10-Q

.

United States Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2023

☐ 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: 001-37661

(Exact name of registrant as specified in its charter)

Tennessee	62-1173944
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
5401 Kingston Pike, Suite 600 Knoxville, Tennessee	37919
(Address of principal executive offices)	(Zip Code)
865-437-5700	Not Applicable
(Registrant’s telephone number, including area code)	(Former name, former address and former fiscal
	year, if changed since last report)

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

Title of each class	Trading symbol(s)	Name of Exchange on which Registered
Common Stock, par value $1.00	SMBK	The Nasdaq Stock Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  ☒   No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such period that the registrant was required to submit such files).

Yes  ☒    No  ☐

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

Large accelerated filer  ☐ Accelerated filer  ☒ Non-accelerated filer  ☐ Smaller reporting company  ☐ Emerging growth company ☐ 

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ☐    No  ☒

As of November 03, 2023, there were 16,994,543 shares of common stock, $1.00 par value per share, issued and outstanding.

TABLE OF CONTENTS

PART I –FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements (Unaudited)	3
	Consolidated Balance Sheets at September 30, 2023 and December 31, 2022	3
	Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2023 and 2022	4
	Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2023 and 2022	5
	Consolidated Statements of Changes in Shareholders’ Equity for the Three and Nine Months Ended September 30, 2023 and 2022	6
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	46
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	63
Item 4.	Controls and Procedures	63
PART II – OTHER INFORMATION		64
Item 1.	Legal Proceedings	64
Item 1A.	Risk Factors	64
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	64
Item 3.	Defaults Upon Senior Securities	65
Item 4.	Mine Safety Disclosures	65
Item 5.	Other Information	65
Item 6.	Exhibits	66

2

PART I –FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

SMARTFINANCIAL, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except for share data)

	(Unaudited)
	September 30,		December 31,
	2023		2022*
ASSETS:
Cash and due from banks	$	62,950	$	44,265
Interest-bearing deposits with banks		297,652		206,849
Federal funds sold		39,656		15,310
Total cash and cash equivalents		400,258		266,424
Securities available-for-sale, at fair value		385,131		483,893
Securities held-to-maturity, at amortized cost		282,313		285,949
Other investments		13,805		15,530
Loans held for sale		2,734		1,752
Loans and leases		3,378,999		3,253,627
Less: Allowance for credit losses		(33,687)		(23,334)
Loans and leases, net		3,345,312		3,230,293
Premises and equipment, net		92,020		92,511
Other real estate owned		1,370		1,436
Goodwill and other intangibles, net		107,792		109,772
Bank owned life insurance		82,914		81,470
Other assets		83,522		68,468
Total assets	$	4,797,171	$	4,637,498
LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits:
Noninterest-bearing demand	$	923,763	$	1,072,449
Interest-bearing demand		993,717		965,911
Money market and savings		1,766,409		1,583,481
Time deposits		562,620		455,259
Total deposits		4,246,509		4,077,100
Borrowings		14,117		41,860
Subordinated debt		42,078		42,015
Other liabilities		47,815		44,071
Total liabilities		4,350,519		4,205,046
Shareholders' equity:
Preferred stock, $1 par value; 2,000,000 shares authorized; No shares issued and outstanding		—		—
Common stock, $1 par value; 40,000,000 shares authorized; 16,994,543 and 16,900,805 shares issued and outstanding, respectively		16,995		16,901
Additional paid-in capital		295,542		294,330
Retained earnings		168,271		156,545
Accumulated other comprehensive income (loss)		(34,156)		(35,324)
Total shareholders' equity		446,652		432,452
Total liabilities and shareholders' equity	$	4,797,171	$	4,637,498

* Derived from audited financial statements.

The accompanying notes are an integral part of the consolidated financial statements.

