included in net income, net of tax of $34 for the three months ended March 31, 2019	(97		)	—
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)	4,296			(4,414		)
TOTAL COMPREHENSIVE INCOME (LOSS)	$	6,577		$	(1,137	)

See accompanying notes to consolidated financial statements

~~Table of Contents~~RELIANT BANCORP, INC.

~~COMMERCE UNION BANCSHARES, INC.~~

CONSOLIDATED STATEMENTS OF CHANGES IN ~~STOCKHOLDERS~~STOCKHOLDERS’ EQUITY

~~’ EQUITY~~

FOR THE ~~NINE~~THREE MONTHS ENDED ~~SEPTEMBER 30, 2017~~MARCH 31, 2019 AND ~~2016~~

2018

(Dollar amounts in thousands except per share amounts)

(Unaudited)

ACCUMULATED

ADDITIONAL

OTHER

COMMON STOCK

PAID-IN

RETAINED

COMPREHENSIVE

NONCONTROLLING

SHARES

AMOUNT

CAPITAL

EARNINGS

INCOME (LOSS)

INTEREST

TOTAL

BALANCE - JANUARY 1, 2016
7,279,620 $ 7,280 $ 84,520 $ 4,987 $ (36 ) $ - $ 96,751

Stock based compensation expense
- - 168 - - - 168

Exercise of stock options
461,931 462 4,154 - - - 4,616

Restricted stock awards
23,800 23 (23 ) - - - -

Restricted stock forfeiture
(2,000 ) (2 ) 2 - - - -

Noncontrolling interest contributions
- - - - - 507 507

Net income (loss)
- - - 6,965 - (507 ) 6,458

Other comprehensive income
- - - - 732 - 732

BALANCE - SEPTEMBER 30, 2016
7,763,351 $ 7,763 $ 88,821 $ 11,952 $ 696 $ - $ 109,232

BALANCE - JANUARY 1, 2017
7,778,309 $ 7,778 $ 89,045 $ 12,212 $ (2,116 ) $ - $ 106,919

Stock based compensation expense
- - 412 - - - 412

Exercise of stock options
59,739 60 633 - - - 693

Restricted stock awards
50,050 50 (50 ) - - - -

Restricted stock forfeiture
(3,000 ) (3 ) 3 - - - -

Common stock issuance
1,137,000 1,137 23,877 - - - 25,014

Stock issuance costs
- - (1,718 ) - - - (1,718 )

Noncontrolling interest contributions
- - - - - 898 898

Cash dividend declared to common shareholders ($0.18 per share)
- - - (1,482 ) - - (1,482 )

Net income (loss)
- - - 6,091 - (898 ) 5,193

Other comprehensive income
- - - - 2,015 - 2,015

BALANCE - SEPTEMBER 30, 2017
9,022,098 $ 9,022 $ 112,202 $ 16,821 $ (101 ) $ - $ 137,944



	COMMON STOCK					ADDITIONAL PAID-IN CAPITAL			RETAINED EARNINGS			ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)			NONCONTROLLING INTEREST			TOTAL
	SHARES		AMOUNT
BALANCE - JANUARY 1, 2018	9,034,439		$	9,034		$	112,437		$	17,189		$	1,477		$	—		$	140,137

Stock based compensation expense	—		—			224			—			—			—			224

Exercise of stock options	25,225		25			315			—			—			—			340

Restricted stock awards	4,500		5			(5		)	—			—			—			—

Restricted stock forfeiture	(1,000	)	(1		)	1			—			—			—			—

Conversion shares issued to shareholders' of Community First, Inc.	2,416,444		2,417			59,566			—			—			—			61,983

Noncontrolling interest contributions	—		—			—			—			—			464			464

Cash dividend declared to common shareholders	—		—			—			(1,060		)	—			—			(1,060		)

Net income (loss)	—		—			—			3,741			—			(464		)	3,277

Other comprehensive loss	—		—			—			—			(4,414		)	—			(4,414		)

BALANCE - MARCH 31, 2018	11,479,608		$	11,480		$	172,538		$	19,870		$	(2,937	)	$	—		$	200,951

	COMMON STOCK					ADDITIONAL PAID-IN CAPITAL			RETAINED EARNINGS			ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)			NONCONTROLLING INTEREST			TOTAL
	SHARES		AMOUNT
BALANCE - JANUARY 1, 2019	11,530,810		$	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 awards	3,000		3			(3		)	—			—			—			—

Restricted stock and dividend forfeiture	(3,750	)	(4		)	4			1			—			—			1

Common stock shares redeemed	(29,958	)	(30		)	(629		)	—			—			—			(659		)

Noncontrolling interest contributions	—		—			—			—			—			1,543			1,543

Cash dividend declared to common shareholders	—		—			—			(1,035		)	—			—			(1,035		)

Net income (loss)	—		—			—			3,824			—			(1,543		)	2,281

Other comprehensive income	—		—			—			—			4,296			—			4,296

BALANCE - MARCH 31, 2019	11,502,285		$	11,502		$	172,886		$	30,119		$	612		$	—		$	215,119

See accompanying notes to consolidated financial statements

~~Table of Contents~~RELIANT BANCORP, INC.

~~COMMERCE UNION BANCSHARES, INC.~~

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~SEPTEMBER 30, 2017~~MARCH 31, 2019 AND ~~2016~~

2018

(Dollar amounts in thousands except per share amounts)

(Unaudited)

2017

2016

OPERATING ACTIVITIES

Consolidated net income
$ 5,193 $ 6,458
Adjustments to reconcile consolidated net income to net cash provided by operating activities

Provision for loan losses
1,195 760
Deferred income tax benefit
(589 ) (36 )
Loss on disposal of premises and equipment
50 -
Depreciation and amortization of premises and equipment
762 728
Net amortization of securities
1,478 1,117
Net realized gains on sales of securities
(59 ) (356 )
Gains on mortgage loans sold, net
(2,751 ) (5,675 )
Stock-based compensation expense
412 168
Realization of deferred gain on other real estate
(26 ) (301 )
Provision for losses on other real estate
- 70
Increase in cash surrender value of life insurance contracts
(595 ) (556 )
Mortgage loans originated for resale
(99,485 ) (137,667 )
Proceeds from sale of mortgage loans
94,592 183,786
Amortization of core deposit intangible
246 267
Change in

Accrued interest receivable
(1,213 ) (403 )
Other assets
5,701 (736 )
Accrued interest payable
113 79
Other liabilities
1,525 2,610

TOTAL ADJUSTMENTS
1,356 43,855

NET CASH PROVIDED BY OPERATING ACTIVITIES
6,549 50,313

INVESTING ACTIVITIES

Activities in available for sale securities

Purchases
(68,010 ) (47,391 )
Sales
18,688 20,036
Maturities, prepayments and calls
6,057 8,038
Purchases of restricted equity securities
(30 ) (837 )
Loan originations and payments, net
(83,232 ) (44,458 )
Purchase of buildings, leasehold improvements, and equipment
(1,277 ) (496 )
Proceeds from sale of other real estate
- 1,314
Improvement of other real estate
- (16 )
Purchase of life insurance contracts
(4,000 ) (4,000 )

NET CASH USED IN INVESTING ACTIVITIES
(131,804 ) (67,810 )

FINANCING ACTIVITIES

Net change in deposits
76,614 19,848
Net change in federal funds purchased
(3,671 ) -
Net change in Advances from Federal Home Loan Bank
24,433 8,921
Issuance of common stock
23,989 4,616
Noncontrolling interest contributions received
1,245 -
Cash dividends paid on common stock
(2,652 ) (1,489 )

NET CASH PROVIDED BY FINANCING ACTIVITIES
119,958 31,896

NET CHANGE IN CASH AND CASH EQUIVALENTS
(5,297 ) 14,399
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD
24,243 20,570
CASH AND CASH EQUIVALENTS - END OF PERIOD
$ 18,946 $ 34,969



	2019			2018
OPERATING ACTIVITIES
Consolidated net income	$	2,281		$	3,277
Adjustments to reconcile consolidated net income to net cash provided by operating activities
Provision for loan losses	—			137
Deferred income taxes (benefit)	1,179			(118		)
Depreciation and amortization of premises and equipment	497			396
Net amortization of securities	825			731
Net realized gains on sales of securities	(131		)	—
Gains on mortgage loans sold, net	(560		)	(1,705		)
Stock-based compensation expense	250			224
Realization of gain on other real estate	—			(89		)
Increase in cash surrender value of life insurance contracts	(278		)	(303		)
Mortgage loans originated for resale	(18,422		)	(37,527		)
Proceeds from sale of mortgage loans	24,815			60,495
Other accretion	(134		)	(327		)
Change in
Accrued interest receivable	(175		)	(208		)
Other assets	(1,433		)	828
Accrued interest payable	(73		)	509
Other liabilities	(1,432		)	(2,103		)

TOTAL ADJUSTMENTS	4,928			20,940

NET CASH PROVIDED BY OPERATING ACTIVITIES	7,209			24,217

INVESTING ACTIVITIES
Cash received from merger	—			33,128
Activities in available for sale securities
Purchases	(20,571		)	(69,815		)
Sales	10,558			82,187
Maturities, prepayments and calls	2,291			2,866
Purchases of restricted equity securities	(9		)	—
Redemption of restricted equity securities	200			—
Net increase in loans	(30,253		)	(20,003		)
Purchase of buildings, leasehold improvements, and equipment	(434		)	(479		)

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	(38,218		)	27,884
	2019			2018
FINANCING ACTIVITIES
Net change in deposits	73,427			33,389
Net change in advances from Federal Home Loan Bank	(42,175		)	(54,672		)
Issuance of common stock, net	28			340
Redemption of common stock	(659		)	—
Noncontrolling interest contributions received	1,450			210
Cash dividends paid on common stock	(1,035		)	(684		)

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	31,036			(21,417		)

NET CHANGE IN CASH AND CASH EQUIVALENTS	27			30,684
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD	35,178			20,668
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	35,205		$	51,352


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for
Interest	$	5,455		$	2,472
Taxes	$	4		$	1

Non-cash investing and financing activities
Unrealized gain (loss) on securities available-for-sale	$	6,954		$	(6,607	)
Unrealized gain (loss) on derivatives	$	(1,139	)	$	614
Change in due to/from noncontrolling interest	$	1,543		$	464

See accompanying notes to consolidated financial statements

Table of Contents

RELIANT BANCORP, INC.

~~COMMERCE UNION BANCSHARES, INC.~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ~~OF CASH FLOWS (CONTINUED)~~

~~FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017~~

MARCH 31, 2019 (UNAUDITED) AND ~~2016~~

DECEMBER 31, 2018

(Dollar amounts in thousands except per share amounts)

~~(Unaudited)~~

2017

2016

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period for

Interest
$ 3,621 $ 2,379
Taxes
$ 1,277 $ 2,537

Non-cash investing and financing activities

Unrealized gain on securities available-for-sale
$ 3,618 $ 2,435
Unrealized loss on derivatives
$ (353 ) $ (1,248 )
Change in due to/from noncontrolling interest
$ 898 $ 507

~~See accompanying notes to consolidated financial statements~~

~~Table of Contents~~

~~COMMERCE UNION BANCSHARES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2017 (UNAUDITED) AND DECEMBER 31, 2016~~

~~(Dollar amounts in thousands except per share amounts)~~

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies of ~~Commerce Union Bancshares,~~Reliant Bancorp, Inc. ~~and Subsidiaries (“the Company”) conform to~~ ~~accounting principles generally accepted in the United States of America and to general practices within the banking industry. The following is a brief summary of the significant policies.~~

~~Principles of Consolidation~~

~~The consolidated financial~~ statements include the accounts of Commerce Union Bancshares, Inc., its wholly owned subsidiary, Reliant Bank (the “Bank”), the Bank’s wholly-owned subsidiaries, Commerce Union Mortgage Services, Inc. (inactive and terminated in September 2016) and Reliant Investments, LLC (inactive and terminated in September 2016), and the Bank’s majority controlled subsidiary, Reliant Mortgage Ventures, LLC, collectively (the “Company”). As described in the notes to our annual financial statements, Reliant Mortgage Ventures, LLC is considered a variable interest entity for which the Bank is deemed to be the primary beneficiary. All significant intercompany balances and transactions have been eliminated in consolidation. The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America ("U.S. GAAP") and to general practices inwithin the banking industry.

The following is a brief summary of the significant policies.

Nature of Operations

~~The Company~~

Reliant Bancorp, Inc. began ~~its~~ organizational activities in 2005. ~~The Company~~Reliant Bancorp, Inc. provides financial services through its offices in Williamson, Robertson, Davidson, Sumner, Rutherford, Maury, Hickman and ~~Sumner Counties.~~Hamilton Counties in Tennessee. Its primary deposit products are checking, savings, and term certificate accounts, and its primary lending products are commercial and residential construction loans, commercial loans, installment loans and lines secured by home equity. Substantially all loans are secured by specific items of collateral including commercial and residential real estate, business assets, and consumer assets.~~These~~

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with instructions to 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 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 2016 audited~~Reliant Bancorp, Inc.’s consolidated financial ~~statements.~~

statements and related notes appearing in Reliant Bancorp, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2018.

The consolidated financial statements as of and for the periods presented include the accounts of Reliant Bancorp Inc., Reliant Bank, Community First TRUPS Holding Company, which is wholly owned by Reliant Bancorp Inc., (“TRUPS”), Reliant Investment Holdings, LLC ("Holdings") of which is 100% wholly owned by Reliant Bank ("Bank"), and Reliant Mortgage Ventures, LLC ("RMV"), of which the Bank controls 51% of the governance rights. Reliant Bancorp Inc., Reliant Bank, TRUPS, Holdings and RMV, are collectively referred to herein as the “Company”. As described in the notes to our annual consolidated financial statements, all significant inter-company balances and transactions have been eliminated in consolidation. As described in Note 12, Reliant Bancorp, Inc. and Community First, Inc. merged effective January 1, 2018. The accounting and reporting policies of the Company conform to U.S. GAAP and general practices in the banking industry.

Use of Estimates

The preparation of financial statements in conformity with ~~accounting principles generally accepted in the United States of America~~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.

Table of Contents

RELIANT BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

MARCH 31, 2019 (UNAUDITED) AND DECEMBER 31, 2018

(Dollar amounts in thousands except per share amounts)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Use of Estimates (Continued)

The ~~consolidated~~consolidated financial statements as of ~~September 30, 2017,~~March 31, 2019, and for the three months ended March 31, 2019 and ~~nine months ended September 30, 2017 and 2016,~~2018, included herein have not been audited. The accounting and reporting policies of the Company conform to U.S. ~~generally accepted accounting principles~~GAAP and Article 108 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.

~~Table of Contents~~

~~COMMERCE UNION BANCSHARES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~SEPTEMBER 30, 2017 (UNAUDITED) AND DECEMBER 31, 2016~~

~~(Dollar amounts in thousands except per share amounts)~~

~~NOTE 1~~ ~~- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)~~

~~Use of Estimates (Continued)~~

~~These~~ ~~consolidated financial statements should be read in conjunction with the Company's 2016 audited consolidated financial statements.~~ The accompanying consolidated financial statements reflect all adjustments, which are, in the opinion of management, 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 ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2017.~~

~~Proposed Merger with Community First, Inc.~~

~~On August~~ 22, 2017, Commerce Union Bancshares, Inc. and Reliant Bank entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Community First, Inc. and Community First Bank & Trust, Columbia, Tennessee, that provides for the combination of the companies. Under the Merger Agreement, a wholly owned subsidiary of Commerce Union Bancshares, Inc. will merge with and into Community First, Inc. with Community First, Inc. to be the surviving corporation and becoming a wholly owned subsidiary of Commerce Union Bancshares, Inc. (the “Merger”). As soon as reasonably practicable following the Merger and as part of a single integrated transaction, Community First, Inc. will merge with and into Commerce Union Bancshares, Inc. (the “Second Step Merger” and, together with the Merger, collectively, the “Mergers”). The Merger Agreement also contemplates that, immediately following the completion of the Second Step Merger, Community First Bank & Trust, the wholly owned bank subsidiary of Community First, Inc., will merge with and into Reliant Bank, with Reliant Bank as the surviving bank (the “Bank Merger”).

~~Pursuant~~2019.

Reclassifications

Certain reclassifications were made to the ~~terms of the Merger Agreement, upon consummation of the Merger, each shar~~e of Community First, Inc. common stock (except for specified shares of Community First, Inc. common stock held by Community First, Inc. or Commerce Union Bancshares, Inc. and any dissenting shares) will be converted into the rightMarch 31, 2018 financial statement presentation in order to receive 0.481 (the “Exchange Ratio”) shares of Commerce Union Bancshares, Inc. common stock. Although the Exchange Ratio is fixed, the market value of the merger consideration will fluctuate with the market price of Commerce Union Bancshares, Inc. common stock and will not be known until the Merger is consummated. As of the date of the Merger Agreement, Community First, Inc. had 5,025,883.87134 shares of common stock issued and outstanding (including shares of restricted stock) and 20,700 outstanding stock options, all of which are, or will be at or priorconform to the ~~effective time of the Merger, fully vested~~March 31, 2019 financial statement presentation. Total stockholders' equity and ~~exercisable.~~

~~Commerce Union Bancshares, Inc. has filed a registration statement on Form S-4 with the Securities and Exchange Commission with respect~~net income are unchanged due to ~~the registration of the shares of Commerce Union Bancshares, Inc. common stock to be issued to Community First, Inc. shareholders in connection with the Merger.~~

these reclassifications.

~~Table of Contents~~

~~COMMERCE UNION BANCSHARES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~SEPTEMBER 30, 2017 (UNAUDITED) AND DECEMBER 31, 2016~~

~~(Dollar amounts in thousands except per share amounts)~~

NOTE 1 ~~- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)~~

~~Proposed Merger with Community First, Inc.~~ ~~(Continued)~~

The Mergers are subject to the satisfaction of customary closing conditions, including obtaining approvals from applicable federal and state banking regulators and the shareholders of Commerce Union Bancshares, Inc. and Community First, Inc. Additionally, the Merger Agreement contains certain termination provisions that may require Community First, Inc. to pay Commerce Union Bancshares, Inc. a termination fee of $2,100,000 under certain specified circumstances, including if Community First, Inc. terminates the Merger Agreement to enter into a definitive agreement for a transaction that its board of directors has determined is superior to the Merger. Commerce Union Bancshares Inc. may also have to pay a termination fee of $2,100,000 in certain circumstances, as set forth in the registration statement filed on Form S-4, and in the Merger Agreement thereto.

~~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 ~~loss~~gain (loss) at ~~September 30, 2017~~March 31, 2019 and accumulated other comprehensive income at December 31, ~~2016~~2018 were as follows:

September 30, 2017

Gross

Gross

Estimated

Amortized

Unrealized

Unrealized

Fair

Cost

Gains

Losses

Value

U. S. Treasury and other U. S. government agencies
$ 591 $ - $ (5 ) $ 586
State and municipal
164,968 1,989 (1,710 ) 165,247
Corporate bonds
1,500 8 (13 ) 1,495
Mortgage backed securities
21,456 70 (77 ) 21,449
Time deposits
3,500 - - 3,500

Total
$ 192,015 $ 2,067 $ (1,805 ) $ 192,277

December 31, 2016

Gross

Gross

Estimated

Amortized

Unrealized

Unrealized

Fair

Cost

Gains

Losses

Value

U. S. Treasury and other U. S. government agencies
$ 1,909 $ 4 $ (5 ) $ 1,908
State and municipal
122,813 446 (3,625 ) 119,634
Corporate bonds
2,000 8 (21 ) 1,987
Mortgage backed securities
20,197 11 (174 ) 20,034
Time deposits
3,250 - - 3,250

Total
$ 150,169 $ 469 $ (3,825 ) $ 146,813



	March 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U. S. Treasury and other U. S. government agencies	$	566	$	—	$	(4	)	$	562
State and municipal	234,736		4,395		(786		)	238,345
Corporate bonds	3,130		—		(112		)	3,018
Mortgage backed securities	34,642		120		(340		)	34,422
Asset backed securities	31,048		—		(590		)	30,458
Time deposits	3,500		—		—			3,500
Total	$	307,622	$	4,515	$	(1,832	)	$	310,305



	December 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U. S. Treasury and other U. S. government agencies	$	568	$	—	$	(14	)	$	554
State and municipal	232,589		879		(4,170		)	229,298
Corporate bonds	3,130		—		(113		)	3,017
Mortgage backed securities	32,172		34		(248		)	31,958
Asset backed securities	28,635		—		(639		)	27,996
Time deposits	3,500		—		—			3,500
Total	$	300,594	$	913	$	(5,184	)	$	296,323

Table of Contents

RELIANT BANCORP, INC.

~~COMMERCE UNION BANCSHARES, INC.~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

~~SEPTEMBER 30, 2017~~

MARCH 31, 2019 (UNAUDITED) AND DECEMBER 31, ~~2016~~

2018

(Dollar amounts in thousands except per share amounts)

NOTE 2 - SECURITIES (CONTINUED)

~~Securities~~

Securities pledged at ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016~~2018 had a carrying amount of ~~$78,520~~$84,506 and ~~$36,292,~~$70,097, respectively, and were pledged to collateralize Federal Home Loan Bank advances, Federal Reserve advances and municipal deposits.

At ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016,~~2018, there were no holdings of securities of any one issuer, other than the U.S. government and its agencies, in an amount greater than 10% of stockholders’ equity.

The fair value of available for sale debt securities at ~~September 30, 2017~~March 31, 2019 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 ~~primarily mortgage backed securities,~~ are shown separately.

Amortized

Estimated

Cost

Fair Value

Due within one year
$ 3,655 $ 3,657
Due in one to five years
13,488 13,584
Due in five to ten years
10,234 10,391
Due after ten years
143,182 143,196
Mortgage backed securities
21,456 21,449

Total
$ 192,015 $ 192,277

~~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, 2017:

Less than 12 months

12 months or more

Total

Estimated

Unrealized

Estimated

Unrealized

Estimated

Unrealized

Fair Value

Loss

Fair Value

Loss

Fair Value

Loss

Description of Securities

U. S. Treasury and other U. S. government agencies
$ 493 $ 5 $ - $ - $ 493 $ 5
State and municipal
43,122 609 23,994 1,101 67,116 1,710
Corporate bonds
- - 487 13 487 13
Mortgage backed securities
2,131 18 3,183 59 5,314 77

Total temporarily impaired
$ 45,746 $ 632 $ 27,664 $ 1,173 $ 73,410 $ 1,805

~~Table of Contents~~

~~COMMERCE UNION BANCSHARES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~SEPTEMBER 30, 2017 (UNAUDITED) AND DECEMBER 31, 2016~~

~~(Dollar amounts in thousands except per share amounts)~~

~~NOTE 2 - SECURITIES (CONTINUED)~~



	Amortized Cost		Estimated Fair Value
Due within one year	$	2,755	$	2,757
Due in one to five years	4,722		4,711
Due in five to ten years	11,301		11,334
Due after ten years	223,154		226,623
Mortgage backed securities	34,642		34,422
Asset backed securities	31,048		30,458
Total	$	307,622	$	310,305

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 March 31, 2019:



	Less than 12 months				12 months or more				Total
	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Description of Securities
U. S. Treasury and other U. S. government agencies	$	—	$	—	$	562	$	4	$	562	$	4
State and municipal	—		—		49,357		786		49,357		786
Corporate bonds	500		1		2,518		111		3,018		112
Mortgage backed securities	12,655		217		8,356		123		21,011		340
Asset backed securities	11,526		167		16,702		423		28,228		590

Total temporarily impaired	$	24,681	$	385	$	77,495	$	1,447	$	102,176	$	1,832

Table of Contents

RELIANT BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

MARCH 31, 2019 (UNAUDITED) AND DECEMBER 31, 2018

(Dollar amounts in thousands except per share amounts)

NOTE 2 - SECURITIES (CONTINUED)

Less than 12 months

12 months or more

Total

Estimated

Unrealized

Estimated

Unrealized

Estimated

Unrealized

Fair Value

Loss

Fair Value

Loss

Fair Value

Loss

Description of Securities

U. S. Treasury and other U. S. government agencies
$ 748 $ 5 $ - $ - $ 748 $ 5
State and municipal
83,637 3,597 1,115 28 84,752 3,625
Corporate bonds
496 4 983 17 1,479 21
Mortgage backed securities
17,599 129 1,255 45 18,854 174

Total temporarily impaired
$ 102,480 $ 3,735 $ 3,353 $ 90 $ 105,833 $ 3,825

2018:



	Less than 12 months				12 months or more				Total
	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Description of Securities
U. S. Treasury and other U. S. government agencies	$	—	$	—	$	555	$	14	$	555	$	14
State and municipal	118,580		2,263		47,223		1,907		165,803		4,170
Corporate bonds	2,526		105		492		8		3,018		113
Mortgage backed securities	17,015		99		5,397		149		22,412		248
Asset backed securities	20,351		383		7,255		256		27,606		639

Total temporarily impaired	$	158,472	$	2,850	$	60,922	$	2,334	$	219,394	$	5,184

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. The fair value is expected to recover as the securities approach their maturity date and/or market rates decline. There were ~~117~~127 and ~~193~~242 securities in an unrealized loss position as of ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016,~~2018, respectively.

NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES

Loans at ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016~~2018 were comprised as follows:

September 30,
2017

December 31,
2016

Commerical, Industrial and Agricultural
$ 138,648 $ 134,404
Real Estate

1-4 Family Residential
100,655 113,031
1-4 Family HELOC
79,195 57,460
Multi-family and Commercial
258,168 215,639
Construction, Land Development and Farmland
141,581 115,889
Consumer
16,386 17,240
Other
15,048 13,745
749,681 667,408
Less

Deferred loan fees
320 625
Allowance for possible loan losses
9,623 9,082

Loans, net
$ 739,738 $ 657,701



	March 31, 2019		December 31, 2018
Commercial, Industrial and Agricultural	$	218,767	$	213,850
Real Estate
1-4 Family Residential	230,124		225,863
1-4 Family HELOC	90,944		88,112
Multi-family and Commercial	469,468		447,840
Construction, Land Development and Farmland	220,752		220,801
Consumer	17,926		20,495
Other	14,213		14,106
Total	1,262,194		1,231,067
Less
Deferred loan fees (cost)	34		(9		)
Allowance for possible loan losses	11,354		10,892

Loans, net	$	1,250,806	$	1,220,184

Table of Contents

RELIANT BANCORP, INC.

~~COMMERCE UNION BANCSHARES, INC.~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

~~SEPTEMBER 30, 2017~~

MARCH 31, 2019 (UNAUDITED) AND DECEMBER 31, ~~2016~~

2018

(Dollar amounts in thousands except per share amounts)

NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED)

Activity ~~in the allowance for loan losses~~ ~~by portfolio segment was as follows for the nine months ended September 30, 2017:~~

Commercial Industrial and Agricultural

Multi-family
and
Commercial
Real Estate

Construction
Land
Development
and Farmland

1-4 Family
Residential
Real Estate

Beginning balance
$ 2,438 $ 2,731 $ 1,786 $ 1,178
Charge-offs
(941 ) - - (15 )
Recoveries
306 - 5 -
Provision
872 363 356 (296 )
Ending balance
$ 2,675 $ 3,094 $ 2,147 $ 867

1-4 Family
HELOC

Consumer

Other

Total

Beginning balance
$ 704 $ 208 $ 37 $ 9,082
Charge-offs
- (30 ) - (986 )
Recoveries
19 2 - 332
Provision
(110 ) 9 1 1,195
Ending balance
$ 613 $ 189 $ 38 $ 9,623

~~Activity~~ in the allowance for loan losses by portfolio segment was as follows for the ~~nine~~three months ended ~~September 30, 2016:~~

Commercial Industrial and Agricultural

Multi-family
and
Commercial
Real Estate

Construction
Land
Development
and Farmland

1-4 Family
Residential
Real Estate

Beginning balance
$ 2,198 $ 2,591 $ 894 $ 1,214
Charge-offs
(84 ) - - (25 )
Recoveries
250 3 5 66
Provision
(109 ) 84 816 (97 )
Ending balance
$ 2,255 $ 2,678 $ 1,715 $ 1,158

1-4 Family
HELOC

Consumer

Other

Total

Beginning balance
$ 699 $ 192 $ 35 $ 7,823
Charge-offs
- - (19 ) (128 )
Recoveries
9 13 - 346
Provision
26 16 24 760
Ending balance
$ 734 $ 221 $ 40 $ 8,801

March 31, 2019:



	Commercial Industrial and Agricultural			Multi-family and Commercial Real Estate		Construction Land Development and Farmland		1-4 Family Residential Real Estate
Beginning balance	$	1,751		$	4,429	$	2,500	$	1,333
Charge-offs	(6		)	—		—		(17		)
Recoveries	240			34		—		212
Provision	(111		)	130		150		(169		)
Ending balance	$	1,874		$	4,593	$	2,650	$	1,359



	1-4 Family HELOC		Consumer			Other			Total
Beginning balance	$	656	$	184		$	39		$	10,892
Charge-offs	—		(11		)	—			(34		)
Recoveries	—		10			—			496
Provision	14		(12		)	(2		)	—
Ending balance	$	670	$	171		$	37		$	11,354

Activity in the allowance for loan losses by portfolio segment was as follows for the three months ended March 31, 2018:



	Commercial Industrial and Agricultural			Multi-family and Commercial Real Estate		Construction Land Development and Farmland			1-4 Family Residential Real Estate
Beginning balance	$	2,538		$	3,166	$	2,434		$	773
Charge-offs	(308		)	—		—			—
Recoveries	143			2		41			8
Provision	112			101		(329		)	223
Ending balance	$	2,485		$	3,269	$	2,146		$	1,004



	1-4 Family HELOC			Consumer			Other			Total
Beginning balance	$	595		$	183		$	42		$	9,731
Charge-offs	(6		)	(16		)	(9		)	(339		)
Recoveries	2			1			5			202
Provision	41			(12		)	1			137
Ending balance	$	632		$	156		$	39		$	9,731

Table of Contents

RELIANT BANCORP, INC.

~~COMMERCE UNION BANCSHARES, INC.~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

~~SEPTEMBER 30, 2017~~

MARCH 31, 2019 (UNAUDITED) AND DECEMBER 31, ~~2016~~

2018

(Dollar amounts in thousands except per share amounts)

NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED)

The allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of ~~September 30, 2017~~March 31, 2019 was as follows:

Commercial Industrial and Agricultural

Multi-family
and
Commercial
Real Estate

Construction
Land
Development and Farmland

1-4 Family
Residential
Real Estate

Allowance for loan losses

Individually evaluated for impairment
$ 526 $ - $ 17 $ 26
Acquired with credit impairment
4 - - -
Collectively evaluated for impairment
2,145 3,094 2,130 841
Total
$ 2,675 $ 3,094 $ 2,147 $ 867
Loans

Individually evaluated for impairment
$ 4,643 $ 1,953 $ 3,268 $ 2,574
Acquired with credit impairment
281 1,161 1,432 47
Collectively evaluated for impairment
133,724 255,054 136,881 98,034
Total
$ 138,648 $ 258,168 $ 141,581 $ 100,655

1-4 Family
HELOC

Consumer

Other

Total

Allowance for loan losses

Individually evaluated for impairment
$ - $ - $ - $ 569
Acquired with credit impairment
- - - 4
Collectively evaluated for impairment
613 189 38 9,050
Total
$ 613 $ 189 $ 38 $ 9,623
Loans

Individually evaluated for impairment
$ 273 $ - $ - $ 12,711
Acquired with credit impairment
17 - - 2,938
Collectively evaluated for impairment
78,905 16,386 15,048 734,032
Total
$ 79,195 $ 16,386 $ 15,048 $ 749,681



	Commercial Industrial and Agricultural		Multi-family and Commercial Real Estate		Construction Land Development and Farmland		1-4 Family Residential Real Estate
Allowance for loan losses
Individually evaluated for impairment	$	191	$	—	$	17	$	—
Acquired with credit impairment	—		—		—		—
Collectively evaluated for impairment	1,683		4,593		2,633		1,359
Total	$	1,874	$	4,593	$	2,650	$	1,359
Loans
Individually evaluated for impairment	$	413	$	2,786	$	1,070	$	1,682
Acquired with credit impairment	40		227		1,743		257
Collectively evaluated for impairment	218,314		466,455		217,939		228,185
Total	$	218,767	$	469,468	$	220,752	$	230,124



	1-4 Family HELOC		Consumer		Other		Total
Allowance for loan losses
Individually evaluated for impairment	$	—	$	—	$	—	$	208
Acquired with credit impairment	—		—		—		—
Collectively evaluated for impairment	670		171		37		11,146
Total	$	670	$	171	$	37	$	11,354
Loans
Individually evaluated for impairment	$	—	$	—	$	—	$	5,951
Acquired with credit impairment	—		11		—		2,278
Collectively evaluated for impairment	90,944		17,915		14,213		1,253,965
Total	$	90,944	$	17,926	$	14,213	$	1,262,194

Table of Contents

RELIANT BANCORP, INC.

~~COMMERCE UNION BANCSHARES, INC.~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

~~SEPTEMBER 30, 2017~~

MARCH 31, 2019 (UNAUDITED) AND DECEMBER 31, ~~2016~~

2018

(Dollar amounts in thousands except per share amounts)

NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED)

The allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, ~~2016~~2018 was as follows:

Commercial Industrial and Agricultural

Multi-family
and
Commercial
Real Estate

Construction
Land
Development and Farmland

1-4 Family
Residential
Real Estate

Allowance for loan losses

Individually evaluated for impairment
$ 747 $ - $ 17 $ 27
Acquired with credit impairment
6 - - -
Collectively evaluated for impairment
1,685 2,731 1,769 1,151
Total
$ 2,438 $ 2,731 $ 1,786 $ 1,178
Loans

Individually evaluated for impairment
$ 5,375 $ 2,036 $ 2,544 $ 1,972
Acquired with credit impairment
329 2,852 1,481 89
Collectively evaluated for impairment
128,700 210,751 111,864 110,970
Total
$ 134,404 $ 215,639 $ 115,889 $ 113,031

1-4 Family
HELOC

Consumer

Other

Total

Allowance for loan losses

Individually evaluated for impairment
$ 62 $ - $ - $ 853
Acquired with credit impairment
- - - 6
Collectively evaluated for impairment
642 208 37 8,223
Total
$ 704 $ 208 $ 37 $ 9,082
Loans

Individually evaluated for impairment
$ 1,479 $ - $ - $ 13,406
Acquired with credit impairment
16 - - 4,767
Collectively evaluated for impairment
55,965 17,240 13,745 649,235
Total
$ 57,460 $ 17,240 $ 13,745 $ 667,408

~~Table of Contents~~

~~COMMERCE UNION BANCSHARES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~SEPTEMBER 30, 2017 (UNAUDITED) AND DECEMBER 31, 2016~~

~~(Dollar amounts in thousands except per share amounts)~~

~~NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED)~~



	Commercial Industrial and Agricultural		Multi-family and Commercial Real Estate			Construction Land Development and Farmland		1-4 Family Residential Real Estate
Allowance for loan losses
Individually evaluated for impairment	$	38	$	—	��	$	17	$	—
Acquired with credit impairment	—		—			—		—
Collectively evaluated for impairment	1,713		4,429			2,483		1,333
Total	$	1,751	$	4,429		$	2,500	$	1,333
Loans
Individually evaluated for impairment	$	978	$	1,160		$	1,780	$	1,246
Acquired with credit impairment	40		232			1,751		262
Collectively evaluated for impairment	212,832		446,448			217,270		224,355
Total	$	213,850	$	447,840		$	220,801	$	225,863



	1-4 Family HELOC		Consumer		Other		Total
Allowance for loan losses
Individually evaluated for impairment	$	—	$	—	$	—	$	55
Acquired with credit impairment	—		—		—		—
Collectively evaluated for impairment	656		184		39		10,837
Total	$	656	$	184	$	39	$	10,892
Loans
Individually evaluated for impairment	$	—	$	12	$	—	$	5,176
Acquired with credit impairment	—		11		—		2,296
Collectively evaluated for impairment	88,112		20,472		14,106		1,223,595
Total	$	88,112	$	20,495	$	14,106	$	1,231,067

Risk characteristics relevant to each portfolio segment are as follows:

Commercial,industrialand ~~agricultural~~:agricultural: The commercial, industrial and agricultural loan portfolio segment includes loans to commercial customers for use in normal business operations to finance working capital needs, equipment purchases or other expansion projects. Collection risk in this portfolio is driven by the creditworthiness of underlying borrowers, particularly cash flow from customers’ business operations. Commercial, industrial and agricultural loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial and industrial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some short-term loans may be made on an unsecured basis. ~~In the case~~

Table of ~~loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect~~Contents

RELIANT BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

MARCH 31, 2019 (UNAUDITED) AND DECEMBER 31, 2018

(Dollar amounts ~~due from its customers.~~

in thousands except per share amounts)

NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED)

Multi-family and commercial real estate: Multi-family and commercial real estate and multi-family loans are subject to underwriting standards and processes similar to commercial, industrial and agricultural loans, in addition to those of real estate loans. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate.

C~~ommercial~~

Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally largely dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Company’s commercial real estate portfolio are diverse in terms of type. This diversity helps reduce the Company’s exposure to adverse economic events that affect any single market or industry. Management monitors and evaluates commercial real estate loans based on collateral, geography and risk grade criteria. The Company also utilizes third-party experts to provide insight and guidance about economic conditions and trends affecting the market areas it serves. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans. Non-owner occupied commercial real estate loans are loans secured by multifamily and commercial properties where the primary source of repayment is derived from rental income associated with the property (that is, loans for which 50 percent or more of the source of repayment comes from third party, nonaffiliated, rental income) or the proceeds of the sale, refinancing, or permanent financing of the property. These loans are made to finance income-producing properties such as apartment buildings, office and industrial buildings, and retail properties. Owner-occupied commercial real estate loans are loans where the primary source of repayment is the cash flow from the ongoing operations and business activities conducted by the party, or affiliate of the party, who owns the property.

~~Table of Contents~~

~~COMMERCE UNION BANCSHARES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~SEPTEMBER 30, 2017 (UNAUDITED) AND DECEMBER 31, 2016~~

~~(Dollar amounts in thousands except per share amounts)~~

~~NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED)~~

Construction and land ~~development:~~development: Loans for non-owner-occupied real estate construction or land development are generally repaid through cash flow related to the operation, sale or refinance of the property. The Company also finances construction loans for owner-occupied properties. A portion of the Company’s construction and land portfolio segment is comprised of loans secured by residential product types (residential land and single-family construction). With respect to construction loans to developers and builders that are secured by non-owner occupied properties that the Company may originate from time to time, the Company generally requires the borrower to have had an existing relationship with the Company and have a proven record of success. Construction and land development loans are underwritten utilizing feasibility studies, independent appraisal reviews, sensitivity analysis of absorption and lease rates, market sales activity, and financial analysis of the developers and property owners. Construction loans are generally based upon estimates of costs and value associated with the complete project. These estimates may be inaccurate. Construction loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project. Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders, sales of developed property or an interim loan commitment from the Company until permanent financing is obtained. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions and the availability of long-term financing.

1-4family residential real estate: Residential real estate loans represent loans to consumers or investors to finance a residence. These loans are typically financed on 15 to 30 year amortization terms, but generally with shorter maturities of 5 to 15 years. Many of these loans are extended to borrowers to finance their primary or secondary residence. Loans to an investor secured by a 1-4 family residence will be repaid from either the rental income from the property or from the sale of the property. This loan segment also includes closed-end home equity loans that are secured by a first or second mortgage on the borrower’s residence. This allows customers to borrow against the equity in their home. Loans in this portfolio segment are underwritten and approved based on a number of credit quality criteria including limits on maximum Loan-to-Value (LTV), minimum credit scores, and maximum debt to income. Real estate market values as of the time the loan is made directly affect the amount of credit extended and, in addition, changes in these residential property values impact the depth of potential losses in this portfolio segment.

Table of Contents

RELIANT BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

MARCH 31, 2019 (UNAUDITED) AND DECEMBER 31, 2018

(Dollar amounts in thousands except per share amounts)

NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED)

1-4 family HELOC: This loan segment includes open-end home equity loans that are secured by a first or second mortgage on the borrower’s residence. This allows customers to borrow against the equity in their home utilizing a revolving line of credit. These loans are underwritten and approved based on a number of credit quality criteria including limits on maximum LTV, minimum credit scores, and maximum debt to income. Real estate market values as of the time the loan is made directly affect the amount of credit extended and, in addition, changes in these residential property values impact the depth of potential losses in this portfolio segment. Because of the revolving nature of these loans as well as the fact that many represent second mortgages, this portfolio segment can contain more risk than the amortizing 1-4 family residential real estate loans.

~~Table of Contents~~

~~COMMERCE UNION BANCSHARES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~SEPTEMBER 30, 2017 (UNAUDITED) AND DECEMBER 31, 2016~~

~~(Dollar amounts in thousands except per share amounts)~~

~~NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED)~~

Consumer: The consumer loan portfolio segment includes non-real estate secured direct loans to consumers for household, family, and other personal expenditures. Consumer loans may be secured or unsecured and are usually structured with short or medium term maturities. These loans are underwritten and approved based on a number of consumer credit quality criteria including limits on maximum LTV on secured consumer loans, minimum credit scores, and maximum debt to income. Many traditional forms of consumer installment credit have standard monthly payments and fixed repayment schedules of one to five years. These loans are made with either fixed or variable interest rates that are based on specific indices. Installment loans fill a variety of needs, such as financing the purchase of an automobile, a boat, a recreational vehicle, or other large personal items, or for consolidating debt. These loans may be unsecured or secured by an assignment of title, as in an automobile loan, or by money in a bank account. In addition to consumer installment loans, this portfolio segment also includes secured and unsecured personal lines of credit as well as overdraft protection lines. Loans in this portfolio segment are sensitive to unemployment and other key consumer economic measures.

Non-accrual loans by class of loan were as follows at ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016:~~

September 30,
2017

December 31,
2016

Commercial, Industrial and Agricultural
$ 2,460 $ 3,062
Multi-family and Commercial Real Estate
- 636
Construction, Land Development and Farmland
1,898 730
1-4 Family Residential Real Estate
592 344
1-4 Family HELOC
- 862
Total
$ 4,950 $ 5,634

2018:



	March 31, 2019		December 31, 2018
Commercial, Industrial and Agricultural	$	439	$	279
Multi-family and Commercial Real Estate	—		—
Construction, Land Development and Farmland	1,294		1,294
1-4 Family Residential Real Estate	2,802		2,556
1-4 Family HELOC	—		—
Consumer	47		65
Total	$	4,582	$	4,194

Performing ~~non-accru~~alnon-accrual loans totaled ~~$1,133~~$1,886 and ~~$2,799~~$2,010 at ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016,~~2018, respectively.

~~Individually impaired loans~~ ~~by class of loans were as follows at September 30, 2017:~~

Unpaid
Principal
Balance

Recorded
Investment
with no
Allowance
Recorded

Recorded
Investment
with
Allowance
Recorded

Total
Recorded
Investment

Related
Allowance

Commercial, Industrial and Agricultural
$ 5,438 $ 3,396 $ 1,529 $ 4,925 $ 530
Multi-family and Commercial Real Estate
3,479 3,114 - 3,114 -
Construction, Land Development and Farmland
4,788 4,463 236 4,699 17
1-4 Family Residential Real Estate
3,325 2,595 26 2,621 26
1-4 Family HELOC
309 290 - 290 -

Total
$ 17,339 $ 13,858 $ 1,791 $ 15,649 $ 573

2018

Table of Contents

RELIANT BANCORP, INC.

~~COMMERCE UNION BANCSHARES, INC.~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

~~SEPTEMBER 30, 2017~~

MARCH 31, 2019 (UNAUDITED) AND DECEMBER 31, ~~2016~~

2018

(Dollar amounts in thousands except per share amounts)

NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED)

Individually impaired loans by class of loans were as follows at March 31, 2019:



	Unpaid Principal Balance		Recorded Investment with no Allowance Recorded		Recorded Investment with Allowance Recorded		Total Recorded Investment		Related Allowance
Commercial, Industrial and Agricultural	$	556	$	40	$	413	$	453	$	191
Multi-family and Commercial Real Estate	3,289		3,013		—		3,013		—
Construction, Land Development and Farmland	3,201		2,642		171		2,813		17
1-4 Family Residential Real Estate	2,188		1,939		—		1,939		—
Consumer	17		11		—		11		—
Total	$	9,251	$	7,645	$	584	$	8,229	$	208

Individually impaired loans by class of loans were as follows at December 31, ~~2016:~~

Unpaid
Principal
Balance

Recorded
Investment
with no
Allowance
Recorded

Recorded
Investment
with
Allowance
Recorded

Total
Recorded
Investment

Related
Allowance

Commercial, Industrial and Agricultural
$ 6,383 $ 3,924 $ 1,780 $ 5,704 $ 753
Multi-family and Commercial Real Estate
5,666 2,914 1,974 4,888 -
Construction, Land Development and Farmland
4,124 3,854 171 4,025 17
1-4 Family Residential Real Estate
2,422 2,034 27 2,061 27
1-4 Family HELOC
2,075 1,178 317 1,495 62

Total
$ 20,670 $ 13,904 $ 4,269 $ 18,173 $ 859

2018:



	Unpaid Principal Balance		Recorded Investment with no Allowance Recorded		Recorded Investment with Allowance Recorded		Total Recorded Investment		Related Allowance
Commercial, Industrial and Agricultural	$	1,247	$	765	$	253	$	1,018	$	38
Multi-family and Commercial Real Estate	1,670		1,391		—		1,391		—
Construction, Land Development and Farmland	3,920		3,360		172		3,532		17
1-4 Family Residential Real Estate	2,243		1,508		—		1,508		—
Consumer	29		23		—		23		—
Total	$	9,109	$	7,047	$	425	$	7,472	$	55

The average balances of impaired loans for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016 were~~2018 was as follows:

2017

2016

Commercial, Industrial and Agricultural
$ 5,550 $ 6,143
Multi-family and Commercial Real Estate
4,403 6,074
Construction, Land Development and Farmland
4,319 3,047
1-4 Family Residential Real Estate
2,225 2,879
1-4 Family HELOC
957 1,944
Total
$ 17,454 $ 20,087



	2019		2018
Commercial, Industrial and Agricultural	$	736	$	3,939
Multi-family and Commercial Real Estate	2,202		3,155
Construction, Land Development and Farmland	3,173		5,621
1-4 Family Residential Real Estate	1,724		2,821
1-4 Family HELOC	—		90
Consumer	17		126
Total	$	7,852	$	15,752

Table of Contents

RELIANT BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

MARCH 31, 2019 (UNAUDITED) AND DECEMBER 31, 2018

(Dollar amounts in thousands except per share amounts)

NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED)

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 1 - Minimal Risk (Pass)

This grade includes loans to borrowers with a strong financial position and history of profits and cash flows sufficient to service the ~~debt~~.debt. These borrowers have well defined sources of primary/secondary repayment, conservatively leveraged balance sheets and the ability to access a wide range of financing alternatives. Collateral securing these loans is negotiable, of sufficient value and in possession of the Company. Risk of loss is unlikely.

~~Table of Contents~~

~~COMMERCE UNION BANCSHARES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~SEPTEMBER 30, 2017 (UNAUDITED) AND DECEMBER 31, 2016~~

~~(Dollar amounts in thousands except per share amounts)~~

~~NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED)~~

Grade 2 - High Quality (Pass)

This grade includes loans to borrowers with a strong financial condition reflecting dependable net profits and cash ~~flows~~.flows. The borrower has verifiable liquid net worth providing above average asset protection. An identifiable market exists for the collateral. Risk of loss is unlikely.

Grade 3 - Above Average (Pass)

This grade includes loans to borrowers with a balance sheet that reflects a comfortable degree of leverage and ~~liquidity~~.liquidity. Borrowers are profitable and have a sustained record of servicing debt. An identifiable market exists for the collateral, but liquidation could take up to one year. Risk of loss is unlikely.

Grade 4 - Average (Pass)

This grade includes loans to borrowers with a financial condition that is satisfactory and comparable to industry ~~standards~~.standards. The borrower has verifiable net worth, providing over time, average asset protection. Borrower cash flows are sufficient to satisfy debt service requirements. Risk of loss is below average.

Grade 5 - Acceptable (Management Attention) (Pass)

This grade includes loans to borrowers whose loans are performing, but sources of repayment are not documented by the current credit ~~analysis~~.analysis. There are some declining trends in margins, ratios and/or cash flow. Guarantor(s) have strong net worth(s), but assets may be concentrated in real estate or other illiquid investments. Risk of loss is average.

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.

2220

Table of Contents

RELIANT BANCORP, INC.

~~COMMERCE UNION BANCSHARES, INC.~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

~~SEPTEMBER 30, 2017~~

MARCH 31, 2019 (UNAUDITED) AND DECEMBER 31, ~~2016~~

2018

(Dollar amounts in thousands except per share amounts)

NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED)

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 affected 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.

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 March 31, 2019:



	Pass		Special Mention		Substandard		Doubtful		Total
Commercial, Industrial and Agricultural	$	217,332	$	292	$	1,103	$	40	$	218,767
1-4 Family Residential Real Estate	226,907		—		3,217		—		230,124
1-4 Family HELOC	90,944		—		—		—		90,944
Multi-family and Commercial Real Estate	463,978		1,565		3,925		—		469,468
Construction, Land Development and Farmland	219,322		456		974		—		220,752
Consumer	17,669		—		248		9		17,926
Other	14,213		—		—		—		14,213
Total	$	1,250,365	$	2,313	$	9,467	$	49	$	1,262,194

Table of Contents

RELIANT BANCORP, INC.