3

SMARTFINANCIAL, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except share and per share data)

		Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Interest income:
Loans and leases, including fees	$	47,539	$	35,127	$	137,712	$	96,300
Securities:
Taxable		4,335		3,135		12,322		8,463
Tax-exempt		356		561		1,066		1,369
Federal funds sold and other earning assets		3,045		3,474		9,448		5,389
Total interest income		55,275		42,297		160,548		111,521
Interest expense:
Deposits		23,433		4,866		59,333		9,384
Borrowings		210		97		775		371
Subordinated debt		626		626		1,877		1,877
Total interest expense		24,269		5,589		61,985		11,632
Net interest income		31,006		36,708		98,563		99,889
Provision for credit losses		795		974		1,458		3,230
Net interest income after provision for credit losses		30,211		35,734		97,105		96,659
Noninterest income:
Service charges on deposit accounts		1,736		1,611		4,838		4,376
Loss on sale of securities		(6,801)		—		(6,801)		—
Mortgage banking		309		170		813		1,475
Investment services		1,461		1,051		3,766		3,186
Insurance commissions		1,153		864		3,551		2,363
Interchange and debit card transaction fees, net		1,357		1,356		4,087		4,107
Other		1,476		1,198		4,492		5,083
Total noninterest income		691		6,250		14,746		20,590
Noninterest expense:
Salaries and employee benefits		16,785		16,317		49,474		47,036
Occupancy and equipment		3,547		3,167		10,073		9,020
FDIC insurance		825		705		2,241		2,022
Other real estate and loan related expense		603		565		1,616		1,930
Advertising and marketing		346		288		1,006		985
Data processing and technology		2,378		1,872		6,777		5,185
Professional services		735		822		2,307		2,809
Amortization of intangibles		647		650		1,981		1,919
Merger related and restructuring expenses		110		87		110		607
Other		2,540		2,757		7,870		7,361
Total noninterest expense		28,516		27,230		83,455		78,874
Income before income tax expense		2,386		14,754		28,396		38,375
Income tax expense		319		3,211		5,993		8,357
Net income	$	2,067	$	11,543	$	22,403	$	30,018
Earnings per common share:
Basic	$	0.12	$	0.69	$	1.33	$	1.79
Diluted	$	0.12	$	0.68	$	1.33	$	1.78
Weighted average common shares outstanding:
Basic		16,807,548		16,749,255		16,801,840		16,734,298
Diluted		16,918,635		16,872,022		16,907,325		16,867,970

The accompanying notes are an integral part of the consolidated financial statements.

4

SMARTFINANCIAL, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(Dollars in thousands)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Net income	$	2,067	$	11,543	$	22,403	$	30,018
Other comprehensive income (loss):
Investment securities:
Unrealized holding gains (losses) on securities available-for-sale		(5,830)		(20,147)		(5,178)		(51,899)
Tax effect		1,505		5,205		1,337		13,406
Reclassification of unrealized gains (losses) on securities transferred from available-for-sale to held-to-maturity		—		—		—		(2,009)
Tax effect		—		—		—		519
Amortization of unrealized gains (losses) on investment securities transferred from available-for-sale to held-to-maturity		37		43		115		70
Tax effect		(10)		(12)		(30)		(18)
Reclassification adjustment for realized losses (gains) included in net income		6,801		—		6,801		—
Tax effect		(1,757)		—		(1,757)		—
Unrealized gains (losses) on securities available-for-sale, net of tax		746		(14,911)		1,288		(39,931)
Fair value hedging activities:
Unrealized gains (losses) on fair value municipal security hedges		—		92		—		(1,351)
Tax effect		—		(23)		—		349
Unrealized gains (losses) on fair value municipal security hedge instruments arising during the period, net of tax		—		69		—		(1,002)
Cash flow hedging activities:
Unrealized gains (losses) on cash flow hedges		154		(1,775)		(163)		(1,775)
Tax effect		(39)		458		43		458
Unrealized gains (losses) on cash flow hedge instruments arising during the period, net of tax		115		(1,317)		(120)		(1,317)
Total other comprehensive income (loss)		861		(16,159)		1,168		(42,250)
Comprehensive income (loss)	$	2,928	$	(4,616)	$	23,571	$	(12,232)

The accompanying notes are an integral part of the consolidated financial statements.

5

SMARTFINANCIAL, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY – (Unaudited)

For the Three and Nine Months Ended September 30, 2023 and 2022

(Dollars in thousands, except for share data)

								Accumulated
								Other
	Common Stock			Additional		Retained		Comprehensive
	Shares	Amount		Paid-in Capital		Earnings		Income (Loss)		Total
Balance, December 31, 2021	16,802,990	$	16,803	$	292,937	$	118,247	$	1,443	$	429,430
Net income	—		—		—		30,018		—		30,018
Other comprehensive loss	—		—		—		—		(42,250)		(42,250)
Common stock issued pursuant to:
Stock options exercised	32,003		32		238		—		—		270
Restricted stock, net of forfeitures	60,515		61		(61)		—		—		—
Shares withheld for payment of taxes	(7,953)		(8)		(198)		—		—		(206)
Stock compensation expense	—		—		991		—		—		991
Common stock dividend ($0.21 per share)	—		—		—		(3,542)		—		(3,542)
Balance, September 30, 2022	16,887,555	$	16,888	$	293,907	$	144,723	$	(40,807)	$	414,711
Balance, December 31, 2022	16,900,805	$	16,901	$	294,330	$	156,545	$	(35,324)	$	432,452
Cumulative effect adjustment for adoption of ASU 2016-13, net of tax	—		—		—		(6,606)		—		(6,606)
Balance, January 1, 2023, adjusted	16,900,805		16,901		294,330		149,939		(35,324)		425,846
Net income	—		—		—		22,403		—		22,403
Other comprehensive income	—		—		—		—		1,168		1,168
Common stock issued pursuant to:
Stock options exercised	15,705		16		149		—		—		165
Restricted stock, net of forfeitures	79,670		80		(80)		—		—		—
Restricted stock withheld for taxes	(1,637)		(2)		(33)		—		—		(35)
Stock compensation expense	—		—		1,176		—		—		1,176
Common stock dividend ($0.24 per share)	—		—		—		(4,071)		—		(4,071)
Balance, September 30, 2023	16,994,543	$	16,995	$	295,542	$	168,271	$	(34,156)	$	446,652
Balance, June 30, 2022	16,898,405	$	16,898	$	293,815	$	134,362	$	(24,648)	$	420,427
Net income	—		—		—		11,543		—		11,543
Other comprehensive loss	—		—		—		—		(16,159)		(16,159)
Common stock issued pursuant to:
Stock options exercised	603		1		6		—		—		7
Restricted stock, net of forfeitures	(3,500)		(3)		3		—		—		—
Restricted stock withheld for taxes	(7,953)		(8)		(198)		—		—		(206)
Stock compensation expense	—		—		281		—		—		281
Common stock dividend ($0.07 per share)	—		—		—		(1,182)		—		(1,182)
Balance, September 30, 2022	16,887,555	$	16,888	$	293,907	$	144,723	$	(40,807)	$	414,711
Balance, June 30, 2023	17,004,092	$	17,004	$	295,296	$	167,564	$	(35,017)	$	444,847
Net income	—		—		—		2,067		—		2,067
Other comprehensive income	—		—		—		—		861		861
Common stock issued pursuant to:
Restricted stock, net of forfeitures	(7,912)		(7)		7		—		—		—
Restricted stock withheld for taxes	(1,637)		(2)		(33)		—		—		(35)
Stock compensation expense	—		—		272		—		—		272
Common stock dividends ($0.08 per share)	—		—		—		(1,360)		—		(1,360)
Balance, September 30, 2023	16,994,543	$	16,995	$	295,542	$	168,271	$	(34,156)	$	446,652

The accompanying notes are an integral part of the consolidated financial statements.

6

SMARTFINANCIAL, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)