~~COMMERCE UNION BANCSHARES, INC.~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

~~SEPTEMBER 30, 2017~~

MARCH 31, 2019 (UNAUDITED) AND DECEMBER 31, ~~2016~~

2018

(Dollar amounts in thousands except per share amounts)

NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED)

Credit quality indicators by class of loan were as follows at ~~September 30, 2017:~~

Pass

Special
Mention

Substandard

Total

Commercial, Industrial and Agricultural
$ 134,802 $ 5 $ 3,841 $ 138,648
1-4 Family Residential Real Estate
96,681 1,400 2,574 100,655
1-4 Family HELOC
78,922 - 273 79,195
Multi-family and Commercial Real Estate
256,215 - 1,953 258,168
Construction, Land Development and Farmland
137,180 1,368 3,033 141,581
Consumer
16,386 - - 16,386
Other
15,048 - - 15,048
Total
$ 735,234 $ 2,773 $ 11,674 $ 749,681

~~Credit quality indicators by class of loan were~~ ~~as follows at~~ December 31, ~~2016:~~

Pass

Special
Mention

Substandard

Total

Commercial, Industrial and Agricultural
$ 129,880 $ - $ 4,524 $ 134,404
1-4 Family Residential Real Estate
109,592 1,427 2,012 113,031
1-4 Family HELOC
55,981 - 1,479 57,460
Multi-family and Commercial Real Estate
211,938 - 3,701 215,639
Construction, Land Development and Farmland
111,663 1,767 2,459 115,889
Consumer
17,240 - - 17,240
Other
13,745 - - 13,745
Total
$ 650,039 $ 3,194 $ 14,175 $ 667,408

2018:

~~Table of Contents~~

~~COMMERCE UNION BANCSHARES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~SEPTEMBER 30, 2017 (UNAUDITED) AND DECEMBER 31, 2016~~

~~(Dollar amounts in thousands except per share amounts)~~

~~NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED)~~



	Pass		Special Mention		Substandard		Total
Commercial, Industrial and Agricultural	$	212,761	$	—	$	1,089	$	213,850
1-4 Family Residential Real Estate	221,546		1,125		3,192		225,863
1-4 Family HELOC	88,112		—		—		88,112
Multi-family and Commercial Real Estate	442,127		3,135		2,578		447,840
Construction, Land Development and Farmland	218,053		579		2,169		220,801
Consumer	20,236		—		259		20,495
Other	14,106		—		—		14,106
Total	$	1,216,941	$	4,839	$	9,287	$	1,231,067

Past due status by class of loan was as follows at ~~September 30, 2017:~~

30-59 Days
Past Due

60-89 Days
Past Due

90+ Days
Past Due

Total
Past Due

Current

Total Loans

Commercial, Industrial and Agricultural
$ 71 $ - $ 1,859 $ 1,930 $ 136,718 $ 138,648
1-4 Family Residential Real Estate
688 - 257 945 99,710 100,655
1-4 Family HELOC
17 - - 17 79,178 79,195
Multi-family and Commercial Real Estate
70 - - 70 258,098 258,168
Construction, Land Development and Farmland
213 338 1,899 2,450 139,131 141,581
Consumer
21 - - 21 16,365 16,386
Other
- - - - 15,048 15,048
Total
$ 1,080 $ 338 $ 4,015 $ 5,433 $ 744,248 $ 749,681

March 31, 2019:



	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Current		Total Loans
Commercial, Industrial and Agricultural	$	167	$	85	$	1,001	$	1,253	$	217,514	$	218,767
1-4 Family Residential Real Estate	2,129		208		2,073		4,410		225,714		230,124
1-4 Family HELOC	5		—		—		5		90,939		90,944
Multi-family and Commercial Real Estate	511		19		—		530		468,938		469,468
Construction, Land Development and Farmland	6		—		171		177		220,575		220,752
Consumer	33		11		17		61		17,865		17,926
Other	—		—		—		—		14,213		14,213
Total	$	2,851	$	323	$	3,262	$	6,436	$	1,255,758	$	1,262,194

Past due status by class of loan was as follows at December 31, ~~2016:~~

30-59 Days
Past Due

60-89 Days
Past Due

90+ Days
Past Due

Total
Past Due

Current

Total Loans

Commercial, Industrial and Agricultural
$ 207 $ 1,586 $ 375 $ 2,168 $ 132,236 $ 134,404
1-4 Family Residential Real Estate
7 - 286 293 112,738 113,031
1-4 Family HELOC
- - - - 57,460 57,460
Multi-family and Commercial Real Estate
- - - - 215,639 215,639
Construction, Land Development and Farmland
58 - 730 788 115,101 115,889
Consumer
193 - - 193 17,047 17,240
Other
- - - - 13,745 13,745
Total
$ 465 $ 1,586 $ 1,391 $ 3,442 $ 663,966 $ 667,408

2018:



	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Current		Total Loans
Commercial, Industrial and Agricultural	$	22	$	153	$	279	$	454	$	213,396	$	213,850
1-4 Family Residential Real Estate	1,104		335		1,203		2,642		223,221		225,863
1-4 Family HELOC	50		—		—		50		88,062		88,112
Multi-family and Commercial Real Estate	—		104		—		104		447,736		447,840
Construction, Land Development and Farmland	214		—		171		385		220,416		220,801
Consumer	11		30		46		87		20,408		20,495
Other	—		—		—		—		14,106		14,106
Total	$	1,401	$	622	$	1,699	$	3,722	$	1,227,345	$	1,231,067

Table of Contents

RELIANT BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

MARCH 31, 2019 (UNAUDITED) AND DECEMBER 31, 2018

(Dollar amounts in thousands except per share amounts)

NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED)

There ~~was a loan~~were two loans totaling ~~$200~~$566 past due 90 days or more and still accruing interest at ~~September 30, 2017.~~March 31, 2019. There ~~were no loans~~was a loan totaling $6 past due 90 days or more and still accruing interest at December 31, ~~2016.~~

~~During~~2018.

The following table presents loans by class modified as troubled debt restructurings that occurred during the ~~nine~~first three months of 2019 and 2018:



	Number of Contracts	Pre-Modification Outstanding Recorded Investments		Post-Modification Outstanding Recorded Investments
March 31, 2019
1-4 Family Residential	—	$	—	$	—
Multi-family and Commercial Real Estate	—	—		—
Total	—	$	—	$	—

March 31, 2018
1-4 Family Residential	1	$	1,254	$	1,254
Total	1	$	1,254	$	1,254

One modification that occurred during the three months ended ~~September 30, 2017, two loans totaling $428 were modified in a troubled debt restructuring. One modification~~March 31, 2018, consisted of ~~a partial charge off, totaling $470, and a~~an interest only monthly payment restructure ~~with the modification having no effect on interest income. The other modification consisted of a temporary reduction in required monthly payments~~ and had no effect on the allowance for loan losses or interest income.

~~Table of Contents~~

~~COMMERCE UNION BANCSHARES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~SEPTEMBER 30, 2017 (UNAUDITED) AND DECEMBER 31, 2016~~

~~(Dollar amounts in thousands except per share amounts)~~

~~NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED)~~

TheThe 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 was as follows at ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016:~~

September 30,
2017

December 31,
2016

Commercial, Industrial and Agricultural
$ 305 $ 385
Multi-family and Commercial Real Estate
1,232 3,321
Construction, Land Development and Farmland
1,510 1,569
1-4 Family Residential Real Estate
48 92
1-4 Family HELOC
36 36
Total outstanding balance
3,131 5,403
Less remaining purchase discount
193 635
Allowance for loan losses
4 6
Carrying amount, net of allowance
$ 2,934 $ 4,762

~~During the~~ ~~three months ended September 30, 2017, there was a $2 reduction~~2018:



	March 31, 2019		December 31, 2018
Commercial, Industrial and Agricultural	$	63	$	63
Multi-family and Commercial Real Estate	229		233
Construction, Land Development and Farmland	1,950		1,958
1-4 Family Residential Real Estate	319		324
1-4 Family HELOC	—		—
Consumer	17		18
Total outstanding balance	2,578		2,596
Less remaining purchase discount	300		300
Allowance for loan losses	—		—
Carrying amount, net of allowance	$	2,278	$	2,296

Table of Contents

RELIANT BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

MARCH 31, 2019 (UNAUDITED) AND DECEMBER 31, 2018

(Dollar amounts in the allowance for loan losses related to purchased credit impaired loans. During the nine months ended September 30, 2017, there was no change in the allowance for loan losses related to purchased credit impaired loans.

thousands except per share amounts)

NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED)

Activity related to the accretable portion of the purchase discount on loans acquired with deteriorated credit quality is as follows for ~~each quarter~~the quarters and three months ended ~~September 30, 2017:~~

Balance at January 1, 2017
$ 87
Accretion income
(18 )
Balance at March 31, 2017
69
Accretion income
(17 )
Balance at June 30, 2017
52
Accretion income
(33 )
Balance at September 30, 2017
$ 19

March 31, 2019 and 2018:



	2019		2018
Balance at January 1,	$	110	$	—
New loans purchased	—		260
Loan charge offs	—		—
Accretion income	—		(38		)
Balance at March 31,	110		222

~~Table of Contents~~

~~COMMERCE UNION BANCSHARES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~SEPTEMBER 30, 2017 (UNAUDITED) AND DECEMBER 31, 2016~~

~~(Dollar amounts in thousands except per share amounts)~~

NOTE 4 - OTHER REAL ESTATE

In connection with the merger with Community First, the Company acquired three real estate parcels. The Company valued the properties at their estimated fair values less costs to sell which totaled $1,650. Expenses related to other real estate totaled $6 and $3 for the quarters ended March 31, 2019 and 2018, respectively.

At March 31, 2019, there were two 1-4 Family Residential loans with related balances totaling $1,902 and a Commercial, Industrial and Agricultural loan, with a related balance of $160, in the process of foreclosure.

NOTE 5 - FAIR ~~VALUE~~SVALUES OF ASSETS AND LIABILITIES

Financial accounting standards relating to fair value measurements establish a framework for measuring fair ~~value~~.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:

•

	~~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;~~

●

~~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.~~

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;

•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.

NOTE 5 - FAIR VALUES OF ASSETS AND LIABILITIES (CONTINUED)

An ~~asset~~’sasset’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 are determined based on discounted future cash flows.

~~Table of Contents~~

~~COMMERCE UNION BANCSHARES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~SEPTEMBER 30, 2017 (UNAUDITED) AND DECEMBER 31, 2016~~

~~(Dollar amounts in thousands except per share amounts)~~

~~NOTE 4 - FAIR VALUES OF ASSETS AND LIABILITIES (CONTINUED)~~

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 impaired loans 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.

~~Mortgage Loans Held For~~~~Sale~~:The fair value of mortgage loans held for sale are valued at the lower of cost or market on an aggregate basis. When the aggregate fair value of mortgage loans held for sale is less than cost, an allowance is recorded. The Company utilizes a third party to value the mortgage loans held for sale portfolio using comparable sales data available with consideration of specific attributes of the loans. Such adjustments are typically not significant, and result in a Level 2 classification of the inputs for determining fair value.

~~There were no changes in~~ ~~valuation methodologies used during the nine months ended September 30, 2017.~~

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~~.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~~.items. Changes in assumptions or in market conditions could significantly affect the estimates.

2824

Table of Contents

RELIANT BANCORP, INC.

~~COMMERCE UNION BANCSHARES, INC.~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

~~SEPTEMBER 30, 2017~~

MARCH 31, 2019 (UNAUDITED) AND DECEMBER 31, ~~2016~~

2018

(Dollar amounts in thousands except per share amounts)

NOTE 45 - FAIR VALUES OF ASSETS AND LIABILITIES (CONTINUED)

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, 2017~~March 31, 2019 and December 31, ~~2016:~~

Quoted Prices in

Significant

Active Markets

Other

Significant

for Identical

Observable

Unobservable

Assets

Inputs

Inputs

Fair Value

(Level 1)

(Level 2)

(Level 3)

September 30, 2017

Assets

U. S. Treasury and other U. S. government agencies
$ 586 $ - $ 586 $ -
State and municipal
165,247 - 165,247 -
Corporate bonds
1,495 - 1,495 -
Mortgage backed securities
21,449 - 21,449 -
Time deposits
3,500 3,500 - -
Interest rate swap
23 - 23 -

Liabilities

Interest rate swap
$ 448 $ - $ 448 $ -

December 31, 2016

Assets

U. S. Treasury and other U. S. government agencies
$ 1,908 $ - $ 1,908 $ -
State and municipal
119,634 - 119,634 -
Corporate bonds
1,987 - 1,987 -
Mortgage backed securities
20,034 - 20,034 -
Time deposits
3,250 3,250 - -
Interest rate swap
195 - 195 -

Liabilities

Interest rate swap
$ 267 $ - $ 267 $ -

2018:



	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2019
Assets
U. S. Treasury and other U. S. government agencies	$	562	$	—	$	562	$	—
State and municipal	238,345		—		238,345		—
Corporate bonds	3,018		—		3,018		—
Mortgage backed securities	34,422		—		34,422		—
Asset backed securities	30,458		—		30,458		—
Time deposits	3,500		3,500		—		—
Interest rate swaps	101		—		101		—

Liabilities
Interest rate swaps	$	1,955	$	—	$	1,955	$	—

December 31, 2018
Assets
U. S. Treasury and other U. S. government agencies	$	554	$	—	$	554	$	—
State and municipal	229,298		—		229,298		—
Corporate bonds	3,017		—		3,017		—
Mortgage backed securities	31,958		—		31,958		—
Asset backed securities	27,996		—		27,996		—
Time deposits	3,500		3,500		—		—
Interest rate swaps	467		—		467		—

Liabilities
Interest rate swaps	$	1,183	$	—	$	1,183	$	—

Table of Contents

RELIANT BANCORP, INC.

~~COMMERCE UNION BANCSHARES, INC.~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

~~SEPTEMBER 30, 2017~~

MARCH 31, 2019 (UNAUDITED) AND DECEMBER 31, ~~2016~~

2018

(Dollar amounts in thousands except per share amounts)

NOTE 45 - FAIR VALUES OF ASSETS AND LIABILITIES (CONTINUED)

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, 2017~~March 31, 2019 and December 31, ~~2016:~~

Quoted Prices in

Significant

Active Markets

Other

Significant

for Identical

Observable

Unobservable

Assets

Inputs

Inputs

Fair Value

(Level 1)

(Level 2)

(Level 3)

September 30, 2017

Assets

Impaired loans
$ 1,218 $ - $ - $ 1,218

December 31, 2016

Assets

Impaired loans
$ 3,410 $ - $ - $ 3,410
Mortgage loans held for sale
11,831 - 11,831 -

2018:



	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2019
Assets
Impaired loans	$	376	$	—	$	—	$	376
Other real estate owned	1,000		—		—		1,000

December 31, 2018
Assets
Impaired loans	$	370	$	—	$	—	$	370
Other real estate owned	1,000		—		—		1,000

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, 2017~~March 31, 2019 and December 31, ~~2016:~~

2018:


		~~Valuation~~		~~Significant~~		~~Range~~
		Valuation Techniques (1)		Significant Unobservable Inputs		Range (Weighted Average)
Impaired loans	Appraisal		~~Appraisal~~		Estimated costs to sell			10%
~~Mortgage loans held for sale~~ Other real estate owned	Appraisal		~~Pricing Model~~ Estimated costs to sell		~~Not applicable~~		~~Not applicable~~		10%


(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.

3026

Table of Contents

RELIANT BANCORP, INC.

~~COMMERCE UNION BANCSHARES, INC.~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

~~SEPTEMBER 30, 2017~~

MARCH 31, 2019 (UNAUDITED) AND DECEMBER 31, ~~2016~~

2018

(Dollar amounts in thousands except per share amounts)

NOTE 45 - FAIR VALUES OF ASSETS AND LIABILITIES (CONTINUED)

Carrying ~~amount~~samounts and estimated fair values of financial instruments not reported at fair value at ~~September 30, 2017~~March 31, 2019 were as follows:

Quoted Prices in

Significant

Active Markets

Other

Significant

Estimated

for Identical

Observable

Unobservable

Carrying

Fair

Assets

Inputs

Inputs

Amount

Value

(Level 1)

(Level 2)

(Level 3)

Financial assets

Cash and due from banks
$ 18,277 $ 18,277 $ 18,277 $ - $ -
Federal funds sold
669 669 - 669 -
Loans, net
739,738 739,783 - - 739,783
Mortgage loans held for sale
19,475 19,479 - 19,479 -
Accrued interest receivable
4,999 4,999 - 4,999 -
Restricted equity securities
7,163 7,163 - 7,163 -
Financial liabilities

Deposits
840,448 840,055 - - 840,055
Accrued interest payable
220 220 - 220 -
Federal Home Loan Bank advances
56,720 56,792 - 56,792 -



	Carrying 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	$	34,796	$	34,796	$	34,796	$	—	$	—
Federal funds sold	409		409		—		409		—
Loans, net	1,250,806		1,235,864		—		—		1,235,864
Mortgage loans held for sale	9,990		10,066		—		10,066		—
Accrued interest receivable	8,389		8,389		—		8,389		—
Restricted equity securities	11,499		11,499		—		11,499		—
Financial liabilities
Deposits	$	1,511,321	$	1,509,732	$	—	$	—	$	1,509,732
Accrued interest payable	990		990		—		990		—
Subordinate debentures	11,624		11,993		—		—		11,993
Federal Home Loan Bank advances	15,309		15,277		—		—		15,277

Carrying amounts and estimated fair ~~values~~values of financial instruments not reported at fair value at December 31, ~~2016~~2018 were as follows:

Quoted Prices in

Significant

Active Markets

Other

Significant

Estimated

for Identical

Observable

Unobservable

Carrying

Fair

Assets

Inputs

Inputs

Amount

Value

(Level 1)

(Level 2)

(Level 3)

Financial assets

Cash and due from banks
$ 23,413 $ 23,413 $ 23,413 $ - $ -
Federal funds sold
830 830 - 830 -
Loans, net
657,701 658,130 - - 658,130
Accrued interest receivable
3,786 3,786 - 3,786 -
Restricted equity securities
7,133 7,133 - 7,133 -
Financial liabilities

Deposits
763,834 763,174 - - 763,174
Accrued interest payable
107 107 - 107 -
Federal funds purchased
3,671 3,671 - 3,671 -
Federal Home Loan Bank advances
32,287 32,444 - 32,444 -



	Carrying 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	$	34,807	$	34,807	$	34,807	$	—	$	—
Federal funds sold	371		371		—		371		—
Loans, net	1,220,184		1,206,574		—		—		1,206,574
Mortgage loans held for sale	15,823		15,871		—		15,871		—
Accrued interest receivable	8,214		8,214		—		8,214		—
Restricted equity securities	11,690		11,690		—		11,690		—
Financial liabilities
Deposits	$	1,437,903	$	1,434,652	$	—	$	—	$	1,434,652
Accrued interest payable	1,063		1,063		—		1,063		—
Federal Home Loan Bank advances	57,498		57,434		—		—		57,434

Table of Contents

RELIANT BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

MARCH 31, 2019 (UNAUDITED) AND DECEMBER 31, 2018

(Dollar amounts in thousands except per share amounts)

NOTE 5 - FAIR VALUES OF ASSETS AND LIABILITIES (CONTINUED)

The ~~method~~smethods 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.

~~Table of Contents~~

~~COMMERCE UNION BANCSHARES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~SEPTEMBER 30, 2017 (UNAUDITED) AND DECEMBER 31, 2016~~

~~(Dollar amounts in thousands except per share amounts)~~

~~NOTE~~ ~~5 - STOCK-BASED COMPENSATION (CONTINUED)~~

In 2006, the Board of Directors and shareholders of the Bank approved the Commerce Union Bank Stock Option Plan (the “Plan”). The Plan provides for the granting of stock options, and authorizes the issuance of common stock upon the exercise of such options, for up to 625,000 shares of common stock to employees and organizers of the Company. As part of a reorganization, all Commerce Union Bank options were replaced with Commerce Union Bancshares, Inc. options with no change in terms. On March 10, 2015, the shareholders of the Company approved the Commerce Union Bancshares, Inc. Amended and Restated Stock Option Plan that permits the grant of awards of up to 1,250,000 shares of the Company common stock in the form of stock options. As part of the merger with Reliant Bank, all outstanding stock options of Reliant Bank were converted to stock options of Commerce Union Bancshares, Inc. under this plan.

~~Under the Stock Option 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 ten 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 the common stock on the grant date.

~~On June~~ 18, 2015, the shareholders of Commerce Union approved the Commerce Union Bancshares, Inc. 2015 Equity Incentive Plan, which provides for the issuance of up to 900,000 shares of common stock in the form of stock options, restricted stock grants or grants for performance-based compensation.

~~A summary of the activity in the~~ ~~stock option plans for the nine months ended September 30, 2017 is as follows:~~

Weighted

Weighted

Average

Average

Remaining

Aggregate

Exercise

Contractual

Intrinsic

Shares

Price

Term

Value

Outstanding at January 1, 2017
241,541 $ 12.96
Granted
15,500 24.24
Exercised
(59,739 ) 11.60
Forfeited or expired
(11,800 ) 13.75
Outstanding at September 30, 2017
185,502 14.29 5.85 $ 1,673
Exercisable at September 30, 2017
107,802 12.68 3.92 $ 1,132

Weighted Average

Shares

Grant-Date Fair Value

Non-vested options at January 1, 2017
96,600 $ 3.36
Granted
15,500 6.66
Vested
(22,600 ) 3.12
Forfeited
(11,800 ) 3.02
Non-vested options at September 30, 2017
77,700 4.14

~~Table of Contents~~

~~COMMERCE UNION BANCSHARES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~SEPTEMBER 30, 2017 (UNAUDITED) AND DECEMBER 31, 2016~~

~~(Dollar amounts in thousands except per share amounts)~~

NOTE 56 - STOCK-BASED COMPENSATION

~~At September 30, 2017,~~

Stock Option Plan

In 2006, the Board of Directors and shareholders of the Bank approved the Commerce Union Bank Stock Option Plan (the “Plan”). The Plan provides for the granting of stock options, and authorizes the issuance of common stock upon the exercise of such options, for up to 625,000 shares of common stock to employees and organizers of the Company. As part of reorganization, all Commerce Union Bank options were replaced with Commerce Union Bancshares, Inc. options with no change in terms. On March 10, 2015, the shareholders of the Company approved the Commerce Union Bancshares, Inc. Amended and Restated Stock Option Plan that permits the grant of awards of up to 1,250,000 shares of the Company

common stock in the form of stock options. As part of the merger with Reliant Bank, all outstanding stock options of Reliant Bank were converted to stock options of Commerce Union Bancshares, Inc. under this plan.

Under the Stock Option 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 ten 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 the common stock on the grant

date.

A summary of the activity in the stock option plan for the three months ended March 31, 2019 as follows:



	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2019	159,260	$	16.72	6.04	$	1,146
Granted	1,000	$	22.67	10.00
Exercised	(2,183)	$	12.37	5.69
Forfeited or expired	(2,600)	$	19.90	7.95
Outstanding at March 31, 2019	155,477	$	16.75	5.79	$	1,023
Exercisable at March 31, 2019	87,877	$	13.49	4.10	$	780



	Shares		Weighted Average Grant-Date Fair Value
Non-vested options at January 1, 2019	71,200		$5.28
Granted	1,000		$6.57
Vested	(2,000	)	$3.55
Forfeited	(2,600	)	$5.03
Non-vested options at March 31, 2019	67,600		$5.36

Table of Contents

RELIANT BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

MARCH 31, 2019 (UNAUDITED) AND DECEMBER 31, 2018

(Dollar amounts in thousands except per share amounts)

NOTE 6 - STOCK-BASED COMPENSATION (CONTINUED)

Stock Option Plan, Continued

As of March 31, 2019, there was $283 of unrecognized future compensation expense to be recognized related to stock options.

Equity Incentive Plan

On June 18, 2015, the shareholders of Commerce Union approved the Commerce Union Bancshares, Inc. 2015 Equity

Incentive Plan, which provides for the issuance of up to 900,000 shares of common stock in the form of stock options, restricted stock grants or grants for performance-based compensation.

The following table shows the activity related to non-vested restricted stock for the three months ended March 31, 2019:



	Shares		Weighted Average Grant-Date Fair Value
Non-vested shares at January 1, 2019	110,660		$	24.28
Granted	3,000		21.77
Vested	—		—
Forfeited	(3,750	)	23.31
Non-vested shares at March 31, 2019	109,910		$	24.25

The restricted shares vest over periods ranging from one to three years. As of March 31, 2019, there was $1,472 of unrecognized compensation ~~totals $1,569.~~

cost related to non-vested restricted share awards.

NOTE 67 - 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. Management believes as of ~~September 30, 2017,~~March 31, 2019, the Company and the Bank meet all capital adequacy requirements to which they are subject.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial ~~condition~~.condition. If only 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, 2017~~March 31, 2019 and December 31, ~~2016,~~2018, 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 that notification that management believes have changed the institution’s category.

In July 2013, the FDIC approved final rules that substantially amend the regulatory risk-based capital ru~~les~~rules applicable to the Company and the Bank. The final rules implement the regulatory capital reforms of the Basel Committee on Banking Supervision reflected in “Basel III: A Global Framework for More Resilient Banks and Banking Systems” (Basel III) and changes required by the Dodd-Frank Act.

Under these rules, the leverage and risk-based capital ratios of bank holding companies may not be lower than the leverage and risk-based capital ratios for insured depository ~~institutions~~.institutions. The final rules implementing Basel III became effective on January 1, 2015, and include new minimum risk-based capital and leverage ratios and a new common equity tier 1 ratio. In addition, these rules refine the definition of what constitutes capital for purposes of calculating those ratios, including the definitions of Tier 1 capital and Tier 2 capital.

3329

Table of Contents

RELIANT BANCORP, INC.

~~COMMERCE UNION BANCSHARES, INC.~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

~~SEPTEMBER 30, 2017~~

MARCH 31, 2019 (UNAUDITED) AND DECEMBER 31, ~~2016~~

2018

(Dollar amounts in thousands except per share amounts)

NOTE 67 - REGULATORY CAPITAL REQUIREMENTS (CONTINUED)

Basel III establishes a “capital conservation buffer” of 2.5% which began phasing in on January 1, 2016, at a rate of ~~.625%~~0.625% per year. The buffer ~~becomes~~became fully phased in on January 1, 2019. An institution is subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses if capital levels fall below minimum levels plus the buffer.

Actual and required capital amounts and ratios are ~~present~~edpresented below as of ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016.~~

Minimum Required

To Be Well

Actual

Capital Including

Capitalized Under

Regulatory

Capital Conservation

Prompt Corrective

Capital

Buffer

Action Provisions

Amount

Ratio

Amount

Ratio

Amount

Ratio

September 30, 2017

Company

Tier I leverage
$ 125,572 12.58 % $ 39,928 4.000 % $ 49,909 5.00 %
Common equity tier 1
125,572 14.72 % 49,052 5.750 % 55,450 6.50 %
Tier I risk-based capital
125,572 14.72 % 61,848 7.250 % 68,246 8.00 %
Total risk-based capital
135,195 15.85 % 78,899 9.250 % 85,297 10.00 %

Bank

Tier I leverage
$ 121,715 12.20 % $ 39,907 4.000 % $ 49,883 5.00 %
Common equity tier 1
121,715 14.29 % 48,976 5.750 % 55,364 6.50 %
Tier I risk-based capital
121,715 14.29 % 61,752 7.250 % 68,140 8.00 %
Total risk-based capital
131,338 15.42 % 78,786 9.250 % 85,174 10.00 %

December 31, 2016

Company

Tier I leverage
$ 96,682 10.86 % $ 35,610 4.000 % N/A N/A
Common equity tier 1
96,682 13.00 % 38,115 5.125 % N/A N/A
Tier I risk-based capital
96,682 13.00 % 49,271 6.625 % N/A N/A
Total risk-based capital
105,764 14.22 % 64,150 8.625 % N/A N/A

Bank

Tier I leverage
$ 95,637 10.75 % $ 35,586 4.000 % $ 44,482 5.00 %
Common equity tier 1
95,637 12.88 % 38,054 5.125 % 48,264 6.50 %
Tier I risk-based capital
95,637 12.88 % 49,192 6.625 % 59,402 8.00 %
Total risk-based capital
104,719 14.10 % 64,057 8.625 % 74,269 10.00 %

2018.



	Actual Regulatory Capital				Minimum Required Capital Including Capital Conservation Buffer				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
March 31, 2019
Company
Tier I leverage	$	171,606	10.23	%	$	67,099	4.000	%	$	83,874	5.000	%
Common equity tier 1	159,982		11.50	%	97,380		7.000	%	90,425		6.500	%
Tier I risk-based capital	171,606		12.34	%	118,205		8.500	%	111,252		8.000	%
Total risk-based capital	183,385		13.19	%	145,985		10.500	%	139,033		10.000	%

Bank
Tier I leverage	$	167,447	9.99	%	$	67,046	4.000	%	$	83,807	5.000	%
Common equity tier 1	167,447		12.07	%	97,111		7.000	%	90,174		6.500	%
Tier I risk-based capital	167,447		12.07	%	117,920		8.500	%	110,984		8.000	%
Total risk-based capital	179,226		12.92	%	145,656		10.500	%	138,720		10.000	%

December 31, 2018
Company
Tier I leverage	$	168,876	10.38	%	$	65,077	4.000	%	$	81,347	5.000	%
Common equity tier 1	157,273		11.59	%	86,507		6.375	%	88,203		6.500	%
Tier I risk-based capital	168,876		12.44	%	106,905		7.875	%	108,602		8.000	%
Total risk-based capital	180,193		13.28	%	133,991		9.875	%	135,688		10.000	%

Bank
Tier I leverage	$	165,308	10.17	%	$	65,018	4.000	%	$	81,272	5.000	%
Common equity tier 1	165,308		12.19	%	86,451		6.375	%	88,146		6.500	%
Tier I risk-based capital	165,308		12.19	%	106,792		7.875	%	108,488		8.000	%
Total risk-based capital	176,625		13.02	%	133,961		9.875	%	135,657		10.000	%

~~Table of Contents~~

~~COMMERCE UNION BANCSHARES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~SEPTEMBER 30, 2017 (UNAUDITED) AND DECEMBER 31, 2016~~

~~(Dollar amounts in thousands except per share amounts)~~

NOTE 78 - EARNINGS PER SHARE

The following is a summary of the components comprising basic and diluted ~~earnings~~earnings per common share of stock (EPS):

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Basic EPS Computation

Net income attributable to common shareholders
$ 1,846 $ 2,368 $ 6,091 $ 6,965
Weighted average common shares outstanding
8,174,973 7,651,549 7,878,760 7,542,573
Basic earnings per common share
$ 0.23 $ 0.31 $ 0.77 $ 0.92
Diluted EPS Computation

Net income attributable to common shareholders
$ 1,846 $ 2,368 $ 6,091 $ 6,965
Weighted average common shares outstanding
8,174,973 7,651,549 7,878,760 7,542,573
Dilutive effect of stock options and restricted shares
105,885 117,243 95,587 97,674
Adjusted weighted average common shares outstanding
8,280,858 7,768,792 7,974,347 7,640,247
Diluted earnings per common share
$ 0.22 $ 0.30 $ 0.76 $ 0.91



	Three Months Ended March 31,
	2019		2018
Basic EPS Computation
Net income attributable to common shareholders	$	3,824	$	3,741
Weighted average common shares outstanding	11,405,438		11,385,323
Basic earnings per common share	$	0.34	$	0.33
Diluted EPS Computation
Net income attributable to common shareholders	$	3,824	$	3,741
Weighted average common shares outstanding	11,405,438		11,385,323
Dilutive effect of stock options, restricted shares and employee stock purchase plan	81,707		92,611
Adjusted weighted average common shares outstanding	11,487,145		11,477,934
Diluted earnings per common share	$	0.33	$	0.33

NOTE 89 - SEGMENT REPORTING

The Company has two reportable business segments: retail banking and residential mortgage banking. Segment information is derived from the internal ~~reportin~~greporting 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.

Retail Bankingprovides 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 Bankingoriginates traditional first lien residential mortgage loans and first lien home equity lines of credit throughout the United States. The ~~loans are amortizing~~traditional first ~~mortgage loans and home equity line of credit loans (HELOC). The amortizing first~~lien residential mortgage loans are typically underwritten to government agency standards and sold to third party secondary market mortgage investors. ~~Some~~The home equity lines of ~~the HELOC loans~~credit are ~~retained in the retail banking operation’s loan portfolio while others are sold~~typically underwritten to ~~third party investors.~~participating banks or other investor group standards.

3530

Table of Contents

RELIANT BANCORP, INC.

~~COMMERCE UNION BANCSHARES, INC.~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

~~SEPTEMBER 30, 2017~~

MARCH 31, 2019 (UNAUDITED) AND DECEMBER 31, ~~2016~~

2018

(Dollar amounts in thousands except per share amounts)

NOTE 89 - SEGMENT REPORTING (CONTINUED)

The following presents summarized results of operations for the ~~Company’s~~Company’s business segments for the periods indicated:

Three Months Ended

September 30, 2017

Retail Banking

Residential
Mortgage
Banking

Elimination
Entries

Consolidated

Net interest income
$ 8,924 $ 172 $ - $ 9,096
Provision for loan losses
540 - - 540
Noninterest income
516 1,584 (13 ) 2,087
Noninterest expense
6,748 1,749 - 8,497
Income tax expense (benefit)
306 - - 306
Net income (loss)
1,846 7 (13 ) 1,840
Noncontrolling interest in net loss of subsidiary
- (7 ) 13 6
Net income attributable to common shareholders
$ 1,846 $ - $ - $ 1,846

Three Months Ended

September 30, 2016

Retail Banking

Residential Mortgage Banking

Elimination Entries

Consolidated

Net interest income
$ 7,750 $ 85 $ - $ 7,835
Provision for loan losses
145 - - 145
Noninterest income
1,024 551 - 1,575
Noninterest expense
5,600 1,283 - 6,883
Income tax expense (benefit)
661 (42 ) - 619
Net income (loss)
2,368 (605 ) - 1,763
Noncontrolling interest in net loss of subsidiary
- 605 - 605
Net income attributable to common shareholders
$ 2,368 $ - $ - $ 2,368



	Three Months Ended March 31, 2019
	Retail Banking		Residential Mortgage Banking			Elimination Entries			Consolidated
Net interest income	$	13,373	$	88		$	—		$	13,461
Provision for loan losses	—		—			—			—
Noninterest income	1,378		575			(15		)	1,938
Noninterest expense (excluding merger expense)	10,445		2,299			—			12,744
Merger expense	2		—			—			2
Income tax expense (benefit)	480		(108		)	—			372
Net income (loss)	3,824		(1,528		)	(15		)	2,281
Noncontrolling interest in net loss of subsidiary	—		1,528			15			1,543
Net income attributable to common shareholders	$	3,824	$	—		$	—		$	3,824



	Three Months Ended March 31, 2018
	Retail Banking		Residential Mortgage Banking			Elimination Entries			Consolidated
Net interest income	$	13,044	$	338		$	—		$	13,382
Provision for loan losses	137		—			—			137
Noninterest income	1,288		1,748			(45		)	2,991
Noninterest expense (excluding merger expense)	9,451		2,534			—			11,985
Merger expense	177		—			—			177
Income tax expense (benefit)	826		(29		)	—			797
Net income (loss)	3,741		(419		)	(45		)	3,277
Noncontrolling interest in net loss of subsidiary	—		419			45			464
Net income attributable to common shareholders	$	3,741	$	—		$	—		$	3,741

NOTE 10 - 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.

Table of Contents

RELIANT BANCORP, INC.

~~COMMERCE UNION BANCSHARES, INC.~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

~~SEPTEMBER 30, 2017~~

MARCH 31, 2019 (UNAUDITED) AND DECEMBER 31, ~~2016~~

2018

(Dollar amounts in thousands except per share amounts)

NOTE 810 - ~~SEGMENT REPORTING~~DERIVATIVES (CONTINUED)

Interest Rate Swaps Designated as Cash Flow Hedges

Nine Months Ended

September 30, 2017

Retail Banking

Residential
Mortgage
Banking

Elimination
Entries

Consolidated

Net interest income
$ 25,224 $ 346 $ - $ 25,570
Provision for loan losses
1,195 - - 1,195
Noninterest income
1,704 2,851 (98 ) 4,457
Noninterest expense
18,581 4,053 - 22,634
Income tax expense
1,061 (56 ) - 1,005
Net income (loss)
6,091 (800 ) (98 ) 5,193
Noncontrolling interest in net loss of subsidiary
- 800 98 898
Net income attributable to common shareholders
$ 6,091 $ - $ - $ 6,091

Nine Months Ended

September 30, 2016

Retail Banking

Residential
Mortgage
Banking

Elimination
Entries

Consolidated

Net interest income
$ 24,082 $ 527 $ - $ 24,609
Provision for loan losses
760 - - 760
Noninterest income
2,253 5,678 - 7,931
Noninterest expense
16,800 6,747 - 23,547
Income tax expense
1,810 (35 ) - 1,775
Net income
6,965 (507 ) - 6,458
Noncontrolling interest in net income of subsidiary
- 507 - 507
Net income attributable to common shareholders
$ 6,965 $ - $ - $ 6,965

Interest rate swaps with notional amounts totaling $60,000 as of March 31, 2019 , were designated as cash flow hedges of certain certificates of deposits 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.

Summary information related to the interest rate swaps designated as cash flow hedges as of March 31, 2019, is as follows:



Notional amounts	$	60,000
Weighted average pay rates	3.338		%
Weighted average receive rates	3.060		%
Weighted average maturity	4.22 years
Unrealized losses	$	1,790

Cash Flow Hedges

The following table presents the net gains (losses) recorded in accumulated other comprehensive income and the Consolidated Statements of Income relating to the cash flow derivative instruments for the period ended:



	Amount of Gain (Loss) Recognized in OCI (Effective Portion)			Amount of Gain (Loss) Reclassified from OCI to Interest Income		Amount of Gain (Loss) Recognized in Other Non-Interest Income (Ineffective Portion)
March 31, 2019
Interest rate contracts	$	(637	)	$	—	$	—

The following table reflects the cash flow hedges included in the Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018, respectively:



	March 31, 2019				December 31, 2018
	Notional Amount		Fair Value		Notional Amount		Fair Value
Included in other liabilities:
Interest rate swaps related to
subordinate debentures	$	10,000	$	284	$	10,000	$	174

Interest rate swaps related to
Certificates of deposits	50,000		1,506		—		—
Federal Home Loan Bank borrowings	—		—		50,000		979
Total included in other liabilities	$	60,000	$	1,790	$	60,000	$	1,153

Table of Contents

RELIANT BANCORP, INC.

~~COMMERCE UNION BANCSHARES, INC.~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

~~SEPTEMBER 30, 2017~~

MARCH 31, 2019 (UNAUDITED) AND DECEMBER 31, ~~2016~~

2018

(Dollar amounts in thousands except per share amounts)

NOTE 910 - DERIVATIVES (CONTINUED)

Fair Value Hedges

The ~~Company has swap agreements that were executed upon~~following table reflects the ~~purchase of investment grade municipal securities effectively converting the fixed municipal yields to floating rates. These~~ fair value hedges ~~are intended to reduce~~included in the ~~interest rate risk associated with~~Consolidated Statements of Income for the ~~underlying hedged item by mitigating~~three months ended March 31, 2019 and 2018, respectively:



Interest rate contracts	Location	March 31, 2019			December 31, 2018
Change in fair value on interest
rate swaps hedging investments	Interest income	$	(501	)	$	614

The following table reflects the ~~changes in~~ fair value ~~based on fluctuations~~hedges included in ~~interest rates.~~

~~The total notional amount~~the Consolidated Balance Sheets as of ~~swap agreements~~ ~~was $21,505 at September 30, 2017~~March 31, 2019 and December 31, ~~2016. At September 30,~~2018, respectively:



	March 31, 2019				December 31, 2018
	Notional Amount		Fair Value		Notional Amount		Fair Value
Included in other assets:
Interest rate swaps related to investments	$	10,668	$	101	$	16,902	$	467

Total included in other assets	$	10,668	$	101	$	16,902	$	467

Included in other liabilities:
Interest rate swaps related to investments	10,437		165		4,203		30

Total included in other liabilities	$	10,437	$	165	$	4,203	$	30

NOTE 11 – INCOME TAXES

Income tax expense for the three months ended March 31, 2019 and 2018 was $372 and $797. The decline is attributable to; a lower income before tax level, an increased level of tax-exempt income in 2019, increased utilization of state tax credit lending programs, and there were no non-deductible merger expenses in 2019. The effective tax rate for the three months ended March 31, 2019 and 2018 was 14% and 20%, respectively.

Table of Contents

RELIANT BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

MARCH 31, 2019 (UNAUDITED) AND DECEMBER 31, 2018

(Dollar amounts in thousands except per share amounts)

NOTE 12 - BUSINESS COMBINATION

On January 1, 2018, pursuant to the Agreement and Plan of Merger, dated August 22, 2017, by and among Reliant Bancorp, Inc., Community First Inc., Pioneer Merger Sub, Inc., and Community First Bank & Trust, Community First, Inc. merged with and into the ~~contracts had~~Reliant Bancorp, Inc. Immediately following the merger, Community First Bank & Trust merged with and into Reliant Bank, with Reliant Bank surviving. Pioneer Merger Sub, Inc. was formed to effect the merger and no longer exists.

Pursuant to the merger agreement, each outstanding share of Community First, Inc. common stock (except for excluded shares and dissenting shares) was converted into and cancelled in exchange for the right to receive 0.481 shares of Reliant Bancorp, Inc. common stock, together with cash in lieu of any fractional shares. This business combination results in expanded and more diversified market area for the Company.

The following table details the financial impact of the merger, including the calculation of the purchase price, the allocation of the purchase price to the fair values ~~totaling $23 recorded~~of net assets assumed and goodwill recognized:



Calculation of Purchase Price

Shares of Community First common stock outstanding as of December 31, 2017	5,025,884
Exchange ratio for Reliant Bancorp, Inc. common stock	0.481
Share conversion	2,417,450
Reliant Bancorp, Inc. common stock shares issued	2,416,444
Reliant Bancorp, Inc. share price at December 29, 2017	$	25.64
Value of Reliant Bancorp, Inc. common stock shares issued	61,958
Value of fractional shares	25
Estimated fair value of Community First, Inc.	$	61,983

Allocation of Purchase Price
Total consideration above	$	61,983
Fair value of assets acquired and liabilities assumed
Cash and cash equivalents	(33,128		)
Time deposits in other financial institutions	(23,309		)
Investment securities available for sale	(69,078		)
Loans, net of unearned income	(313,040		)
Mortgage loans held for sale, net	(910		)
Accrued interest receivable	(1,165		)
Premises and equipment	(9,585		)
Restricted equity securities	(1,726		)
Cash surrender value of life insurance contracts	(10,664		)
Other real estate owned	(1,650		)
Deferred tax asset, net	(4,885		)
Core deposit intangible	(7,888		)
Other assets	(1,795		)
Deposits—noninterest-bearing	80,395
Deposits—interest-bearing	352,100
Other borrowings	11,522
Payables and other liabilities	5,061
Net liabilities assumed (net assets acquired)	(29,745		)
Goodwill	$	32,238

Table of Contents

RELIANT BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

MARCH 31, 2019 (UNAUDITED) AND DECEMBER 31, 2018

(Dollar amounts in thousands except per share amounts)

NOTE 12 - BUSINESS COMBINATION (CONTINUED)

During 2018, as part of the system integration of Community First, the Company determined minor adjustments were appropriate to reduce other assets by $93 and ~~$448 recorded~~increase payables and other liabilities by $85 effective as of the acquisition date.

NOTE 13 - RECENT 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 ~~other liabilities. At December 31, 2016,~~our 2018 Form 10-K for additional information related to previously issued accounting standards updates.

ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” implements a common revenue standard that clarifies the ~~contracts had fair values totaling $195 recorded~~principles for recognizing revenue. The principle element of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in ~~other~~an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this principle, an entity should apply the following steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when (or as) the entity satisfies a performance obligation. ASU 2014-09 was originally going to be effective for the Company on January 1, 2018; however, the FASB recently issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606) – Deferral of the Effective Date" which deferred the effective date of ASU 2014-09 by one year to January 1, 2019. Revenue is comprised of net interest income on financial assets and ~~$267 recorded in other liabilities.~~

financial liabilities, which is explicitly excluded from the scope of ASU 2014-09, and non-interest income. The ~~derivative instruments~~ held by the Company are designated and qualify as fair value hedges. Accordingly, the gain or loss on the derivatives as well as the offsetting gain or loss on the available-for-sale securities attributable to the hedged risk are recognized in current earnings. At September 30, 2017, the Company’s fair value hedges are effective and areadoption of this standard did not ~~expected to~~ have a significant impact on ~~net income over~~ the ~~next twelve months.~~Company.

~~NOTE~~

~~10 – INCOME TAXES~~ASU 2016-01, “

~~Income tax expense~~ totaled $306 and $1,005 for the three and nine months ended September 30, 2017 as compared to $619 and $1,775 in the comparative periods in 2016. The tax rate was favorably impacted by an increase in income from tax-exempt securities, excess tax benefits recognized relating to the exercise of stock options and the addition of certain state tax credits on interest-free loans.

~~NOTE~~ ~~11 - RECENT ACCOUNTING PRONOUNCEMENTS~~

~~ASU~~ ~~2016-01~~~~, “Financial~~Financial Instruments – Overall (Subtopic ~~825-10)~~825-10): Recognition and Measurement of Financial Assets and Financial ~~Liabilities”~~ Liabilities." ASU 2016-01, among other things, (i) requires equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income, (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment,

(iii) eliminates the requirement for public business entities to disclose the methods and significant assumptions used to

estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance

sheet, (iv) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, (v) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments, (vi) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements and (viii) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to ~~available-for-sale.~~available-for-sale securities. ASU ~~2016-1 will be~~2016-01 became effective for ~~the Company beginning~~us on January 1, ~~2018~~2019 and isdid not ~~expected to~~ have a significant impact on our ~~consolidated~~ financial statements.

ASU 2016-02, “

~~Table of Contents~~

~~COMMERCE UNION BANCSHARES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~SEPTEMBER 30, 2017 (UNAUDITED) AND DECEMBER 31, 2016~~

~~(Dollar amounts in thousands except per share amounts)~~

~~NOTE~~ ~~11 - RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)~~

~~ASU~~ ~~2016-02~~,“Leases (Topic ~~842)~~842).” ~~requires~~ASU 2016-02 will require lessees to recognize a lease liability, which is a ~~lessee‘s~~ 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 ~~does not significantly change lease accounting requirements applicable to lessors. ASU 2016-1~~ will be effective for ~~the Company~~us on January 1, ~~2019~~2020 and will require transition using a modified retrospective approach ~~which requires application of the new guidance~~for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the ~~year~~consolidated financial statements. We estimate that the effect of ~~adoption.~~implementing this pronouncement will result in right to use assets of $13,804 and a corresponding liability, using the remaining contractual lease periods. We also estimate the impact on regulatory capital to be a reduction of eight basis points to the Tier 1 leverage capital ratio. Management is presently evaluating the ~~impact~~planned renewals of existing leases. If management determines to utilize the ~~update on~~renewals of leases then the ~~Company’s consolidated financial statements.~~

~~ASU 2016-09~~,~~“Compensation~~right to use assets and corresponding liability will increase.

Table of Contents

RELIANT BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

MARCH 31, 2019 (UNAUDITED) AND DECEMBER 31, 2018

(Dollar amounts in thousands except per share amounts)

NOTE 13 - ~~Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting~~” requires that all excess tax benefits and tax deficiencies related to share-based payment awards be recognized as income tax expense or benefit in the income statement during the period in which they occur. Previously, such excess tax benefits were recorded as additional paid-in capital, and tax deficiencies were charged to additional paid in capital to the extent of prior excess tax benefits. Additionally, excess tax benefits should be classified along with other income tax cash flows as an operating activity rather than a financing activity, as was previously the case. ASU 2016-09 also provides that an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. ASU 2016-09 became effective on January 1, 2017 with early adoption permitted. The Company elected early adoption of this update and as a result recognized in income tax expense an excess tax benefit of $82 and $181 related to the exercise of stock options during the three months and nine months ended September 30, 2017, respectively and $106 and $531 for the corresponding periods in 2016.

RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)

ASU 2016-13,, “Financial Instruments –- Credit Losses (Topic 326): Measurement of Credit Losses on Financial ~~Instruments”~~ 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~~available for sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 will be effective ~~beginning~~ on January 1, ~~2020. Management is~~2021. We are currently evaluating the potential impact of ASU 2016-13 on our financial statements. We are currently 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. We are also in the process of implementing a third-party vendor solution to assist us in the application of the ASU 2016-13. The adoption of the 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. While we are currently unable to reasonably estimate the impact of adopting ASU 2016-13, we expect that the ~~pronouncement on~~impact of adoption will be significantly influenced by the ~~consolidated financial statements.~~

composition, characteristics and quality of our loan and securities portfolios as well as the prevailing economic conditions and forecasts as of the adoption date.

ASU 2017-04, ““Intangibles - Goodwill and Other (Topic ~~350)~~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 will be effective ~~beginning~~for the Company on January 1, ~~2020,~~2021, with ~~early~~earlier adoption permitted ~~for interim or annual impairment tests beginning in 2017. ASU 2017-04~~and is not currently expected to have a significant impact on the consolidated financial statements.

~~Table of Contents~~

~~COMMERCE UNION BANCSHARES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~SEPTEMBER 30, 2017 (UNAUDITED) AND DECEMBER 31, 2016~~

~~(Dollar amounts~~ASU 2018-13, “Fair Value Measurement (Topic 820) - Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.” ASU 2018-13 modifies the disclosure requirements on fair value measurements in ~~thousands except per share amounts)~~

~~NOTE~~ ~~11 - RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)~~

~~ASU 2017-05~~~~, “Other Income - Gains and Losses from~~Topic 820. The amendments in this update remove disclosures that no longer are considered cost beneficial, modify/clarify the ~~Derecognition of Nonfinancial Assets (Subtopic 610-20) - Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets”~~clarifies the scope of Subtopic 610-20 and adds guidance for partial sales of nonfinancial assets, including partial sales of real estate. Historically, U.S. GAAP contained several different accounting models to evaluate whether the transferspecific requirements of certain ~~assets qualified for sale treatment.~~disclosures, and add disclosure requirements identified as relevant. ASU ~~2017-05 reduces the number of potential accounting models that might apply and clarifies which model does apply in various circumstances. ASU 2017-05~~2018-13 will be effective for the Company on January 1, ~~2018 and is not expected to have a significant impact on our consolidated financial statements.~~

~~ASU 2017-08 “Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20) - Premium Amortization on Pur~~~~chased Callable Debt Securities~~” shortens the amortization period for certain callable debt securities held at a premium to require such premiums to be amortized to the earliest call date unless applicable guidance related to certain pools of securities is applied to consider estimated prepayments. Under prior guidance, entities were generally required to amortize premiums on individual, non-pooled callable debt securities as a yield adjustment over the contractual life of the security. ASU 2017-08 does not change the accounting for callable debt securities held at a discount. ASU 2017-08 will be effective for the Company on January 1, 2019,2021, with early adoption permitted, and is not expected to have a significant impact on our ~~consolidated~~ financial statements.

~~ASU 2017-09,~~ ~~“Compensation~~

NOTE 14 - ~~Stock Compensation (Topic 718) - Scope~~SUBSEQUENT EVENT

On May 3, 2019, in connection with the Company's stock repurchase plan, 200,000 shares were acquired at a total cost of ~~Modification Accounting.”~~ ~~ASU 2017-09 clarifies when changes to the terms or conditions~~$4,598.