	Nine Months Ended September 30,
	2023		2022
Cash flows from operating activities:
Net income	$	22,403	$	30,018
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		8,372		7,474
Accretion of fair value purchase accounting adjustments, net		—		(762)
Amortization of intangible assets		1,981		1,919
Provision for credit losses		1,458		3,230
Stock compensation expense		1,176		991
Loss on sale of securities available-for-sale		6,801		—
Deferred income tax expense (benefit)		1,801		(500)
Increase in cash surrender value of bank owned life insurance		(1,445)		(1,382)
Net losses from sale and write-downs of other real estate owned		12		66
Net gains from mortgage banking		(813)		(1,475)
Origination of loans held for sale		(28,585)		(47,840)
Proceeds from sales of loans held for sale		28,416		51,676
Net (gain) loss from sale/disposal of fixed assets		56		(261)
Net change in:
Accrued interest receivable		(919)		(2,062)
Accrued interest payable		1,458		(993)
Other assets		(11,885)		(26,998)
Other liabilities		(2,278)		28,480
Net cash provided by operating activities		28,009		41,581
Cash flows from investing activities:
Available-for-sale:
Proceeds from sales		152,775		—
Proceeds from maturities, calls and paydowns		32,404		32,143
Purchases		(94,424)		(295,347)
Held-to-maturity:
Proceeds from maturities, calls and paydowns		1,986		1,345
Purchases		—		(50,575)
Proceeds from sales of other investments		2,669		1,054
Purchases of other investments		(944)		(88)
Net increase in loans and leases		(148,006)		(404,770)
Proceeds from sale of fixed assets		633		1,460
Purchases of premises and equipment		(4,016)		(10,690)
Proceeds from sale of other real estate owned		326		488
Net cash (paid) received from business combinations		—		(4,881)
Net cash used by investing activities		(56,597)		(729,861)
Cash flows from financing activities:
Net increase in deposits		169,521		258,872
Net increase (decrease) in securities sold under agreements to repurchase		1,342		838
Proceeds from borrowings		26,000		5,000
Repayment of borrowings		(30,500)		(75,000)
Cash dividends paid		(4,071)		(3,542)
Issuance of common stock, net of restricted shares withheld for taxes		130		64
Net cash provided by financing activities		162,422		186,232
Net change in cash and cash equivalents		133,834		(502,048)
Cash and cash equivalents, beginning of period		266,424		1,045,077
Cash and cash equivalents, end of period	$	400,258	$	543,029
Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	60,437	$	12,624
Net cash paid during the period for income taxes		9,406		8,255
Noncash investing and financing activities:
Recognition of operating lease assets in exchange for lease liabilities		1,751		53
Acquisition of real estate through foreclosure		272		—
Transfer of securities from available-for-sale to held-to-maturity		—		162,378
Change in goodwill due to acquisition		—		4,580

The accompanying notes are an integral part of the consolidated financial statements.

7

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1. Presentation of Financial Information

Nature of Business:

SmartFinancial, Inc. (the "Company," “SmartFinancial,” “we,” “our” or “us”) is a bank holding company whose principal activity is the ownership and management of its wholly owned subsidiary, SmartBank (the "Bank"). The Company provides a variety of financial services to individuals and corporate customers through its offices in East and Middle Tennessee, Alabama, and Florida. The Bank’s primary deposit products are noninterest-bearing and interest-bearing demand deposits, savings and money market deposits, and time deposits. Its primary lending products are commercial, residential, and consumer loans.

Basis of Presentation and Accounting Estimates:

The accounting and financial reporting policies of the Company and its wholly owned subsidiary conform to U.S. generally accepted accounting principles (“GAAP”) and reporting guidelines of banking regulatory authorities and regulators. The accompanying interim consolidated financial statements for the Company and its wholly owned subsidiary have not been audited. All material intercompany balances and transactions have been eliminated.

In management’s opinion, all accounting adjustments necessary to accurately reflect the financial position and results of operations on the accompanying financial statements have been made. These adjustments are normal and recurring accruals considered necessary for a fair and accurate presentation. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for credit losses, the valuation of foreclosed assets and deferred taxes, the fair value of financial instruments, goodwill, and the fair value of assets acquired, and liabilities assumed in acquisitions. The results for interim periods are not necessarily indicative of results for the full year or any other interim periods. The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes appearing in the Company’s annual report on Form 10-K for the year ended December 31, 2022.

Allowance for Credit Losses (“ACL”):

As described below under Recently Issued and Adopted Accounting Pronouncements, the Company adopted ASU 2016-13 effective January 1, 2023, which requires the estimation of an allowance for credit losses in accordance with the Current Expected Credit Losses (“CECL”) methodology. This standard applies to all financial assets measured at amortized cost and off-balance sheet credit exposures, including loans, investment securities and unfunded commitments.  We applied the standard’s provisions using the modified retrospective method as a cumulative-effect adjustment to retained earnings as of January 1, 2023.  With this transition method, we did not have to restate comparative prior periods presented in the financial statements related to Topic 326, but will present comparative prior periods disclosures using the previous accounting guidance for the allowance for loan losses.  This adoption method is considered a change in accounting principle requiring additional disclosure of the nature of and reason for the change, which is solely a result of the adoption of the required standard.