Item2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Executive Summary

The following is a ~~share-based payment award must be accounted for as modifications. Under ASU 2017-09, an entity will not apply modification accounting to a share-based payment award if all~~summary of the ~~following are the same immediately before~~Company’s financial highlights and ~~after the change: (i) the award's fair value, (ii) the award's vesting conditions and (iii) the award's classification as an equity or liability instrument. ASU 2017-09 will be effective~~significant events for the ~~Company on January 1, 2018 and is not expected~~three months ended March 31, 2019:

Net income available to ~~have a significant impact on the consolidated financial statements.~~

~~ASU 2017-12,~~ ~~“Derivatives and Hedging (Topic 815) - Targeted Improvements to Accounting for Hedging Activities.”~~ ASU 2017-12 amends the hedge accounting recognition and presentation requirements in ASC 815 to improve the transparency and understandability of information conveyed to financial statement users about an entity’s risk management activities to better align the entity’s financial reporting for hedging relationships with those risk management activities and to reduce the complexity of and simplify the application of hedge accounting. ASU 2017-12 will be effectivecommon shareholders totaled $3.8 million, or $0.33 per diluted common share, for the ~~Company on January 1,~~three months ended March 31, 2019 ~~and is not expected~~compared to ~~have a significant impact on~~$3.7 million, or $0.33 per diluted common share, during same period in 2018.

Loans, net of unearned income increased $31.1 million for the ~~consolidated financial statements.~~

three months ended March 31, 2019.

Deposits increased $73.4 million for the three months ended March 31, 2019.

~~Table~~Asset quality remains strong with nonperforming assets to total assets of ~~Contents~~just 0.45 percent.

~~ITEM~~ 2. ~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

In the following section the term ~~“Company”~~“Company” means ~~“Commerce Union Bancshares,~~“Reliant Bancorp, Inc.” and all of its subsidiaries” and the term “Bank” means “Reliant 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 our 10-K filed March ~~14, 2017.~~8, 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.

Critical Accounting Policies

The accounting principles we follow and our methods of applying these principles conform ~~with~~ to accounting principles generally accepted in the United States of America ("U.S. ~~GAAP~~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, ~~2016.~~ 2018. The following is a brief summary of the more significant policies.

Principles of Consolidation

The consolidated financial statements as of and for the periods presented include the accounts of ~~Commerce Union Bancshares, Inc., its wholly-owned subsidiary,~~ Reliant Bancorp, the Bank, ~~(the “Bank”~~Community First Trups Holding Company, which is wholly owned by Reliant Bancorp (“TRUPS”), ~~and~~Reliant Investment Holdings, LLC ("Holdings"), which is 100% wholly owned by the ~~Bank’s 51% controlled subsidiary,~~Bank, and Reliant Mortgage Ventures, LLC ("RMV"), of which the Bank controls 51% of the governance rights (Reliant Bancorp, the Bank, Holdings, TRUPS, and RMV are collectively ~~(the~~referred to herein as the “Company”). As described in the notes to our annual consolidated financial statements, RMV is considered a variable interest entity for which the Bank is deemed to be the primary beneficiary. All significant intercompany ~~accounts~~balances and transactions have been eliminated in consolidation. As described in Note 12, Reliant Bancorp and Community First, Inc. merged effective January 1, 2018. The accounting and reporting policies of the Company conform to U.S. GAAP and to general practices in the banking industry.

During 2011, the Bank and another entity organized ~~Reliant Mortgage Ventures.~~RMV. Under the related operating agreement, the non-controlling member receives 70% of the ~~profits~~cash flow distributions of ~~the mortgage venture,~~RMV, and the Bank receives 30% of the ~~profits~~cash flow distributions, once the non-controlling member recovers its ~~aggregate losses.~~capital contributions to RMV. The non-controlling member is ~~responsible for 100% of the mortgage venture’s net losses.~~required to fund RMV’s losses via additional capital contributions to RMV. As of ~~September 30, 2017, the~~March 31, 2019, RMV's cumulative losses to date totaled ~~$4,197 prior to intercompany eliminations. Reliant Mortgage Ventures, LLC~~$9,601. RMV will have to generate net income of this amount before the Company will participate in future ~~earnings.~~

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 acquired loans at fair value as of the date of the ~~reverse~~ merger (discussed below), 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 establishes an allowance for loan losses subsequent to the date 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 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 non-purchased credit-impaired loans acquired in the ~~reverse~~ merger and that are accounted for under ASC 310-20, the historical loss estimates are based on the historical losses experienced by Reliant Bank for loans with similar characteristics as those acquired other than purchased credit-impaired loans. We record an allowance for loan losses only when the calculated amount exceeds the remaining credit mark established at acquisition.

~~Table of Contents~~

Allowance for Loan Losses

The allowance for loan losses 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 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~~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.

A loan is impaired when full payment under the loan terms is not expected. All classified loans and loans on non-accrual status ~~or 90+ days past due still accruing~~ 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 loans 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 the 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.

COMPARISON OF RESULTS OF OPERATIONS FOR THETHREE MONTHSENDEDMARCH 31, 2019AND ~~NINE MONTHS~~~~ENDED~~ ~~SEPTEMBER~~302018

Merger Between Reliant Bancorp, Inc. and Community First, Inc.

On December 15, 2017, the shareholders of Reliant Bancorp approved a merger with Community First, Inc. ("Community First"), which became effective on January 1, 2018 (the "Merger”). Each outstanding share of Community First common stock converted into the right to receive .481 shares of Reliant Bancorp common stock. After the Merger was completed, legacy Reliant Bancorp’s shareholders owned approximately 78.9% of the common stock of the combined company, and legacy Community First’s shareholders owned approximately 21.1% of the common stock of the combined company.

The assets and liabilities of Community First as of the effective date of the Merger were recorded at their respective estimated fair values and added to those of the Company. Any excess of purchase price over the net estimated fair values of the acquired assets and assumed liabilities of Community First was allocated to all identifiable intangibles assets. Any remaining excess was then allocated to goodwill.

As of December 31, 2017,~~AND~~ ~~2016~~

Community First, including its wholly owned subsidiaries, had total assets of $480 million, total loans of $316 million and total deposits of $433 million. Community First held a loan portfolio that was primarily comprised of real estate loans.

As a result of the Merger on January 1, 2018, the Company:

grew consolidated total assets from $1,125.0 million to $1,636.0 million as of January 1, 2018 after giving effect to purchase accounting;

increased total loans from $762.5 million to $1,075.5 million as of January 1, 2018;

increased total deposits from $883.5 million to $1,316.9 million as of January 1, 2018; and

expanded its employee base from 167 full time equivalent employees to 272 full time equivalent employees as of January 1, 2018.

Earnings

Net income attributable to common shareholders amounted to ~~$1,846 and $6,091,~~$3,824, or ~~$0.23 and $0.77~~$0.34 per basic share, for the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2019, compared to ~~$2,368 and $6,965,~~$3,741, or ~~$0.31 and $0.92~~$0.33 per basic share, for the same ~~periods~~period in ~~2016.~~2018. Diluted net income attributable to common shareholders ~~per share~~ was ~~$0.22 and $0.30~~$0.33 per ~~share and $0.76 and $0.91 per diluted~~ share for the three ~~and nine~~ months ended ~~September 30, 2017, compared to 2016, respectively.~~March 31, 2019 and March 31, 2018. The ~~major components contributing to the decline in income per share from the prior-year discussed further below include the private offering~~increase of ~~1,137,000 shares, the increase in audit, legal and consulting expenses relating to the merger with Community First Inc., the increase in provision for loan loss and somewhat offset by an increase~~0.6% in net interest income ~~and a decline in income taxes. Our earnings per share declined with~~for the ~~change in earnings and the greater number of average shares outstanding due~~three months ended March 31, 2019 compared to the ~~exercise~~same period in 2018 accounts for all of ~~Company stock options~~the increase in net income attributable to common shareholders. This and ~~the private offering.~~

~~Table~~other components of ~~Contents~~earnings are discussed further below.

Net Interest Income

Net interest ~~incom~~eincome represents the amount by which interest earned on various earning assets exceeds interest paid 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 spread and net interest margin for the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2019, and ~~2016~~2018 (dollars in thousands):

Three Months Ended
September 30, 2017

Three Months Ended
September 30, 2016

Change

Average Balances

Rates / Yields (%)

Interest Income / Expense

Average Balances

Rates / Yields (%)

Interest Income / Expense

Due to Volume

Due to Rate

Total

Interest earning assets

Loans
$ 727,453 4.78 $ 8,588 $ 649,778 4.57 $ 7,277 $ 947 $ 364 $ 1,311
Loan fees
- 0.27 490 - 0.28 452 38 - 38
Loans with fees
727,453 5.05 9,078 649,778 4.85 7,729 985 364 1,349
Mortgage loans held for sale
18,333 4.57 211 12,804 3.39 109 56 46 102
Deposits with banks
14,451 0.88 32 20,439 0.37 19 (34 ) 47 13
Investment securities - taxable
30,212 2.35 179 33,512 1.63 137 (81 ) 123 42
Investment securities - tax-exempt
157,718 3.99 1,022 111,448 3.33 578 300 144 444
Fed funds sold and other
7,557 5.51 105 8,506 3.93 84 (53 ) 74 21
Total earning assets
955,724 4.72 10,627 836,487 4.37 8,656 1,173 798 1,971
Nonearning assets
54,812 48,640
Total Assets
$ 1,010,536 $ 885,127
Interest bearing liabilities

Interest bearing demand
81,629 0.20 42 89,572 0.20 46 (4 ) - (4 )
Savings and money market
205,463 0.40 207 179,816 0.33 151 23 33 56
Time deposits - retail
329,203 1.02 845 143,344 0.73 262 446 137 583
Time deposits - wholesale
90,222 1.20 272 94,239 0.71 168 (48 ) 152 104
Total interest bearing deposits
706,517 0.77 1,366 506,971 0.49 627 417 322 739
Federal Home Loan Bank advances
46,910 1.40 165 132,876 0.58 194 (694 ) 665 (29 )
Total interest-bearing liabilities
753,427 0.81 1,531 639,847 0.51 821 (277 ) 987 710
Net interest rate spread (%) / Net Interest Income ($)
3.91 $ 9,096 3.86 $ 7,835 $ 1,450 $ (189 ) $ 1,261
Non-interest bearing deposits
133,108 (0.13 ) 134,343 (0.09 )
Other non-interest bearing liabilities
4,574 4,159
Stockholder's equity
119,427 106,778
Total liabilities and stockholders' equity
$ 1,010,536 $ 885,127
Cost of funds
0.68 0.42
Net interest margin
4.08 3.98

~~Table of Contents~~

Nine Months Ended
September 30, 2017

Nine Months Ended
September 30, 2016

Change

Average Balances

Rates / Yields (%)

Interest Income / Expense

Average Balances

Rates / Yields (%)

Interest Income / Expense

Due to Volume

Due to Rate

Total

Interest earning assets

Loans
$ 701,362 4.61 $ 23,652 $ 635,055 4.87 $ 22,603 $ 2,879 $ (1,830 ) $ 1,049
Loan fees
- 0.29 1,541 - 0.30 1,408 133 - 133
Loans with fees
701,362 4.90 25,193 635,055 5.17 24,011 3,012 (1,830 ) 1,182
Mortgage loans held for sale
13,310 4.22 420 24,351 3.64 663 (389 ) 146 (243 )
Deposits with banks
15,177 0.71 81 20,646 0.35 54 (25 ) 52 27
Investment securities - taxable
32,355 2.12 514 43,840 1.79 589 (214 ) 139 (75 )
Investment securities - tax-exempt
145,412 4.01 2,796 98,560 3.33 1,506 902 388 1,290
Fed funds sold and other
7,787 5.15 300 7,447 4.38 244 12 44 56
Total earning assets
915,403 4.58 29,304 829,899 4.60 27,067 3,298 (1,061 ) 2,237
Nonearning assets
54,240 49,350
Total Assets
$ 969,643 $ 879,249
Interest bearing liabilities

Interest bearing demand
84,307 0.21 131 89,604 0.20 137 (13 ) 7 (6 )
Savings and money market
200,304 0.37 557 188,387 0.34 480 32 45 77
Time deposits - retail
308,911 0.86 1,994 142,602 0.70 747 1,043 204 1,247
Time deposits - wholesale
87,105 1.03 669 105,188 0.65 513 (147 ) 303 156
Total interest bearing deposits
680,627 0.66 3,351 525,781 0.48 1,877 915 559 1,474
Federal Home Loan Bank advances and other
41,132 1.24 383 121,999 0.64 581 (689 ) 491 (198 )
Total interest-bearing liabilities
721,759 0.69 3,734 647,780 0.51 2,458 226 1,050 1,276
Net interest rate spread (%) / Net Interest Income ($)
3.89 $ 25,570 4.09 $ 24,609 $ 3,072 $ (2,111 ) $ 961
Non-interest bearing deposits
132,406 (0.11 ) 123,526 (0.08 )
Other non-interest bearing liabilities
3,548 4,846
Stockholder's equity
111,930 103,097
Total liabilities and stockholders' equity
$ 969,643 $ 879,249
Cost of funds
0.58 0.43
Net interest margin
4.04 4.20



	Three Months Ended March 31, 2019						Three Months Ended March 31, 2018						Change
	Average Balances		Rates / Yields (%)		Interest Income / Expense		Average Balances		Rates / Yields (%)		Interest Income / Expense		Due to Volume			Due to Rate			Total
Interest earning assets
Loans	$	1,238,341	5.16		$	15,463	$	1,088,166	4.81		$	12,872	$	1,697		$	895		$	2,591
Loan fees	—		0.23		706		—		0.26		686		20			—			20
Loans with fees	1,238,341		5.39		16,169		1,088,166		5.07		13,558		1,716			895			2,611
Mortgage loans held for sale	10,747		5.77		153		39,235		4.97		481		(782		)	454			(328		)
Deposits with banks	27,643		1.73		118		50,206		1.34		166		(267		)	219			(48		)
Investment securities - taxable	72,464		2.82		503		72,678		2.83		507		(2		)	(2		)	(4		)
Investment securities - tax-exempt	228,497		3.86		1,718		218,246		3.57		1,504		78			136			214
Federal funds sold and other	12,650		5.83		182		9,934		5.96		146		57			(21		)	36
Total earning assets	1,590,342		5.00		18,843		1,478,465		4.61		16,362		801			1,680			2,481
Nonearning assets	140,835						134,621
Total assets	$	1,731,177					$	1,613,086
Interest bearing liabilities
Interest bearing demand	148,649		0.30		111		154,318		0.20		77		(19		)	53			34
Savings and money market	400,328		1.14		1,130		344,641		0.56		478		88			564			652
Time deposits - retail	577,270		2.05		2,921		516,424		1.31		1,664		217			1,040			1,257
Time deposits - wholesale	106,625		2.47		650		95,743		1.41		332		42			276			318
Total interest bearing deposits	1,232,872		1.58		4,812		1,111,126		0.93		2,551		328			1,933			2,261
Federal Home Loan Bank advances	56,718		2.70		377		70,172		1.57		272		(312		)	417			105
Subordinated debt	11,613		6.74		193		11,536		5.52		157		1			35			36
Total borrowed funds	68,331		3.38		570		81,708		2.13		429		(310		)	451			141
Total interest-bearing liabilities	1,301,203		1.68		5,382		1,192,834		1.01		2,980		17			2,385			2,402
Net interest rate spread (%) / Net interest income ($)			3.32		$	13,461			3.60		$	13,382	$	784		$	(705	)	$	79
Non-interest bearing deposits	211,122		(0.24	)			212,614		(0.15	)
Other non-interest bearing liabilities	9,391						6,205
Stockholder's equity	209,461						201,433
Total liabilities and stockholders' equity	$	1,731,177					$	1,613,086
Cost of funds			1.44						0.86
Net interest margin			3.63						3.79

Table Assumptions—Average loan balances are inclusive of nonperforming loans. Yields computed on tax-exempt instruments are on a tax equivalent ~~basis.~~basis including a state tax credit included in loan yields of $300 and $25 for the three months ended March 31, 2019 and 2018, respectively. Net interest spread is calculated as the yields realized on interest-bearing assets less the rates paid on interest-bearing liabilities. 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.

Analysis—For the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2019, we recorded net interest income of approximately ~~$9.1~~$13.5 million ~~and $25.6 million, respectively,~~ which resulted in a net interest margin (net interest income divided by the average balance of interest earning assets) of ~~4.08% and 4.04% respectively.~~3.63%. For the three ~~and nine~~ months ended ~~September 30, 2016,~~March 31, 2018, we recorded net interest income of approximately ~~$7.8~~$13.4 million, ~~and $24.6 million, respectively,~~ which resulted in a net interest margin of 3.98% and 4.20%, respectively. For the three months ended September 30, 2017 and 2016, our net interest spread was 3.91% and 3.86%, respectively. For the nine months ended September 30, 2017 and 2016, our net interest spread was 3.89% and 4.09%, respectively.3.79%. The main factor contributing to the slight increase in our net interest income was our ~~earning asset growth outpacing~~increase in our ~~interest-bearing liability growth for~~loans and the ~~periods presented. Additionally, net interest income for the three and nine months ended September 30, 2017~~related yield. It was ~~impacted~~partially offset by the ~~recognition~~increase in our cost of income from the remaining purchase discount of $354 on a purchase-credit impaired loan that paid in full during the third quarter of 2017 compared to a similar $619 recognition of income for the nine months ended September 30, 2016.funds.

~~Table of Contents~~

Our year-over-year average loan volume increased by approximately ~~10.4% from~~13.8% for the first ~~nine~~three months of ~~2016~~2019 compared to the first ~~nine~~three months of ~~2017.~~2018. Our ~~combined loan and loan fee yield decreased from 5.17% to 4.90% for the first nine months of 2016 compared to 2017, respectively, while our~~ combined loan and loan fee yield increased from ~~4.85%~~5.07% to ~~5.05%~~5.39% for the first three months ~~ended September 30, 2016~~of 2019 compared to ~~2017, respectively.~~2018. The increased yield for the three months ended ~~September 30, 2017~~March 31, 2019 is attributable to ~~the recognition of income from the remaining~~a 34 basis points increase in contractual loan yields, a nine basis points increase in state tax credits, and partially offset by an eight basis points decrease in purchase ~~discount of $354 on~~accounting accretion and a ~~purchase-credit impaired~~three basis points decrease in loan ~~that paid in full during the third quarter of 2017.~~

fees.

Our tax equivalent yield on tax-exempt investments ~~increase~~dincreased to ~~3.99% and 4.01%, respectively,~~3.86% for the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2019, from ~~3.33%~~3.57% for the same ~~periods~~period in ~~2016.~~2018. This increase was driven by investment restructurings in the first quarter of 2018. Our year-over-year average tax-exempt investment volume increased by approximately ~~41.5% and 47.5% from~~4.7% for the first three ~~and nine~~ months of ~~2016~~2019 compared to the same ~~periods~~period in ~~2017.~~2018. Our year-over-year average taxable securities volume decreased by ~~9.9% and 26.2% from~~0.3% for the first three ~~and nine~~ months of 2016 compared to the same periods in 2017. We have continued to add volume to our investment portfolio. A portion of the earnings growth in the tax-exempt investment portfolio related to the completion of a municipal bond replacement strategy that was implemented late in the fourth quarter of 2016 and completed in the first quarter 2017 and additional strategies that were implemented in 2017 that are expected to provide better yielding securities that are relatively less sensitive to rising interest rates and potential declines in corporate tax rates.

~~Our cost of funds increased from 0.43% to 0.58% for the nine months ended September 30, 2016~~2019 compared to the same period in ~~2017.~~ 2018. No material changes to our investment portfolio were made during the first quarter of 2019.

Our cost of funds increased to 1.44% from ~~0.42% to 0.68%~~0.86% for the three months ended ~~September 30, 2016~~March 31, 2019 compared to the same period in ~~2017.~~2018. The increase in our cost of funds was driven mainly by higher rates being paid on time deposits, FHLB advances, and ~~FHLB advances.~~subordinated debt. We experienced a ~~7.2% increase and a 0.9%~~0.7% decrease in our average non-interest bearing deposits from the ~~nine and~~ three months ended ~~September 30, 2016, respectively.~~

~~We continue to deploy various asset~~March 31, 2018.

Our balance sheet has some components that will benefit from rising interest rates, including variable rate loans, some variable rate investment securities and ~~liability management strategies to manage our risk~~ ~~relating to~~ interest rate ~~fluctuations. We believe margin expansion over both the short and the long term will be challenging primarily~~swaps. Conversely our interest bearing liabilities are negatively impacted with rising interest rates. Our wholesale fundings are particularly sensitive to changes in interest rates mainly due to ~~continued pressure~~their short term nature. We added $30 million of pay-fixed receive-variable interest rate swaps in each of the second and third quarters of 2018. We are always looking for opportunities to increase our non-interest bearing and lower cost deposits and have seen some success with a stronger focus on ~~loan yields~~low cost deposits in all of our ~~competitive markets~~sales incentive plans. These efforts will continue as well as ~~recent and anticipated increases in short term interest rates. Any increases in short-term market interest rates would be expected~~continuing to ~~increase~~evaluate the benefits of fixing a greater portion of our ~~interest income on variable-rate loans, certain investments and~~funding costs through interest rate ~~swaps but may be offset by an increase in our cost of funds that is somewhat dependent on short-term interest rates.~~

swaps.

Provision for Loan Losses

The provision for loan losses represents a charge to earnings necessary to establish an allowance for loan losses that, in ~~management~~’smanagement’s evaluation, should be adequate to provide coverage for the inherent losses on outstanding loans. Based upon management’s assessment of the loan portfolio, we adjust our allowance for loan losses on a quarterly basis to an amount deemed appropriate to adequately cover probable losses inherent in the loan portfolio.

Based upon our evaluation of the loan portfolio, we believe the allowance for loan losses to be adequate to absorb our estimate of probable losses existing in the loan portfolio at ~~September 30, 2017.~~March 31, 2019. While policies and procedures used to estimate the allowance for loan losses, as well as the resultant provision for loan losses charged to operations, are considered adequate by management, they are necessarily approximate and imprecise. There are factors beyond our control, such as conditions in the local and national economy, local real estate market, or particular industry or borrower-specific conditions, which may materially negatively impact our asset quality and the adequacy of our allowance for loan losses and, thus, the resulting provision for loan losses.

We recorded ano provision for loan losses ~~of $540 and $1,195,~~ for the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2019 compared to ~~$145 and $760,~~$137 for loan losses recorded for the three ~~and nine~~ months ended ~~September 30, 2016, respectively.~~March 31, 2018. Our provision for loan losses was impacted by the level of loan growth, the credit quality of the loan portfolio, and the amount of net ~~charge-offs and recoveries.~~

recoveries for the three months ended March 31, 2019.

45Non-Interest Income

~~Table of Contents~~

N~~on-Interest Income~~

Our non-interest income is composed of several components, some of which vary significantly between periods. The following is a summary of our non-interest income for the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2019, and ~~2016~~2018 (dollars in thousands):

Three Months Ended

Dollar

Percent

September 30,
Increase Increase

2017

2016
(Decrease) (Decrease)
Non-Interest Income

Service charges and fees
$ 309 $ 320 $ (11 ) -3.4 %
Securities gains (losses), net
- 296 (296 ) -100.0 %
Gains on mortgage loans sold, net
1,571 551 1,020 185.1 %
Gain (loss) on sale of other real estate
1 145 (144 ) -99.3 %
Loss on disposal of premises and equipment
(50 ) - (50 ) -100.0 %
Other noninterest income:

Bank-owned life insurance
219 194 25 12.9 %
Brokerage revenue
16 40 (24 ) -60.0 %
Miscellaneous noninterest income (expense), net
21 29 (8 ) -27.6 %
Total other non-interest income
256 263 (7 ) -2.7 %
Total non-interest income
$ 2,087 $ 1,575 $ 512 32.5 %

Nine Months Ended

Dollar

Percent

September 30,
Increase Increase

2017

2016
(Decrease) (Decrease)
Non-Interest Income

Service charges and fees
$ 936 $ 926 $ 10 1.1 %
Securities gains (losses), net
59 356 (297 ) -83.4 %
Gains on mortgage loans sold, net
2,751 5,675 (2,924 ) -51.5 %
Gain (loss) on sale of other real estate
26 301 (275 ) -91.4 %
Loss on disposal of premises and equipment
(50 ) - (50 ) -100.0 %
Other noninterest income:

Bank-owned life insurance
595 557 38 6.8 %
Brokerage revenue
70 67 3 4.5 %
Rental income
- 2 (2 ) -100.0 %
Miscellaneous noninterest income (expense), net
70 47 23 48.9 %
Total other non-interest income
735 673 62 9.2 %
Total non-interest income
$ 4,457 $ 7,931 $ (3,474 ) -43.8 %



	Three Months Ended March 31,				Dollar Increase			Percent Increase
	2019		2018		(Decrease)			(Decrease)
Non-Interest Income
Service charges and fees	$	884	$	771	$	113		14.7	%
Securities gains, net	131		—		131			100.0	%
Gains on mortgage loans sold, net	560		1,705		(1,145		)	(67.2	)%
Gain on sale of other real estate	—		89		(89		)	(100.0	)%
Other noninterest income:
Bank-owned life insurance	279		302		(23		)	(7.6	)%
Brokerage revenue	11		75		(64		)	(85.3	)%
Miscellaneous noninterest income	73		49		24			49.0	%
Total other non-interest income	363		426		(63		)	(14.8	)%
Total non-interest income	$	1,938	$	2,991	$	(1,053	)	(35.2	)%

The most significant ~~reason~~reasons for the changes in total non-interest income during the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 compared to the same periods in ~~2016 is~~2018 are the fluctuation in gains on mortgage loans sold, ~~net. This~~net, the increase in service charges, and the gains on securities transactions. These and other factors impacting non-interest income are discussed further below.

Service charges on deposit accounts have ~~remained generally flat~~increased and mainly reflect customer growth trends but have also been impacted by changes in our fee structures.

The majority of the 14.7% increase for the three months ended March 31, 2019 was driven by the changes in our fee structures.

Securities gains and losses often fluctuate from period to period and can sometimes be attributable to various balance sheet risk strategies. During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2019, the Company sold securities classified as available for sale totaling ~~$18,688 for gains~~$10,558 with a gain of ~~$59.~~$131. During the ~~nine~~three months ended ~~September 30, 2016,~~March 31, 2018, the Company sold securities classified as available for sale totaling $20,036, including $18,978 sold during the third quarter of 2016. The Company recognized a gain on sales of securities classified as available for sale of $296 and $356 for the three and nine months ended September 30, 2016, respectively.

$82,187 with no gain.

~~Table of Contents~~

Gains on mortgage loans sold, net, consists of fees from the origination and sale of mortgage ~~loans.~~loans and first-lien HELOCs. These mortgage fees are for loans originated and subsequently sold to third-party investors. All of these loan sales transfer servicing rights to the buyer. Generally, mortgage related revenue increases in lower interest rate environments and more robust housing markets and ~~decrease~~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 the venture’s products in the secondary markets. Gains on mortgage loans sold, net, amounted to ~~$1,571 and $2,751~~$560 for the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2019, compared to ~~$551 and $5,675~~$1,705 for the same ~~periods~~period in the prior year. As discussed further in the notes to our consolidated financial statements, gains on mortgage loans sold are generally recognized at the time of a loan sale corresponding to the transfer of risk. The timing of this revenue recognition varies from the time a loan is originated with a customer. We completed the transition to dispose a majority of our out-of-market mortgage loan production offices during the quarter ended June 30, 2016 to better focus our marketing and other resources in our core Middle Tennessee markets. The decline in gains on mortgage loans sold during the nine months ended September 30, 2017 was impacted by the transition. The increase in gains on mortgage loans sold during

During the three months ended ~~September 30, 2017~~March 31, 2019, there was ~~influenced by our new first-lien HELOC program.~~

~~During the three and~~ ~~nine months ended September 30, 2017, we recognized a~~no gain ~~of $1 and $26, respectively,~~or loss due to the ~~recognition~~sale of ~~a previously deferred gain from a payoff of a loan~~other real estate compared to a gain of ~~$145 and $301~~$89 in the same ~~periods~~period in ~~2016 for similar transactions.~~

~~Non-interest~~2018.

Non-interest income also includes appreciation in the cash surrender value of bank-owned life insurance which was ~~$219 and $595~~$279 for the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2019, compared to ~~$194 and $557~~$302 for the same ~~periods~~period in ~~2016.~~2018. The decrease relates to the introductory rate ending from our last purchase.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 ~~taxable. An additional $4.0 million of bank-owned life insurance was purchased with terms similar~~expected to ~~our existing policies in June 2017.~~

Ourbe taxable.

Our brokerage revenue is solely based on commissions received from established referral relationships and fluctuate based on ~~related activity.~~

~~Rental income relates to rent received on foreclosed properties and is minimal for~~ ~~the periods presented. There were no foreclosed properties on our balance sheet or rent received during the three or nine months ended September 30, 2017.~~

assets under management.

Non-Interest Expense

The following is a summary of our ~~non-interest~~non-interest expense for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018 (dollars in thousands):

Three Months Ended

Dollar

Percent

September 30,
Increase Increase

2017

2016
(Decrease) (Decrease)
Non-Interest Expense

Salaries and employee benefits
$ 4,880 $ 4,017 $ 863 21.5 %
Occupancy
850 767 83 10.8 %
Information technology
732 586 146 24.9 %
Advertising and public relations
81 117 (36 ) -30.8 %
Audit, legal and consulting
1,046 328 718 218.9 %
Federal deposit insurance
100 109 (9 ) -8.3 %
Provision for losses on other real estate
- 17 (17 ) -100.0 %
Other operating
808 942 (134 ) -14.2 %
Total non-interest expense
$ 8,497 $ 6,883 $ 1,614 23.4 %

~~Table of Contents~~

Nine Months Ended

Dollar

Percent

September 30,
Increase Increase

2017

2016
(Decrease) (Decrease)
Non-Interest Expense

Salaries and employee benefits
$ 13,634 $ 14,294 $ (660 ) -4.6 %
Occupancy
2,482 2,406 76 3.2 %
Information technology
1,924 1,849 75 4.1 %
Advertising and public relations
204 542 (338 ) -62.4 %
Audit, legal and consulting
1,647 993 654 65.9 %
Federal deposit insurance
320 349 (29 ) -8.3 %
Provision for losses on other real estate
- 70 (70 ) -100.0 %
Other operating
2,423 3,044 (621 ) -20.4 %
Total non-interest expense
$ 22,634 $ 23,547 $ (913 ) -3.9 %



	Three Months Ended March 31,				Dollar Increase			Percent Increase
	2019		2018		(Decrease)			(Decrease)
Non-Interest Expense
Salaries and employee benefits	$	7,265	$	6,954	$	311		4.5	%
Occupancy	1,352		1,229		123			10.0	%
Information technology	1,410		1,349		61			4.5	%
Advertising and public relations	254		89		165			185.4	%
Audit, legal and consulting	796		623		173			27.8	%
Federal deposit insurance	195		196		(1		)	(0.5	)%
Merger expenses	2		177		(175		)	(98.9	)%
Other operating	1,472		1,545		(73		)	(4.7	)%
Total non-interest expense	$	12,746	$	12,162	$	584		4.8	%

The most significant ~~reasons~~reason for the increase in total non-interest expense of ~~$1,614~~$584 or ~~23.4%~~4.8% for the three months ended ~~September 30, 2017~~March 31, 2019 is due to ~~the increase~~additional staffing for our mortgage venture and opening our new branches in ~~audit, legal~~Murfreesboro and ~~consulting expenses~~ ~~and the increase~~Chattanooga as well as our investment in salaries and employee benefits. The most significant reason for the decline in total non-interest expense of $913 or 3.9% for the nine months ended September 30, 2017 is due to the decrease in salary and employee benefits when compared to the same period in 2016.revenue producers. These and other factors impacting non-interest expense are discussed further below.

Salaries and employee benefits increased by ~~$863~~$311 or ~~21.5%~~4.5% for the three months ended ~~September 30, 2017~~March 31, 2019 compared to the same period in ~~2016.~~2018. This increase is attributable mainly to the increased staff for our mortgage venture as well as our staffing of ~~the Green Hills branch, the~~our new branches in Murfreesboro and Chattanooga ~~loan and deposit production office,~~ and other ~~strategic hires. For the nine months ended September 30, 2017 compared to the same period~~investments in 2016, salaries and employee benefits decreased by $660 or 4.6%. The decline is mainly attributable to the decrease in employee related expenses of the mortgage operations resulting from the transition of a majority of our out-of-market mortgage loan production offices during the second quarter of 2016 and was partially offset by staffing previously mentioned.

revenue producers.

Certain of our facilities are leased while there are others that we own. Primarily, occupancy costs increased ~~$83 and $76~~$123 or 10.0% during the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 when compared to the same period in ~~2016~~2018 due to the ~~full quarter of depreciation~~lease for ~~our~~a new ~~Green Hills location and a full quarter of depreciation and lease expense for our new Chattanooga location that opened in the first quarter of 2017 and the related depreciation for our new Mortgage~~executive office ~~in Brentwood~~ which opened in the second quarter of ~~2017.~~

2018, the lease for the Murfreesboro branch which opened in the third quarter of 2018, and the lease for the Chattanooga branch which opened in the fourth quarter of 2018.

Information technology costs increased by ~~$146 and $75~~$61 or ~~24.9% and 4.1%~~4.5% when comparing the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 to the comparable ~~periods~~period in ~~2016. These fluctuations are~~2018. This increase is mainly attributable to increased costs due to increasing the ~~timing~~volume of ~~project related activities.~~

accounts and transactions as well as our continued investment in information security and other technology.

Advertising and public relations costs ~~decreased~~increased by $165 or 185.4% when comparing the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 to the same ~~periods~~period in ~~2016, by $36 and $338, respectively.~~2018. The ~~decrease~~increase was ~~substantially~~ attributable to an increase in advertising for our mortgage venture as well as cost associated with a ~~decline~~brand initiative campaign and an increase in ~~our direct-mail advertising~~donations and related consultation expenditures and partially offset by the recently completed marketing campaign to increase core deposits. Additional customer acquisition strategies are being evaluated by the Company.

sponsorships.

Audit, legal and consulting costs increased by ~~$718 and $654, respectively,~~$173 or ~~218.9% and 65.9%~~27.8% when comparing the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 to the same ~~periods~~period in ~~2016.~~2018. This increase is mainly attributable to the ~~$562 of merger related expenses~~increase in ~~the third quarter of 2017.~~

legal fees and consulting fees incurred in connection with our mortgage venture.

Our ~~FDIC~~Federal Deposit Insurance Corporation (FDIC) expense 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 decreased by ~~$9 and $29, respectively~~$1 for the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2019, compared to the same ~~periods~~period in ~~2016.~~2018. This slight decrease is primarily the result of a ~~reduction in~~decrease of the ~~applicable rate~~rates charged by the FDIC which was ~~partially~~ offset by ~~the~~our increase in ~~average liabilities.~~

deposits.

~~Table of Contents~~

~~We recorded~~ ~~a provision for losses on other real estate of $17 and $70 during the three and nine months ended September 30, 2016, respectively compared~~Merger related expenses decreased by 98.9% to ~~no provision during the three and nine months ended September 30, 2017. As of September 30, 2017, the Company has no properties held in the other real estate portfolio.~~

~~Other operating expenses~~ ~~decreased~~$2 for the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2019 when compared to the same ~~periods~~period in ~~2016~~2018. These costs are considered one time expenses associated with the Merger, and most of these expected expenses have been incurred at this point.

Other operating expenses decreased by $73 or 4.7% for the three months ended March 31, 2019, compared to the same period in 2018 mainly due to ~~decreases~~the decrease in loan-related expenses such as processing costs ~~relating to our mortgage operations as~~based on volume ~~decreased and our transitioning of several of our out-of-market mortgage offices to another bank, and~~for the ~~reversal of the lower of cost or market adjustment for loans held for sale during the nine~~three months ended ~~September 30, 2017.~~

March 31, 2019.

Income Taxes

During the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2019, we recorded consolidated income tax expense of ~~$306 and $1,005, respectively,~~$372 compared to ~~$619 and $1,775, respectively,~~$797 for the three ~~and nine~~ months ended ~~September 30, 2016.~~March 31, 2018. The Company files separate federal tax returns for the operations of the mortgage banking

and banking operations. The taxable income or losses of the mortgage banking operations are included in the respective returns of the Bank and non-controlling members for federal purposes.

Our income tax expense attributable to ~~Bank~~ shareholders for the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2019, reflects an effective income tax rate of ~~14.2% and 14.8%, respectively,~~11.2% (exclusive of a tax benefit from our mortgage banking operations of ~~$0 and $56 on pre-tax gains (losses) of $7 and $(856) prior to intercompany eliminations), compared to 21.8% and 20.6% (exclusive of tax benefit of $42 and $35~~$108 on pre-tax losses of ~~$647 and $542~~$1,651), compared to 18.1% (exclusive of a tax benefit of $29 on pre-tax losses of $493 from our mortgage banking operations for the comparable ~~periods~~period of ~~2016)~~2018). Our tax rate for the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2019, was favorably influenced by ~~tax credits related to interest-free loans originated in~~ the ~~second quarter of 2016, an~~ increase in ~~income earned on tax-exempt investment securities, certain federal and~~ state tax credits ~~and benefits relating to the exercise~~ of ~~Company stock options.~~

No$275.

~~ncontrolling~~Noncontrolling Interest in Net~~Income (~~Loss)of Subsidiary

Our ~~noncontrolling~~non-controlling interest in net ~~income (loss)~~loss of subsidiary is solely attributable to Reliant Mortgage Ventures, LLC. Reliant Bank has a 51% voting interest in this venture. Under the terms of the related operating agreement, the ~~noncontrolling~~non-controlling member receives 70% of the ~~profits~~cash flow distributions of the mortgage venture, and the Bank receives 30% of any ~~profits.~~cash flow distributions, after the non-controlling member recovers its capital contributions to the venture. The ~~noncontrolling~~non-controlling member is ~~responsible for 100% of~~required to fund the mortgage ~~venture’s net losses.~~venture's losses via additional capital contributions to the mortgage venture. The venture had a net ~~income of $7 and a net~~ loss of $800, respectively prior to intercompany eliminations, for the three and nine months ended September 30, 2017 compared to net loss of $605 and $507, for the same periods in 2016. The increase in income$1,543 for the three months ended ~~September 30, 2017~~March 31, 2019 compared to a net loss of $464 for the same period in 2018. The increase in loss for the three months ended March 31, 2019 when compared to the same period in ~~2016 results from their increased production volume from our first-lien HELOC program. The decrease in income for the nine months ended September 30, 2017 when compared~~2018 is mainly attributable to the ~~same period~~increase in ~~2016 results from~~salaries and benefits due to the ~~transition of most of its out-of-market mortgage offices to another bank.~~increased staff as well as legal fees and consulting fees previously mentioned. These amounts are included in our consolidated results. Also, see Note 89 for segment reporting in the consolidated financial statements included elsewhere herein.

~~Table of Contents~~

~~OMPARISON~~COMPARISON OF BALANCE SHEETS AT~~SEPTEMBER~~ 30, ~~201~~7~~AND~~ ~~DECEMBER~~ATMARCH 31, ~~201~~62019

ANDDECEMBER 31, 2018

Overview

The Company’s total assets were ~~$1,041,180~~$1,761,926 at ~~September 30, 2017~~March 31, 2019 and ~~$911,984~~$1,724,338 at December 31, ~~2016.~~2018. Our assets increased by ~~14.2%~~2.2% from December 31, ~~2016~~2018 to ~~September 30, 2017.~~March 31, 2019. The increase was substantially attributable to the growth in net loans and investments during the period of ~~$82.0~~$30.6 million or ~~12.5%~~2.5% and ~~$45.5~~$14.0 million or ~~31.0%~~4.7%, respectively, discussed further below. ~~Other increases include mortgage loans held for sale of $7.6 million or 64.6% and cash surrender value of life insurance contracts of $4.6 million or 18.5%.~~ These increases were partially offset by the decline of ~~cash and cash equivalents~~mortgage loans held for sale by ~~$5.3~~$5.8 million or ~~21.8%~~36.9%. The Company’s total liabilities were ~~$903,236~~$1,546,807 at ~~September 30, 2017~~March 31, 2019 and ~~$805,065~~$1,515,924 at December 31, ~~2016,~~2018, an increase of ~~12.2%~~2.0%. The increase in liabilities from December 31, ~~2016~~2018 to ~~September 30, 2017,~~March 31, 2019, was substantially attributable to anthe increase in deposits ~~and Federal Home Loan Bank advances~~ of ~~$76.6~~$73.4 million or ~~10.0%~~5.1% and ~~$24.4 million or 75.7%, respectively, during~~ the ~~period. This~~ increase was partially offset by athe decrease in ~~federal funds purchased~~Federal Home Loan Bank (FHLB) advances of ~~$3.7 million.~~$42 million or 73.4% during the period. These and other components of our balance sheets are discussed further below.

Loans

Lending-related income is the most important 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. As previously discussed 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 ~~factors,~~reasons, including but not limited to scheduled maturities or early payoffs exceeding new loan volume. Early payoffs typically increase in lowering rate environments as customers identify advantageous opportunities for refinancing. We have been adding experienced lending officers to our staff to help with loan growth. In the first quarter of 2017 we expanded outside Middle Tennessee into Chattanooga, one of the state’s fastest growing metropolitan ~~markets. Our Chattanooga team as well as~~markets, and with the ~~lending staff in~~Merger we have expanded our ~~new full-service branch in Green Hills opened in the first quarter of 2017 are expected to help us towards our goal of obtaining quality loan growth.~~Middle Tennessee footprint into Maury and Hickman Counties. Total loans, net, at ~~September 30, 2017,~~March 31, 2019, and December 31, ~~2016,~~2018, were ~~$739,738~~$1,250,806 and ~~$657,701,~~$1,220,184, respectively. This represented an increase of ~~12.5%~~2.5% from December 31, ~~2016~~2018 to ~~September 30, 2017.~~

March 31, 2019.

The table below provides a summary of the loan portfolio composition for the dates noted (including purchased credit-impaired (PCI) loans).

September 30,

December 31,

2017

2016

Amount

Percent

Amount

Percent

Commerical, Industrial and Agricultural
$ 138,648 18.5 % $ 134,404 20.1 %
Real estate:

1-4 Family Residential
100,655 13.4 % 113,031 16.9 %
1-4 Family HELOC
79,195 10.6 % 57,460 8.6 %
Multifamily and Commercial
258,168 34.4 % 215,639 32.3 %
Construction, Land Development and Farmland
141,581 18.9 % 115,889 17.4 %
Consumer
16,386 2.2 % 17,240 2.6 %
Other
15,048 2.0 % 13,745 2.1 %
749,681 100.0 % 667,408 100.0 %
Less:

Deferred loan fees
320 625
Allowance for possible loan losses
9,623 9,082

Loans, net
$ 739,738 $ 657,701

~~Table of Contents~~



	March 31,				December 31,
	2019				2018
	Amount		Percent		Amount			Percent
Commerical, Industrial and Agricultural	$	218,767	17.3	%	$	213,850		17.4	%
Real estate:
1-4 Family Residential	230,124		18.2	%	225,863			18.3	%
1-4 Family HELOC	90,944		7.2	%	88,112			7.2	%
Multifamily and Commercial	469,468		37.2	%	447,840			36.4	%
Construction, Land Development and Farmland	220,752		17.5	%	220,801			17.9	%
Consumer	17,926		1.4	%	20,495			1.7	%
Other	14,213		1.2	%	14,106			1.1	%
	1,262,194		100.0	%	1,231,067			100.0	%
Less:
Deferred loan fees (costs)	34				(9		)
Allowance for possible loan losses	11,354				10,892

Loans, net	$	1,250,806			$	1,220,184

The table below provides a summary of PCI loans as of ~~September 30, 2017:~~

September 30,

2017

Commerical, Industrial and Agricultural
$ 305
Real estate:

1-4 Family Residential
48
1-4 Family HELOC
36
Multifamily and Commercial
1,232
Construction, Land Development and Farmland
1,510
Consumer
-
Other
-
Total gross PCI loans
3,131
Less:

Remaining purchase discount
193
Allowance for possible loan losses
4

Loans, net
$ 2,934

March 31, 2019:



	March 31, 2019

Commerical, Industrial and Agricultural	$	63
Real estate:
1-4 Family Residential	319
1-4 Family HELOC	—
Multifamily and Commercial	229
Construction, Land Development and Farmland	1,950
Consumer	17
Other	—
Total gross PCI loans	2,578
Less:
Remaining purchase discount	300
Allowance for possible loan losses	—

Loans, net	$	2,278

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 of ~~$138,648~~$218,767 at ~~September 30, 2017,~~March 31, 2019, increased ~~3.2%~~2.3% compared to ~~$134,404~~$213,850 at December 31, ~~2016.~~

2018.

Real estate loans comprised ~~77.3%~~80.1% of the loan portfolio at ~~September 30, 2017.~~March 31, 2019. 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 ~~decreased~~increased the residential portfolio 2.3% from December 31, ~~2016~~2018 to ~~September 30, 2017.~~March 31, 2019. Multi-family and commercial loans included in the real estate category above include (in typical order of prominence) loans secured by non-owner-occupied nonfarm nonresidential properties, loans secured by owner-occupied nonfarm nonresidential properties, and loans secured by multi-family residential properties. Multi-family and commercial real estate loans of ~~$258,168~~$469,468 at ~~September 30, 2017,~~March 31, 2019, increased ~~19.7%~~4.8% compared to the ~~$215,639~~$447,840 held as of December 31, ~~2016.~~2018. 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 increased ~~during~~since 2016 ~~and into the first nine months of 2017,~~ based on a strong local economy.

Consumer loans mainly consist of loans to individuals for household, family, and other personal expenditures under revolving credit plans and other consumer loans. We have a small amount of credit card loans on our balance sheet due to the implementation of a new credit card program during the third quarter of 2017. We have a relatively small number of automobile loans. Our consumer loans experienced a decrease from December 31, ~~2016,~~2018, to ~~September 30, 2017,~~March 31, 2019, of ~~5.0%~~12.5%.

O~~ther~~

Other loans consist mainly of loans to states and political subdivisions and loans to other depository institutions and ~~were minimal for the periods presented. Our other loans~~ experienced an increase of ~~9.5%~~0.8% from December 31, ~~2016~~2018 to ~~September 30, 2017.~~

March 31, 2019.

~~Table of Contents~~

The repayment of loans is a source of additional liquidity for us. The following table sets forth the loans repricing or maturing within specific intervals at ~~September 30, 2017,~~March 31, 2019, excluding unearned net fees and costs.

One Year or
Less

One to Five
Years

Over Five
Years

Total

Gross loans
$ 284,604 $ 267,591 $ 197,486 $ 749,681

Fixed interest rate
$ 509,603
Variable interest rate
240,078
Total
$ 749,681



	One Year or Less		One to Five Years		Over Five Years		Total
Gross loans	$	414,547	$	552,364	$	295,283	$	1,262,194

Fixed interest rate							$	768,000
Variable interest rate							494,194
Total							$	1,262,194

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.

Allowance for Loan Losses

We maintain an allowance for loan losses that we believe is adequate to absorb the probable incurred losses inherent in our loan portfolio. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent 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~~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.

A loan is impaired when full payment under the loan terms is not expected. All classified loans and loans on non-accrual status are individually evaluated for impairment. Factors considered in determining if a loan is impaired include the ~~borrower~~’sborrower’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 loans remaining principal balance, are recorded as recoveries of prior charge-offs until these charge-offs have been fully recovered.

At ~~September 30, 2017,~~March 31, 2019, the allowance for loan losses was ~~$9,623~~$11,354 compared to ~~$9,082~~$10,892 at December 31, ~~2016.~~2018. The allowance for loan losses as a percentage of total loans was ~~1.28%~~0.90% at ~~September 30, 2017~~March 31, 2019 compared to ~~1.36%~~0.88% at December 31, 2016. The allowance was adjusted downward as a percent of total loans from December 31, 2016 to September 30, 2017. The increase in our allowance for loan losses is directly attributable to our loan growth and offset by our net charge offs and recoveries.

2018.

~~Table of Contents~~

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

A~~nalysis~~

Analysis of Changes in Allowance for Loan Losses

September 30,

September 30,

2017

2016

Beginning Balance, January 1
$ 9,082 $ 7,823
Loans charged off:

Commerical, Industrial and Agricultural
(941 ) (84 )
Real estate:

1-4 Family Residential
(15 ) (25 )
1-4 Family HELOC
- -
Multifamily and Commercial
- -
Construction, Land Development and Farmland
- -
Consumer
(30 ) -
Other
- (19 )
Total loans charged off
(986 ) (128 )
Recoveries on loans previously charged off:

Commerical, Industrial and Agricultural
306 250
Real estate:

1-4 Family Residential
- 66
1-4 Family HELOC
19 9
Multifamily and Commercial
- 3
Construction, Land Development and Farmland
5 5
Consumer
2 13
Other
- -
Total loan recoveries
332 346
Net recoveries (charge-offs)
(654 ) 218
Provision for loan losses
1,195 760
Total allowance at end of period
$ 9,623 $ 8,801
Gross loans at end of period ⁽¹⁾
$ 749,681 $ 662,079
Average gross loans ⁽¹⁾
$ 701,362 $ 635,055
Allowance to total loans
1.28 % 1.33 %
Net charge offs to average loans (annualized)
0.12 % -0.05 %



	March 31, 2019			March 31, 2018
Beginning Balance, January 1	$	10,892		$	9,731
Loans charged off:
Commerical, Industrial and Agricultural	(6		)	(308		)
Real estate:
1-4 Family Residential	(17		)	—
1-4 Family HELOC	—			(6		)
Multifamily and Commercial	—			—
Construction, Land Development and Farmland	—			—
Consumer	(11		)	(16		)
Other	—			(9		)
Total loans charged off	(34		)	(339		)
Recoveries on loans previously charged off:
Commerical, Industrial and Agricultural	240			143
Real estate:
1-4 Family Residential	212			8
1-4 Family HELOC	—			2
Multifamily and Commercial	34			2
Construction, Land Development and Farmland	—			41
Consumer	10			1
Other	—			5
Total loan recoveries	496			202
Net recoveries (charge-offs)	462			(137		)
Provision for loan losses	—			137
Total allowance at end of period	$	11,354		$	9,731
Gross loans at end of period ⁽¹⁾	$	1,262,194		$	1,105,799
Average gross loans ⁽¹⁾	$	1,238,341		$	1,088,166
Allowance to total loans	0.90		%	0.88		%
Net recoveries (charge-offs) to average loans (annualized)	0.15		%	(0.05		)%

~~(1)~~
⁽¹⁾	Loan balances exclude loans held for ~~sale~~. sale.