In connection with the adoption of ASU 2016-13, the Company revised certain accounting policies and implemented certain accounting policy elections. The revised accounting policies are described below:

ACL - Held-to-Maturity (“HTM”) Securities - The Company measures expected credit losses on HTM securities on a collective basis by major security type with each type sharing similar risk characteristics. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The Company has made the election to exclude accrued interest receivable on HTM securities from the estimate of credit losses and report accrued interest separately on the consolidated balance sheets. See Note 4 - Securities, for additional information related to the Company’s allowance for credit losses on HTM securities.

8

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

ACL - Available-for-Sale (“AFS”) Securities - For AFS securities in an unrealized loss position, the Company first evaluates whether it intends to sell, or whether it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either of these criteria regarding intent or requirement to sell is met, the AFS security amortized cost basis is written down to fair value through income. If the criteria is not met, the Company is required to assess whether the decline in fair value has resulted from credit losses or noncredit-related factors. If the assessment indicates a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists, and an allowance for credit loss is recorded through income as a component of provision for credit loss expense. If the assessment indicates that a credit loss does not exist, the Company records the decline in fair value through other comprehensive income, net of related income tax effects. The Company has made the election to exclude accrued interest receivable on AFS securities from the estimate of credit losses and report accrued interest separately on the consolidated balance sheets. Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit loss expense. Losses are charged against the allowance when management believes the uncollectibility of an AFS security is confirmed or when either of the criteria regarding intent or requirement to sell is met. See Note 4 - Securities, for additional information related to the Company’s allowance for credit losses on AFS securities.

ACL – Loans and Leases – The ACL reflects management’s estimate of expected losses that will result from the inability of our clients to make required loan and lease payments.  Loans and leases deemed to be uncollectible are charged against the ACL, while recoveries of previously charged-off amounts are credited to the ACL.  Management uses systematic methodologies to determine its ACL for loans and leases held for investment and certain off-balance-sheet exposures.  The ACL is a valuation account that is subtracted from the amortized cost basis to present the net amount expected to be collected on the loan and lease portfolio.  Management considers the effects of past events, current conditions, and reasonable and supportable forecasts on the collectability of the loan and lease portfolio.  The ACL recorded on the balance sheet reflects management’s best estimate of expected credit losses.  The Company’s ACL is calculated using collectively assessed and individually assessed loans and leases.

The ACL is measured on a collective pool basis when similar risk characteristics exist. Loans with similar risk characteristics are grouped into homogenous segments.  The Company segmented the loan and lease portfolio by call code and risk rating.  The loan portfolio reserve estimate is calculated using a non-discounted cash flow method for probability of default and loss given default values.  This method utilizes the Company’s data along with peer data that is regressed against the national unemployment rate.  The lease portfolio’s reserve estimate is based on the open pool methodology which is a simplified process of capturing losses by quarter over the life of a lease divided by the balance of all leases originated.

Management considers forward-looking information in estimating expected credit losses.  The Company uses an average of Fannie Mae and Federal Open Market Committee projections of the national unemployment rate to determine the best estimate of expected credit losses.  For the contractual term that extends beyond the reasonable and supportable forecast period, the Company reverts to the long term mean of historical factors using a straight-line approach.  The Company uses an eight-quarter forecast and a four-quarter reversion period.

Management considers the need to qualitatively adjust expected credit losses for information not already captured in the loss estimation.  The qualitative factors considered by management include: (1) effectiveness of the Company’s loan and lease policies and procedures; (2) the experience, ability and depth of lending management and other relevant staff; and (3) the quality of external and internal loan review and internal controls.  