~~Table of Contents~~

While no portion of the allowance is in any way restricted to any individual loan or group of loans, and the entire allowance 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,

December 31,

2017

2016

% of

% of Loan

% of

% of Loan

Allowance

Type to

Allowance

Type to

Amount

To Total

Total Loans

Amount

To Total

Total Loans

Commerical, Industrial and Agricultural
$ 2,675 27.8 % 18.5 % $ 2,438 26.8 % 20.1 %
Real estate:

1-4 Family Residential
867 9.0 % 13.4 % 1,178 13.0 % 16.9 %
1-4 Family HELOC
613 6.4 % 10.6 % 704 7.8 % 8.6 %
Multifamily and Commercial
3,094 32.2 % 34.4 % 2,731 30.1 % 32.3 %
Construction, Land Development and Farmland
2,147 22.3 % 18.9 % 1,786 19.7 % 17.4 %
Consumer
189 2.0 % 2.2 % 208 2.3 % 2.6 %
Other
38 0.3 % 2.0 % 37 0.5 % 2.1 %
$ 9,623 100.0 % 100.0 % $ 9,082 100.0 % 100.0 %



	March 31, 2019						March 31, 2018
	Amount		% of Allowance To Total		% of Loan Type to Total Loans		Amount		% of Allowance To Total		% of Loan Type to Total Loans
Commercial, Industrial and Agricultural	$	1,874	16.5	%	17.3	%	$	2,485	25.5	%	15.1	%
Real estate:
1-4 Family Residential	1,359		12.0	%	18.2	%	1,004		10.3	%	19.7	%
1-4 Family HELOC	670		5.9	%	7.2	%	632		6.5	%	7.6	%
Multifamily and Commercial	4,593		40.5	%	37.2	%	3,269		33.6	%	36.6	%
Construction, Land Development and Farmland	2,650		23.3	%	17.5	%	2,146		22.1	%	17.8	%
Consumer	171		1.5	%	1.4	%	156		1.6	%	1.9	%
Other	37		0.3	%	1.2	%	39		0.4	%	1.3	%
	$	11,354	100.0	%	100.0	%	$	9,731	100.0	%	100.0	%

Nonperforming Assets

Non-performing assets consist of non-performing loans plus real estate acquired through foreclosure or deed in lieu of foreclosure. Non-performing loans by definition consist of non-accrual loans and loans past due 90 days or more and still accruing interest. When we place a loan on non-accrual 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.~~

assured, which generally includes a minimum performance of six months.

The following table provides information with respect to Company’s non-performing assets.

September 30,

December 31,

2017

2016

Non-accrual loans
$ 4,950 $ 5,634
Past due loans 90 days or more and still accruing interest
200 -
Restructured loans
2,204 2,953
Total non-performing loans
7,354 8,587
Foreclosed real estate ("OREO")
- -
Total non-performing assets
$ 7,354 $ 8,587
Total non-performing loans as a percentage of total loans
0.98 % 1.29 %
Total non-performing assets as a percentage of total assets
0.71 % 0.94 %
Allowance for loan losses as a percentage of non-performing loans
130.85 % 105.76 %

~~Table of Contents~~



	March 31, 2019			December 31, 2018
Non-accrual loans	$	4,582		$	4,194
Past due loans 90 days or more and still accruing interest	566			6
Restructured loans	1,748			2,469
Total non-performing loans	6,896			6,669
Foreclosed real estate ("OREO")	1,000			1,000
Total non-performing assets	$	7,896		$	7,669
Total non-performing loans as a percentage of total loans	0.55		%	0.54		%
Total non-performing assets as a percentage of total assets	0.45		%	0.44		%
Allowance for loan losses as a percentage of non-performing loans	164.65		%	163.32		%

Investment Securities and Other Earning Assets

The investment securities portfolio is intended to provide the ~~Company~~Bank with adequate liquidity, flexible asset/liability management and a source of stable income. The portfolio is structured with minimal credit exposure to the Company 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 stockholders’ 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 are a significant component of the Company’s earning assets. Securities totaled ~~$192,277~~$310,305 at ~~September 30, 2017.~~March 31, 2019. This represents a ~~31.0%~~4.7% increase from the December 31, ~~2016~~2018 total of ~~$146,813.~~$296,323. Our growth is attributable to the Merger and the planned investment securities restructuring, mentioned previously, that began in the fourth quarter of 2017. The increase is attributable to purchasing ~~$68,010~~$20,571 securities available for sale during the ~~nine~~three months ended ~~September 30 2017,~~March 31, 2019, offset by sales of ~~$18,688,~~$10,558, and principal paydowns and maturities of ~~$6,057~~$2,291 during the same period. A portion of our year-to-date growth in the investment portfolio is related to the completion of a municipal bond replacement strategy that was implemented late in the fourth quarter of 2016 and completed in the first quarter 2017 and additional strategies that were implemented in 2017 that are expected to provide better yielding securities that are relatively less sensitive to rising interest rates and potential declines in corporate tax rates.

Restricted equity securities totaled $~~7,163~~$11,499 and ~~7,133~~$11,690 at ~~September 30, 2017,~~March 31, 2019, and December 31, ~~2016,~~2018, respectively, and consist of Federal Reserve Bank and Federal Home Loan Bank stock.

The following table shows the Company’s investments’ amortized cost and fair value, aggregated by investment category for the periods presented:

September 30, 2017

December 31, 2016

Amortized
Cost

Fair Value

% of Total

Amortized
Cost

Fair Value

% of Total

U.S.Treasury and other U.S. government agencies
$ 591 586 0.30 % $ 1,909 1,908 1.30 %
State and municipal
164,968 165,247 85.94 % 122,813 119,634 81.49 %
Corporate bonds
1,500 1,495 0.78 % 2,000 1,987 1.35 %
Mortgage backed securities
21,456 21,449 11.16 % 20,197 20,034 13.65 %
Time deposits
3,500 3,500 1.82 % 3,250 3,250 2.21 %
Total
$ 192,015 192,277 100.00 % $ 150,169 146,813 100.00 %



	March 31, 2019					December 31, 2018
	Amortized Cost		Fair Value	% of Total		Amortized Cost		Fair Value	% of Total
U.S.Treasury and other U.S. government agencies	$	566	562	0.18	%	$	568	554	0.19	%
State and municipal	234,736		238,345	76.81	%	232,589		229,298	77.38	%
Corporate bonds	3,130		3,018	0.97	%	3,130		3,017	1.02	%
Mortgage backed securities	34,642		34,422	11.09	%	32,172		31,958	10.78	%
Asset backed securities	31,048		30,458	9.82	%	28,635		27,996	9.45	%
Time deposits	3,500		3,500	1.13	%	3,500		3,500	1.18	%
Total	$	307,622	310,305	100.00	%	$	300,594	296,323	100.00	%

The table below summarizes the contractual maturities of securities available for sale at ~~September 30, 2017:~~

Amortized
Cost

Estimated
Fair Value

Due within one year
$ 3,655 $ 3,657
Due in one to five years
13,488 13,584
Due in five to ten years
10,234 10,391
Due after ten years
143,182 143,196
Mortgage backed securities
21,456 21,449
Total
$ 192,015 $ 192,277

March 31, 2019:

~~Table of Contents~~



	Amortized Cost		Estimated Fair Value
Due within one year	$	2,755	$	2,757
Due in one to five years	4,722		4,711
Due in five to ten years	11,301		11,334
Due after ten years	223,154		226,623
Mortgage backed securities	34,642		34,422
Asset backed securities	31,048		30,458
Total	$	307,622	$	310,305

Premises and Equipment

Premises and equipment, net, totaled ~~$9,558~~$21,970 at ~~September 30, 2017~~March 31, 2019 compared to ~~$9,093~~$22,033 at December 31, ~~2016,~~2018, a net ~~increase~~decrease of ~~$465~~$63 or ~~5.1%~~0.3%. Premises and equipment purchases amounted to approximately ~~$1,277~~$434 during the first ~~nine~~three months of ~~2017~~2019 and were mainly incurred for additional leasehold improvements ~~related to~~for our branches and new ~~Green Hills branch and improvements to our IT infrastructure for disaster recovery planning~~mortgage locations while depreciation expense amounted to ~~$762.~~$497. At ~~September 30, 2017,~~March 31, 2019, we operated from ~~eight~~seventeen retail banking locations as well as ~~two~~six stand-alone mortgage loan ~~production offices and two commercial loan and deposit~~ production offices. Two of our bank branch locations, including our main office, are in Brentwood, Tennessee. ~~Our~~Of our other ~~six~~fifteen bank branch locations three are in Columbia, the remaining are in Franklin, Springfield, Gallatin, ~~and~~ Nashville, ~~Tennessee. Our commercial loan and deposit production offices are in~~ Murfreesboro, Mt. Pleasant, Thompson Station, Centerville, Lyles, and Chattanooga, Tennessee. As of ~~September 30, 2017~~March 31, 2019, our mortgage loan production offices were located Brentwood, Hendersonville, and ~~Brentwood,~~Chattanooga, Tennessee as well as two in Little Rock, Arkansas and one in Timonium, Maryland. During the three months ended March 31, 2016, the Company began transitioning most of its out-of-market branches to another bank. We own three branch and office facilities located in Robertson and Sumner counties of Tennessee while the remainder of our locations are leased.

Deposits

Deposits represent the Company’s largest source of funds. The Company competes with other bank and nonbank 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 price 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, 2017,~~March 31, 2019, total deposits were ~~$840,448,~~$1,511,321, an increase of ~~$76,614,~~$73,418, or ~~10.0%~~5.1%, compared to ~~$763,834~~$1,437,903 at December 31, ~~2016.~~2018. During the first ~~nine~~three months of ~~2017,~~2019, non-interest bearing demand deposits increased by $4.0 million, interest-bearing demand deposits decreased by $10.1 million, savings and money market deposits ~~increased~~decreased by ~~$13.7~~$2.9 million, and time deposits increased by ~~$71.7 million, while non-interest bearing demand and interest-bearing demand deposits decreased by $2.7 and $6.0 million, respectively.~~$82.4 million. A substantial portion of the increase in the ~~time~~ deposits is attributable to time deposits with the state of Tennessee as part of our ~~marketing campaign in August.~~

strategy to lower our funding costs.

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, 2017.~~

September 30,

2017

Twelve months or less
$ 232,064
Over twelve months through three years
13,669
Over three years
4,589
Total
$ 250,322

March 31, 2019.



	March 31, 2019
Twelve months or less	$	371,657
Over twelve months through three years	14,140
Over three years	4,227
Total	$	390,024

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 on-balance sheet and 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.

~~Table of Contents~~

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 were in compliance with our policy as of ~~September 30, 2017.~~March 31, 2019. 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 and other shortcomings, we rely more heavily on the earnings simulation model and the economic value of equity model discussed further below.

Earnings Simulation ~~Mode~~Modell—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 variance 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:

Instantaneous,
Parallel Change in
Prevailing Interest
Rates Equal to

Estimated Change in Net Interest Income and Policy of Maximum
Percentage Decline in Net Interest Income

Next 12

Next 24

Months

Months

Estimate

Policy

Estimate

Policy

-200 bp
-2.3% -15% -6.6% -15%
-100 bp
0.8% -10% -0.3% -10%
+100 bp
0.0% -10% -0.5% -10%
+200 bp
0.2% -15% -0.7% -15%
+300 bp
0.8% -20% -0.8% -20%
+400 bp
1.0% -25% -1.2% -25%



Instantaneous, Parallel Change in Prevailing Interest Rates Equal to	Estimated Change in Net Interest Income and Policy of Maximum Percentage Decline in Net Interest Income
	Next 12		Next 24
	Months		Months
	Estimate	Policy	Estimate	Policy
-200 bp	2.1%	(15)%	(2.3)%	(15)%
-100 bp	1.7%	(10)%	0.4%	(10)%
+100 bp	(1.0)%	(10)%	(0.4)%	(10)%
+200 bp	(1.7)%	(15)%	(0.3)%	(15)%
+300 bp	(2.4)%	(20)%	(0.4)%	(20)%
+400 bp	(3.5)%	(25)%	(0.9)%	(25)%

We were in compliance with our earnings simulation model policies as of ~~September 30, 2017,~~March 31, 2019, indicating what we believe to be a fairly neutral interest-rate risk profile.

Economic value of equity—Our 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.

~~Table of Contents~~

To help monitor our related risk, we~~’ve~~ 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
+100 bp		15%
+200 bp		25%
+300 bp		30%
+400 bp		35%
Non-parallel shifts		35%

At ~~September 30, 2017,~~March 31, 2019, 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 mortgage 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.

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 ~~Federal Home Loan Bank of Cincinnati~~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, 2017,~~March 31, 2019, advances totaled ~~$56,720~~$15,309 compared to ~~$32,287~~$57,498 as of December 31, ~~2016.~~2018. The ~~increase~~decrease in FHLB advances generally is attributable to our increase in deposits, mainly our increase in time deposits from the state of Tennessee, and the decrease in our mortgage loans held for sale and ~~securities and~~somewhat offset by our increase in ~~deposits.~~

loans and securities.

~~Table of Contents~~

At ~~September 30, 2017,~~March 31, 2019, the scheduled maturities of our FHLB advances and interest rates were as follows (scheduled maturities will differ from scheduled repayments):

Scheduled Maturities

Amount

Weighted
Average
Rates

2017
$ 45,000 1.18%
2018
6,000 2.74%
2019
- 0.00%
2020
- 0.00%
2021
483 2.73%
Thereafter
5,237 1.87%

$ 56,720 1.42%



Scheduled Maturities	Amount		Weighted Average Rates
2019	$	11,000	2.52%
2020	—		—%
2021	356		2.73%
2022	711		1.22%
2023	2,600		1.94%
Thereafter	642		2.47%
	$	15,309	2.36%

The Company has issued $23.0 million of subordinated debentures in connection with TRUPS issued by trusts that are affiliates of the Company, $10.0 million of which is owned by a wholly owned subsidiary of the Company. The Company has timely made its scheduled interest payments on these subordinated debentures since assumed in the first quarter of 2018. As of March 31, 2019, the Company was current on all interest payments due related to its subordinated debentures. The Company 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 the Company cannot pay any dividends on its common stock or preferred stock.

Capital

~~Stockholders~~’

Stockholders’ equity was ~~$137,944~~$215,119 at ~~September 30, 2017,~~March 31, 2019, an increase of ~~$31,025,~~$6,705, or ~~29.0%~~3.2%, from ~~$106,919~~$208,414 at December 31, ~~2016.~~2018. During the third quarter of 2017, the company issued 1,137,000 shares of common stock in a private offering raising $23.3 million net of expenses of which $20.0 million was pushed-down to the Bank. Additionally, during the ninethree months ended ~~September 30, 2017,~~March 31, 2019, the Company raised ~~$693~~$28 of capital through the exercise of Company stock ~~options.~~options and purchased $659 of its common stock as part of its previously announced share repurchase program. The ~~additional capital for the stock option exercises and a portion of the proceeds from the private placement was pushed-down to the Bank and when combined with the~~ accretion of earnings to capital ~~partially~~which was offset by the declared dividends, net stock purchase, and the increase in assets led to a ~~increase~~decrease in the Bank’s ~~September 30, 2017~~March 31, 2019 Tier 1 leverage ratio to ~~12.20%~~9.99% compared with ~~10.75%~~10.17% at December 31, ~~2016~~2018 (see other ratios discussed further below). Additionally, the subordinated debentures qualify as Tier 1 and Total risk-based capital for the Company. Common dividends of ~~$1,711 (declared during the fourth quarter of 2016) and $941 (declared~~$1,036 (of which $1,036 were declared in the ~~second quarter of 2017)~~prior year) were paid during the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2019, and common dividends of ~~$541~~$1,035 were declared in the ~~second~~first quarter of ~~2017~~2019 and were paid subsequent to quarter end.

On July 14, 2017, the Company filed a Form S-3 registration statement 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) depositary shares, (v) warrants, and (vi) units, up to a maximum aggregate offering price of $75,000,000. The net proceeds from any offering will be used for general corporate purposes including acquisitions, capital expenditures, investments, and the repayment, redemption, or refinancing of any indebtedness or other securities. 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.

Banks as regulated institutions are required to meet certain levels of capital. The Federal Reserve B~~oard~~Board of Governors, the primary federal regulator for the Bank, has adopted minimum capital regulations or guidelines that categorize 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 the guidelines. We regularly review our capital adequacy to ensure compliance with these 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 return.

~~Table of Contents~~

Prompt corrective action regulations provide five 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, 2017,~~March 31, 2019, 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 ~~that~~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, 2017~~March 31, 2019 and December 31, ~~2016~~2018 for the Company and Bank.

Actual Regulatory Capital

Minimum Required Capital
Including Capital
Conservation Buffer

To Be Well Capitalized
Under Prompt Corrective
Action Provisions

Amount

Ratio

Amount

Ratio

Amount

Ratio

September 30, 2017

Company

Tier I leverage
$ 125,572 12.58 % $ 39,928 4.000 % $ 49,909 5.00 %
Common equity Tier 1
125,572 14.72 % 49,052 5.750 % 55,450 6.50 %
Tier I risk-based capital
125,572 14.72 % 61,848 7.250 % 68,246 8.00 %
Total risk-based capital
135,195 15.85 % 78,899 9.250 % 85,297 10.00 %

Bank

Tier I leverage
$ 121,715 12.20 % $ 39,907 4.000 % $ 49,883 5.00 %
Common equity Tier 1
121,715 14.29 % 48,976 5.750 % 55,364 6.50 %
Tier I risk-based capital
121,715 14.29 % 61,752 7.250 % 68,140 8.00 %
Total risk-based capital
131,338 15.42 % 78,786 9.250 % 85,174 10.00 %

December 31, 2016

Company

Tier I leverage
$ 96,682 10.86 % $ 35,610 4.000 % N/A N/A
Common equity Tier 1
96,682 13.00 % 38,115 5.125 % N/A N/A
Tier I risk-based capital
96,682 13.00 % 49,271 6.625 % N/A N/A
Total risk-based capital
105,764 14.22 % 64,150 8.625 % N/A N/A

Bank

Tier I leverage
$ 95,637 10.75 % $ 35,586 4.000 % $ 44,482 5.00 %
Common equity Tier 1
95,637 12.88 % 38,054 5.125 % 48,264 6.50 %
Tier I risk-based capital
95,637 12.88 % 49,192 6.625 % 59,402 8.00 %
Total risk-based capital
104,719 14.10 % 64,057 8.625 % 74,269 10.00 %



	Actual Regulatory Capital				Minimum Required Capital Including Capital Conservation Buffer				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
March 31, 2019
Company
Tier I leverage	$	171,606	10.23	%	$	67,099	4.000	%	$	83,874	5.00	%
Common equity Tier 1	159,982		11.50	%	97,380		7.000	%	90,425		6.50	%
Tier I risk-based capital	171,606		12.34	%	118,205		8.500	%	111,252		8.00	%
Total risk-based capital	183,385		13.19	%	145,985		10.500	%	139,033		10.00	%

Bank
Tier I leverage	$	167,447	9.99	%	$	67,046	4.000	%	$	83,807	5.00	%
Common equity Tier 1	167,447		12.07	%	97,111		7.000	%	90,174		6.50	%
Tier I risk-based capital	167,447		12.07	%	117,920		8.500	%	110,984		8.00	%
Total risk-based capital	179,226		12.92	%	145,656		10.500	%	138,720		10.00	%

December 31, 2018
Company
Tier I leverage	$	168,876	10.38	%	$	65,077	4.000	%	$	81,347	5.00	%
Common equity Tier 1	157,273		11.59	%	86,507		6.375	%	88,203		6.50	%
Tier I risk-based capital	168,876		12.44	%	106,905		7.875	%	108,602		8.00	%
Total risk-based capital	180,193		13.28	%	133,991		9.875	%	135,688		10.00	%

Bank
Tier I leverage	$	165,308	10.17	%	$	65,018	4.000	%	$	81,272	5.00	%
Common equity Tier 1	165,308		12.19	%	86,451		6.375	%	88,146		6.50	%
Tier I risk-based capital	165,308		12.19	%	106,792		7.875	%	108,488		8.00	%
Total risk-based capital	176,625		13.02	%	133,961		9.875	%	135,657		10.00	%

Effects of Inflation and Changing Prices

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles, which require the measurement of financial position 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~~’institutions’ increased 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 refinancings tend to slow as interest rates increase, and can reduce our earnings from such activities.

~~Table of Contents~~

Off Balance Sheet Lending Arrangements

O~~ff-balance~~

Off-balance sheet arrangements generally consist of unused lines of credit and standby letters of credit. Such commitments were as ~~follows:~~

September 30,

2017

Unused lines of credit
$ 179,462
Standby letters of credit
12,358
Total commitments
$ 191,820

follows at March 31, 2019:



	March 31, 2019
Unused lines of credit	$	261,188
Standby letters of credit	18,056
Total commitments	$	279,244

Other Off Balance Sheet Arrangements

The total notional amount of swap agreements was $81,505 at March 31, 2019 and December 31, 2018. At March 31, 2019, the contracts had negative fair values totaling $1,854 recorded. At December 31, 2018, the contracts had negative fair values totaling $542 recorded.

Emerging Growth Company Status

The Company is 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 the Company ~~complies~~chooses to comply with the ~~greater obligations~~reporting requirements of public companies that are not emerging growth companies, the Company may avail itself of the reduced requirements applicable to emerging growth companies from time to time in the future, so long as the Company is an emerging growth company. The Company will remain an emerging growth company for an initial five year period, though it may cease to be an emerging growth company earlier under certain circumstances, including if, before the end of such five years, it is deemed to be a large accelerated filer under the rules of the SEC (which depends on, among other things, having a market value of common stock held by non-affiliates in excess of $700 million) or if total annual gross revenues equal or exceed $1.07 billion in a fiscal year. Management cannot predict if investors will find the Company’s common stock less attractive because it will rely on these exemptions. If some investors find the Company’s common stock less attractive as a result, there may be a less active trading market for its common stock and the Company’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. The Company 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 the 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.

~~Table of Contents~~

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

~~The information required by this~~

This Item 3 is ~~discussed in Part 1~~ ~~– Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations under the heading “Market and Liquidity Risk.”~~

not applicable to smaller reporting companies.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Management, including our President and 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 President and 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 ~~and~~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 President and Chief Executive Officer and the 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 three months ended ~~September 30, 2017,~~March 31, 2019, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

~~Commerce Union~~

Reliant Bancorp and its wholly-owned subsidiary, Reliant Bank, are periodically involved as a plaintiff or defendant in various legal actions in the ordinary course of its business. Neither ~~Commerce Union~~Reliant Bancorp nor Reliant 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 ~~Commerce Union~~Reliant Bancorp or its subsidiaries are without merit or that the ultimate liability, if any, resulting from them will not materially affect Reliant Bank’s financial condition or ~~Commerce Union’s~~Reliant Bancorp’s consolidated financial position.

~~Item 1A.~~ ~~Risk Factors.~~

~~Except as set forth below there have been no material changes to the risk factors included in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.~~

~~The merger of Commerce Union and Community First may not be completed, which~~ ~~could have a material adverse effect on our business, future operations, and stock price.~~

~~Completion of~~ the merger is subject to certain closing conditions, including the receipt of all required regulatory approvals, in each case without the imposition of a materially burdensome condition. If we are not successful in obtaining the required regulatory approvals, the merger will not be completed. Even if the regulatory approvals are received, the timing of the regulatory approvals and any conditions imposed by the regulatory approvals could result in certain closing conditions of the merger not being satisfied.

~~Consummation of the merger is~~ also conditioned upon other customary closing conditions, including (1) the approval of the merger agreement by Community First’s shareholders and the approval by our shareholders of the issuance of stock by Commerce Union in connection with the merger, (2) the absence of any order, decree, injunction, or law enjoining or prohibiting the merger, (3) the effectiveness of a registration statement on Form S-4 for the shares of common stock to be issued by Commerce Union in connection with the merger, and (4) the authorization for listing on the Nasdaq Capital Market of the shares to be issued by Commerce Union in connection with the merger. Each party’s obligation to complete the merger is also subject to certain additional customary conditions. Additionally, Commerce Union’s obligation to complete the merger is subject to holders of not more than 7.5% of the outstanding shares of Community First’s common stock perfecting their rights to dissent from the merger. If a condition to either party’s obligation to consummate the merger is not satisfied, that party may be able to terminate the merger agreement and, in such case, the transaction would not be consummated.

~~If the merger is not completed, our ongoing business and financial results may be adversely affected and we will be subject to several risks, including the following:~~

●

~~the price of our common stock may decline to the extent that its current market prices reflect a market assumption that the merger will be completed;~~

●

~~having to pay significant costs relating to the merger without receiving any benefits arising from the merger;~~

●

~~negative reactions from customers, shareholders and market analysts; and~~

●

~~the diversion of the focus of our management to the merger instead of on pursuing other opportunities that could have been beneficial to our business.~~

If the merger is not completed, our business may be adversely affected by the failure to pursue other beneficial opportunities due to the focus of our management team on the merger, without realizing any of the anticipated benefits of completing the merger. If the merger agreement is terminated under certain circumstances, we may be required to pay a termination fee of $2.1 million to Community First.

~~Table of Contents~~

~~Integrating Community First Bank into Reliant Bank’s operations may be more difficult, costly, or time-consuming than we expect.~~

~~Reliant Bank~~ and Community First Bank have operated and, until the bank merger is completed, will continue to operate, independently. Accordingly, the process of integrating Community First Bank’s operations into Reliant Bank’s operations could result in the disruption of operations or the loss of Community First Bank customers and employees, and could make it more difficult to achieve the intended benefits of the merger. Inconsistencies between the standards, controls, procedures, and policies of Reliant Bank and those of Community First Bank could adversely affect Reliant Bank’s ability to maintain relationships with current customers and employees of Community First Bank if and when the bank merger is completed.

~~As with any merger of banking institutions, business disruptions may occur that may cause~~ Reliant Bank to lose customers or may cause Community First Bank’s customers to withdraw their deposits from Community First Bank prior to the merger’s consummation and from Reliant Bank thereafter. The realization of the anticipated benefits of the merger may depend in large part on our ability to integrate Community First Bank’s operations into Reliant Bank’s operations, and to address differences in business models and cultures. If we are unable to integrate the operations of Community First and Community First Bank into our and Reliant Bank’s operations successfully and on a timely basis, some or all of the expected benefits of the acquisition may not be realized. Difficulties encountered with respect to such matters could result in an adverse effect on the financial condition, results of operations, capital, liquidity, or cash flows of Reliant Bank and our company.

~~We may fail to realize the cost savings anticipated from the merger.~~

~~Although we anticipate that we would realize certain cost savings as to the operations of~~ Community First and Community First Bank and otherwise from the merger if and when the operations of Community First and Community First Bank are fully integrated into our and Reliant Bank’s operations, it is possible that we may not realize all of the cost savings that we have estimated we can realize from the merger. For example, we may be required to continue to operate or maintain functions that are currently expected to be combined or reduced as a result of the merger. Our realization of the estimated cost savings also will depend on our ability to combine the operations of our company and Reliant Bank with the operations of Community First and Community First Bank in a manner that permits those costs savings to be realized. If we are not able to integrate the operations of Community First and Community First Bank into our and Reliant Bank’s operations successfully and to reduce the combined costs of conducting the integrated operations of the two banks, the anticipated cost savings may not be fully realized, if at all, or may take longer to realize than expected. Our failure to realize those cost savings could materially adversely affect our financial condition, results of operations, capital, liquidity, or cash flows.

~~The issuance of the stock consideration to~~ ~~Community First’s shareholders and the issuance of the shares in the private placement may decrease the market price of our common stock.~~

~~We issued 1,137,000~~ shares of our common stock in connection with the private placement of our shares, and as consideration for the merger, we will issue approximately 2,417,450 additional shares of our common stock to Community First’s shareholders. These two transactions together will result in our shareholders’ existing share ownership being diluted by an aggregate of approximately 3,554,450 new shares, which represents 45.3% of our outstanding common stock immediately prior to the closing of the private placement. The dilution associated with the issuance of new shares of common stock in the private placement and/or the merger may result in fluctuations in the market price of our common stock, including a stock price decrease, and could materially impair our earnings per share and other per share financial metrics.

~~The combined company will incur significant transaction and merger-related costs in connection with the merger.~~

We expect to incur significant costs associated with combining the operations of Community First with our operations. We recently began collecting information in order to formulate detailed integration plans to deliver anticipated cost savings. Additional unanticipated costs may be incurred in the integration of our business with the business of Community First. Although we expect that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, may offset incremental transaction and merger-related costs over time, this net benefit may not be achieved in the near term, or at all.

~~Table of Contents~~

Whether or not the merger is consummated, each of Commerce Union and Community First will incur substantial expenses, such as legal, accounting, and financial advisory fees, in pursuing the merger which will adversely impact its earnings.

We ~~will be subject to business uncertainties and contractual restrictions while the merger is pending, which could adversely affect~~ ~~our~~ ~~business and operations.~~

~~Uncertainty about the effect of the merger on employees and customers may have an adverse effect on~~ Reliant Bank. Uncertainties surrounding the merger may impair the ability of one or more of Commerce Union, Reliant Bank, Community First, and/or Community First Bank to attract, retain and motivate key personnel until the merger is completed, and could cause customers and others that deal with either of the banks to seek to change their existing business relationships with such bank.

~~Under the terms of the merger agreement,~~ Commerce Union is subject to certain restrictions on its business prior to completing the merger, which may adversely affect our ability to execute certain of our business strategies. In addition, the merger agreement restricts Community First and Community First Bank from taking other specified actions until the merger occurs without our consent, such as acquiring or disposing of assets, incurring indebtedness, or incurring capital expenditures. These restrictions may prevent Community First and Community First Bank from pursuing attractive business opportunities that may arise prior to the completion of the merger. Such limitations could negatively impact Community First’s or Commerce Union’s businesses and operations prior to the completion of the merger.

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

~~Commerce Union~~ ~~completed a private placement~~

The following table contains information regarding shares of our common stock inrepurchased by Reliant Bancorp during the ~~quarter~~three months ended ~~September 30, 2017, as reported on our Current Report on Form 8-K filed with the Securities and Exchange Commission on August 23, 2017.~~

March 31, 2019.



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)
January 1, 2019 to January 31, 2019		$21.77	11,497	$11,750
February 1, 2019 to February 28, 2019		$21.86	11,538	$11,498
March 1, 2019 to March 31, 2019		$22.59	6,923	$11,341
Total		$21.99	29,958	$11,341


(1)	During the quarter ended March 31, 2019, no shares of common stock were purchased other than through a publicly announced plan or program of Reliant Bancorp.

(2)

On December 4, 2018, Reliant Bancorp announced a stock repurchase plan pursuant to which we may purchase, in the aggregate, up to $12 million of our common stock. This stock repurchase plan will remain in effect through December 31, 2019, unless the entire authorized amount of shares is sooner repurchased. The stock repurchase plan does not obligate Reliant Bancorp to repurchase any dollar amount or number of shares, and the plan may be extended, modified, amended, suspended, or discontinued at any time.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

EXHIBIT INDEX

~~2.1~~

Exhibit No.	Description	Location
3.1	Amended and Restated Charter of Reliant Bancorp, Inc. (Restated for SEC filing purposes)	Incorporated by reference to Exhibit 3.1 to Form 10-Q filed November 6, 2018

3.2	Third Amended and Restated Bylaws of Reliant Bancorp, Inc., effective June 15, 2018	Incorporated by reference to Exhibit 3.1 to Form 8-K filed June 21, 2018

4.1	Common Stock Specimen Certificate	Incorporated by reference to Exhibit 4.4 to Form S-8 filed December 19, 2018

4.2	The rights of securities holders are defined in the Charter and Bylaws provided in Exhibits 3.1 and 3.2

10.1	Employment Agreement, ~~and Plan of Merger,~~ dated ~~as of ,~~March 25, 2019, by and among ~~Commerce Union Bancshares, Inc., Community First,~~Reliant Bancorp, Inc., Reliant Bank, and ~~Community First Bank (incorporated herein~~David A. Kowalski	Incorporated by reference to Exhibit ~~2.1~~10.1 to ~~our~~ Form 8-K filed ~~on 08/23/17).~~ March 29, 2019

~~31.1~~
31.1	Certification pursuant to Rule 13a-14(a)/15d-14(a)		Filed herewith.

~~31.2~~
31.2	Certification pursuant to Rule 13a-14(a)/15d-14(a)		Filed herewith.

~~32.1~~
32.1	Certification pursuant to 18 USC Section 1350 –- Sarbanes-Oxley Act of 2002

~~32.2~~

~~Certification pursuant to 18 USC Section 1350 – Sarbanes-Oxley Act of 2002~~

~~101~~	Interactive Data Files* Furnished herewith.

	* ~~The documents formatted in eXtensible Business Reporting Language (XBRL) and attached as Exhibit~~
101 to this report are deemed not filed as part of a registration statement or prospectus for purposes of Section 12 of the Securities Act, are deemed not filed for purposes of Section 18 of the Exchange Act and otherwise not subject to liability under these sections.	Interactive Data Files	Filed herewith.

~~Table of Contents~~

SIGNATURES

~~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.



	~~COMMERCE UNION BANCSHARES, INC.~~	RELIANT BANCORP, INC.

~~November~~ ~~9, 2017~~ May 7, 2019			/s/ DeVan D. Ard, Jr.
			DeVan D. Ard, Jr.
	~~DeVan D. Ard, Jr.~~		President andChief Executive Officer
	~~President and~~ ~~Chief~~		(Principal Executive ~~Officer~~	Officer)
	(P~~rincipal Executive Officer)~~


~~November~~ ~~9, 2017~~ May 7, 2019			/s/ J. Daniel Dellinger
			J. Daniel Dellinger
	~~J. Daniel Dellinger~~		Chief Financial Officer
	~~Chief Financial Officer~~
	(Principal Financial Officer)



PART I – FINANCIAL INFORMATION		4
Item 1.	Consolidated Financial Statements (Unaudited).	4
Item 2.	~~Management~~’sManagement’s Discussion and Analysis of Financial Condition and Results of ~~Operations.~~Operations	41 37
Item 3.	Quantitative and Qualitative Disclosures About Market ~~Risk.~~Risk	62 56
Item 4.	Controls and ~~Procedures.~~Procedures	62 56

PART II – OTHER INFORMATION		62 57
Item 1.	Legal ~~Proceedings.~~Proceedings	62 57
Item 1A.	Risk ~~Factors.~~Factors	62 X
Item 2.	Unregistered Sales of Equity Securities and Use of ~~Proceeds.~~Proceeds	64 57
Item 3.	Defaults Upon Senior ~~Securities.~~Securities	64 57
Item 4.	Mine Safety ~~Disclosures.~~Disclosures	64 57
Item 5.	Other ~~Information.~~Information	64 57
Item 6.	~~Exhibits.~~Exhibits	64 58

SIGNATURES		65 59

	September 30, 2017			December 31, 2016
ASSETS
Cash and due from banks	$	18,277		$	23,413
Federal funds sold		669			830
Total cash and cash equivalents		18,946			24,243
Securities available for sale		192,277			146,813
Loans, net		739,738			657,701
Mortgage loans held for sale, net		19,475			11,831
Accrued interest receivable		4,999			3,786
Premises and equipment, net		9,558			9,093
Restricted equity securities, at cost		7,163			7,133
Cash surrender value of life insurance contracts		29,422			24,827
Deferred tax assets, net		2,776			3,437
Goodwill		11,404			11,404
Core deposit intangibles		1,336			1,582
Other assets		4,086			10,134

TOTAL ASSETS	$	1,041,180		$	911,984

LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Deposits
Demand	$	132,058		$	134,792
Interest-bearing demand		79,439			85,478
Savings and money market deposit accounts		197,521			183,788
Time		431,430			359,776
Total deposits		840,448			763,834
Accrued interest payable		220			107
Federal funds purchased		-			3,671
Federal Home Loan Bank advances		56,720			32,287
Dividends payable		541			1,711
Other liabilities		5,307			3,455

TOTAL LIABILITIES		903,236			805,065

STOCKHOLDERS’ EQUITY
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; 9,022,098 and 7,778,309 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively		9,022			7,778
Additional paid-in capital		112,202			89,045
Retained earnings		16,821			12,212
Accumulated other comprehensive loss		(101	)		(2,116	)

TOTAL STOCKHOLDERS’ EQUITY		137,944			106,919

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,041,180		$	911,984

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2017			2016		2017			2016
INTEREST INCOME
Interest and fees on loans	$	9,078		$	7,729	$	25,193		$	24,011
Interest and fees on loans held for sale		211			109		420			663
Interest on investment securities, taxable		179			137		514			589
Interest on investment securities, nontaxable		1,022			578		2,796			1,506
Federal funds sold and other		137			103		381			298

TOTAL INTEREST INCOME		10,627			8,656		29,304			27,067

INTEREST EXPENSE
Deposits
Demand		42			46		131			137
Savings and money market deposit accounts		207			151		557			480
Time		1,117			430		2,663			1,260
Federal Home Loan Bank advances and other		165			194		383			581

TOTAL INTEREST EXPENSE		1,531			821		3,734			2,458

NET INTEREST INCOME		9,096			7,835		25,570			24,609

PROVISION FOR LOAN LOSSES		540			145		1,195			760

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		8,556			7,690		24,375			23,849

NONINTEREST INCOME
Service charges on deposit accounts		309			320		936			926
Gains on mortgage loans sold, net		1,571			551		2,751			5,675
Gain on securities transactions, net		-			296		59			356
Gain on sale of other real estate		1			145		26			301
Loss on disposal of premises and equipment		(50	)		-		(50	)		-
Other		256			263		735			673

TOTAL NONINTEREST INCOME		2,087			1,575		4,457			7,931

NONINTEREST EXPENSE
Salaries and employee benefits		4,880			4,017		13,634			14,294
Occupancy		850			767		2,482			2,406
Information technology		732			586		1,924			1,849
Advertising and public relations		81			117		204			542
Audit, legal and consulting		1,046			328		1,647			993
Federal deposit insurance		100			109		320			349
Provision for losses on other real estate		-			17		-			70
Other operating		808			942		2,423			3,044

TOTAL NONINTEREST EXPENSE		8,497			6,883		22,634			23,547

INCOME BEFORE PROVISION FOR INCOME TAXES		2,146			2,382		6,198			8,233

INCOME TAX EXPENSE		306			619		1,005			1,775

CONSOLIDATED NET INCOME		1,840			1,763		5,193			6,458

NONCONTROLLING INTEREST IN NET LOSS OF SUBSIDIARY		6			605		898			507

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	1,846		$	2,368	$	6,091		$	6,965

Basic net income attributable to common shareholders, per share	$	0.23		$	0.31	$	0.77		$	0.92
Diluted net income attributable to common shareholders, per share	$	0.22		$	0.30	$	0.76		$	0.91

													ACCUMULATED
							ADDITIONAL						OTHER
	COMMON STOCK						PAID-IN			RETAINED			COMPREHENSIVE			NONCONTROLLING
	SHARES			AMOUNT			CAPITAL			EARNINGS			INCOME (LOSS)			INTEREST			TOTAL

BALANCE - JANUARY 1, 2016		7,279,620		$	7,280		$	84,520		$	4,987		$	(36	)	$	-		$	96,751

Stock based compensation expense		-			-			168			-			-			-			168

Exercise of stock options		461,931			462			4,154			-			-			-			4,616

Restricted stock awards		23,800			23			(23	)		-			-			-			-

Restricted stock forfeiture		(2,000	)		(2	)		2			-			-			-			-

Noncontrolling interest contributions		-			-			-			-			-			507			507

Net income (loss)		-			-			-			6,965			-			(507	)		6,458

Other comprehensive income		-			-			-			-			732			-			732

BALANCE - SEPTEMBER 30, 2016		7,763,351		$	7,763		$	88,821		$	11,952		$	696		$	-		$	109,232


BALANCE - JANUARY 1, 2017		7,778,309		$	7,778		$	89,045		$	12,212		$	(2,116	)	$	-		$	106,919

Stock based compensation expense		-			-			412			-			-			-			412

Exercise of stock options		59,739			60			633			-			-			-			693

Restricted stock awards		50,050			50			(50	)		-			-			-			-

Restricted stock forfeiture		(3,000	)		(3	)		3			-			-			-			-

Common stock issuance		1,137,000			1,137			23,877			-			-			-			25,014

Stock issuance costs		-			-			(1,718	)		-			-			-			(1,718	)

Noncontrolling interest contributions		-			-			-			-			-			898			898

Cash dividend declared to common shareholders ($0.18 per share)		-			-			-			(1,482	)		-			-			(1,482	)

Net income (loss)		-			-			-			6,091			-			(898	)		5,193

Other comprehensive income		-			-			-			-			2,015			-			2,015

BALANCE - SEPTEMBER 30, 2017		9,022,098		$	9,022		$	112,202		$	16,821		$	(101	)	$	-		$	137,944

	September 30, 2017
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
U. S. Treasury and other U. S. government agencies	$	591	$	-	$	(5	)	$	586
State and municipal		164,968		1,989		(1,710	)		165,247
Corporate bonds		1,500		8		(13	)		1,495
Mortgage backed securities		21,456		70		(77	)		21,449
Time deposits		3,500		-		-			3,500

Total	$	192,015	$	2,067	$	(1,805	)	$	192,277

	December 31, 2016
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
U. S. Treasury and other U. S. government agencies	$	1,909	$	4	$	(5	)	$	1,908
State and municipal		122,813		446		(3,625	)		119,634
Corporate bonds		2,000		8		(21	)		1,987
Mortgage backed securities		20,197		11		(174	)		20,034
Time deposits		3,250		-		-			3,250

Total	$	150,169	$	469	$	(3,825	)	$	146,813

Balance at January 1, 2017	$	87
Accretion income		(18	)
Balance at March 31, 2017		69
Accretion income		(17	)
Balance at June 30, 2017		52
Accretion income		(33	)
Balance at September 30, 2017	$	19

			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
September 30, 2017
Assets
U. S. Treasury and other U. S. government agencies	$	586	$	-	$	586	$	-
State and municipal		165,247		-		165,247		-
Corporate bonds		1,495		-		1,495		-
Mortgage backed securities		21,449		-		21,449		-
Time deposits		3,500		3,500		-		-
Interest rate swap		23		-		23		-

Liabilities
Interest rate swap	$	448	$	-	$	448	$	-

December 31, 2016
Assets
U. S. Treasury and other U. S. government agencies	$	1,908	$	-	$	1,908	$	-
State and municipal		119,634		-		119,634		-
Corporate bonds		1,987		-		1,987		-
Mortgage backed securities		20,034		-		20,034		-
Time deposits		3,250		3,250		-		-
Interest rate swap		195		-		195		-

Liabilities
Interest rate swap	$	267	$	-	$	267	$	-

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic
	Shares			Price		Term		Value
Outstanding at January 1, 2017		241,541		$	12.96
Granted		15,500			24.24
Exercised		(59,739	)		11.60
Forfeited or expired		(11,800	)		13.75
Outstanding at September 30, 2017		185,502			14.29		5.85	$	1,673
Exercisable at September 30, 2017		107,802			12.68		3.92	$	1,132

				Weighted Average
	Shares			Grant-Date Fair Value
Non-vested options at January 1, 2017		96,600		$	3.36
Granted		15,500			6.66
Vested		(22,600	)		3.12
Forfeited		(11,800	)		3.02
Non-vested options at September 30, 2017		77,700			4.14

						Minimum Required					To Be Well
	Actual					Capital Including					Capitalized Under
	Regulatory					Capital Conservation					Prompt Corrective
	Capital					Buffer					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
September 30, 2017
Company
Tier I leverage	$	125,572		12.58	%	$	39,928		4.000	%	$	49,909		5.00	%
Common equity tier 1		125,572		14.72	%		49,052		5.750	%		55,450		6.50	%
Tier I risk-based capital		125,572		14.72	%		61,848		7.250	%		68,246		8.00	%
Total risk-based capital		135,195		15.85	%		78,899		9.250	%		85,297		10.00	%

Bank
Tier I leverage	$	121,715		12.20	%	$	39,907		4.000	%	$	49,883		5.00	%
Common equity tier 1		121,715		14.29	%		48,976		5.750	%		55,364		6.50	%
Tier I risk-based capital		121,715		14.29	%		61,752		7.250	%		68,140		8.00	%
Total risk-based capital		131,338		15.42	%		78,786		9.250	%		85,174		10.00	%

December 31, 2016
Company
Tier I leverage	$	96,682		10.86	%	$	35,610		4.000	%		N/A		N/A
Common equity tier 1		96,682		13.00	%		38,115		5.125	%		N/A		N/A
Tier I risk-based capital		96,682		13.00	%		49,271		6.625	%		N/A		N/A
Total risk-based capital		105,764		14.22	%		64,150		8.625	%		N/A		N/A

Bank
Tier I leverage	$	95,637		10.75	%	$	35,586		4.000	%	$	44,482		5.00	%
Common equity tier 1		95,637		12.88	%		38,054		5.125	%		48,264		6.50	%
Tier I risk-based capital		95,637		12.88	%		49,192		6.625	%		59,402		8.00	%
Total risk-based capital		104,719		14.10	%		64,057		8.625	%		74,269		10.00	%

	Three Months Ended
	September 30, 2016
	Retail Banking		Residential Mortgage Banking			Elimination Entries		Consolidated
Net interest income	$	7,750	$	85		$	-	$	7,835
Provision for loan losses		145		-			-		145
Noninterest income		1,024		551			-		1,575
Noninterest expense		5,600		1,283			-		6,883
Income tax expense (benefit)		661		(42	)		-		619
Net income (loss)		2,368		(605	)		-		1,763
Noncontrolling interest in net loss of subsidiary		-		605			-		605
Net income attributable to common shareholders	$	2,368	$	-		$	-	$	2,368

	Three Months Ended September 30, 2017							Three Months Ended September 30, 2016							Change
	Average Balances		Rates / Yields (%)			Interest Income / Expense		Average Balances		Rates / Yields (%)			Interest Income / Expense		Due to Volume			Due to Rate			Total
Interest earning assets
Loans	$	727,453		4.78		$	8,588	$	649,778		4.57		$	7,277	$	947		$	364		$	1,311
Loan fees		-		0.27			490		-		0.28			452		38			-			38
Loans with fees		727,453		5.05			9,078		649,778		4.85			7,729		985			364			1,349
Mortgage loans held for sale		18,333		4.57			211		12,804		3.39			109		56			46			102
Deposits with banks		14,451		0.88			32		20,439		0.37			19		(34	)		47			13
Investment securities - taxable		30,212		2.35			179		33,512		1.63			137		(81	)		123			42
Investment securities - tax-exempt		157,718		3.99			1,022		111,448		3.33			578		300			144			444
Fed funds sold and other		7,557		5.51			105		8,506		3.93			84		(53	)		74			21
Total earning assets		955,724		4.72			10,627		836,487		4.37			8,656		1,173			798			1,971
Nonearning assets		54,812							48,640
Total Assets	$	1,010,536						$	885,127
Interest bearing liabilities
Interest bearing demand		81,629		0.20			42		89,572		0.20			46		(4	)		-			(4	)
Savings and money market		205,463		0.40			207		179,816		0.33			151		23			33			56
Time deposits - retail		329,203		1.02			845		143,344		0.73			262		446			137			583
Time deposits - wholesale		90,222		1.20			272		94,239		0.71			168		(48	)		152			104
Total interest bearing deposits		706,517		0.77			1,366		506,971		0.49			627		417			322			739
Federal Home Loan Bank advances		46,910		1.40			165		132,876		0.58			194		(694	)		665			(29	)
Total interest-bearing liabilities		753,427		0.81			1,531		639,847		0.51			821		(277	)		987			710
Net interest rate spread (%) / Net Interest Income ($)				3.91		$	9,096				3.86		$	7,835	$	1,450		$	(189	)	$	1,261
Non-interest bearing deposits		133,108		(0.13	)				134,343		(0.09	)
Other non-interest bearing liabilities		4,574							4,159
Stockholder's equity		119,427							106,778
Total liabilities and stockholders' equity	$	1,010,536						$	885,127
Cost of funds				0.68							0.42
Net interest margin				4.08							3.98

	Three Months Ended					Dollar			Percent
	September 30,					Increase			Increase
	2017			2016		(Decrease)			(Decrease)
Non-Interest Income
Service charges and fees	$	309		$	320	$	(11	)		-3.4	%
Securities gains (losses), net		-			296		(296	)		-100.0	%
Gains on mortgage loans sold, net		1,571			551		1,020			185.1	%
Gain (loss) on sale of other real estate		1			145		(144	)		-99.3	%
Loss on disposal of premises and equipment		(50	)		-		(50	)		-100.0	%
Other noninterest income:
Bank-owned life insurance		219			194		25			12.9	%
Brokerage revenue		16			40		(24	)		-60.0	%
Miscellaneous noninterest income (expense), net		21			29		(8	)		-27.6	%
Total other non-interest income		256			263		(7	)		-2.7	%
Total non-interest income	$	2,087		$	1,575	$	512			32.5	%

	Nine Months Ended					Dollar			Percent
	September 30,					Increase			Increase
	2017			2016		(Decrease)			(Decrease)
Non-Interest Income
Service charges and fees	$	936		$	926	$	10			1.1	%
Securities gains (losses), net		59			356		(297	)		-83.4	%
Gains on mortgage loans sold, net		2,751			5,675		(2,924	)		-51.5	%
Gain (loss) on sale of other real estate		26			301		(275	)		-91.4	%
Loss on disposal of premises and equipment		(50	)		-		(50	)		-100.0	%
Other noninterest income:
Bank-owned life insurance		595			557		38			6.8	%
Brokerage revenue		70			67		3			4.5	%
Rental income		-			2		(2	)		-100.0	%
Miscellaneous noninterest income (expense), net		70			47		23			48.9	%
Total other non-interest income		735			673		62			9.2	%
Total non-interest income	$	4,457		$	7,931	$	(3,474	)		-43.8	%

	September 30,								December 31,
	2017								2016
			% of			% of Loan					% of			% of Loan
			Allowance			Type to					Allowance			Type to
	Amount		To Total			Total Loans			Amount		To Total			Total Loans

Commerical, Industrial and Agricultural	$	2,675		27.8	%		18.5	%	$	2,438		26.8	%		20.1	%
Real estate:
1-4 Family Residential		867		9.0	%		13.4	%		1,178		13.0	%		16.9	%
1-4 Family HELOC		613		6.4	%		10.6	%		704		7.8	%		8.6	%
Multifamily and Commercial		3,094		32.2	%		34.4	%		2,731		30.1	%		32.3	%
Construction, Land Development and Farmland		2,147		22.3	%		18.9	%		1,786		19.7	%		17.4	%
Consumer		189		2.0	%		2.2	%		208		2.3	%		2.6	%
Other		38		0.3	%		2.0	%		37		0.5	%		2.1	%
	$	9,623		100.0	%		100.0	%	$	9,082		100.0	%		100.0	%

	Amortized Cost		Estimated Fair Value

Due within one year	$	3,655	$	3,657
Due in one to five years		13,488		13,584
Due in five to ten years		10,234		10,391
Due after ten years		143,182		143,196
Mortgage backed securities		21,456		21,449
Total	$	192,015	$	192,277