Loans that do not share risk characteristics are evaluated on an individual basis. The Company maintains a net book balance threshold of $500,000 for individually evaluated loans unless further analysis in the future suggests a change is needed to this threshold based on the credit environment at that time.  For collateral dependent financial assets where the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the financial asset to be provided substantially through the operation or sale of the collateral, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the asset as of the measurement date. When repayment is expected to be from the operation of the collateral,

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expected credit losses are calculated as the amount by which the amortized cost basis of the financial asset exceeds the present value of expected cash flows from the operation of the collateral. When repayment is expected to be from the sale of the collateral, expected credit losses are calculated as the amount by which the amortized costs basis of the financial asset exceeds the fair value of the underlying collateral less estimated cost to sell. The allowance for credit losses may be zero if the fair value of the collateral at the measurement date exceeds the amortized cost basis of the financial asset.  If the loan is not collateral dependent, the measurement of loss is based on the difference between the expected and contractual future cash flows of the loan.

Management measures expected credit losses over the contractual term of a loan. When determining the contractual term, the Company considers expected prepayments but is precluded from considering expected extensions, renewals, or modifications, unless the Company reasonably expects it will execute a loan modification (“LM”) with a borrower.  In the event of a reasonably expected LM, the Company factors the reasonably-expected LM into the current expected credit losses estimate.  

Purchased credit-deteriorated, otherwise referred to herein as (“PCD”), assets are defined as acquired individual financial assets (or acquired groups of financial assets with similar risk characteristics) that, as of the date of acquisition, have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by the Company’s assessment. The Company records acquired PCD loans by adding the expected credit losses (i.e. allowance for credit losses) to the purchase price of the financial assets rather than recording through the provision for credit losses in the income statement.  The expected credit loss, as of the acquisition day, of a PCD loan is added to the allowance for credit losses.  The non-credit discount or premium is the difference between the unpaid principal balance and the amortized cost basis as of the acquisition date.  Subsequent to the acquisition date, the change in the ACL on PCD loans is recognized through the provision for credit losses.  The non-credit discount or premium is accreted or amortized, respectively, into interest income over the remaining life of the PCD loan on a level-yield basis.  In accordance with the transition requirements within the standard, the Company’s purchased credit-impaired loans (“PCI”) were treated as PCD loans.

The Company follows its nonaccrual policy by reversing contractual interest income in the income statement when the Company places a loan on nonaccrual status.  Therefore, management excludes the accrued interest receivable balance from the amortized cost basis in measuring expected credit losses on the portfolio and does not record an allowance for credit losses on accrued interest receivable.  As of September 30, 2023, and December 31, 2022, the accrued interest receivables for loans recorded in other assets were $11.5 million and $9.8 million, respectively.

ACL – Off Balance Sheet Credit Exposures – The Company has a variety of assets that have a component that qualifies as an off-balance sheet exposure.  These primarily include undrawn portions of revolving lines of credit and standby letters of credit.  The expected losses associated with these exposures within the unfunded portion of the expected credit loss will be recorded as a liability on the balance sheet with an offsetting income statement expense.  Management has determined that all of the Company’s off-balance-sheet credit exposures are not unconditionally cancellable.  As of September 30, 2023, the liability recorded for expected credit losses on unfunded commitments in Other Liabilities was $2.3 million.  The current adjustment to the ACL for unfunded commitments is recognized through the provision for credit losses in the Consolidated Statement of Income.

Recently Issued and Adopted Accounting Pronouncements:

In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326) (“ASU 2016-13”), and has issued subsequent amendments thereto, which introduces the current expected credit losses (“CECL”) methodology. Among other things, ASU 2016-13 requires the measurement of all expected credit losses for financial assets, including loans and held-to-maturity debt securities, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The new model requires institutions to calculate and estimate losses that are expected to be incurred through the financial asset's contractual life through a provision for credit losses, including loans obtained as a result of any acquisition not deemed to be PCD. ASU 2016-13 also requires the allowance for credit losses for PCD loans to be determined in a manner similar to that of other financial assets measured

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

at amortized cost; however, the initial allowance determined at acquisition is added to the purchase price rather than recorded as provision expense. In accordance with ASU 2016-13, the disclosure of credit quality indicators related to the amortized cost of financing receivables is further disaggregated by year of origination (or vintage). The Company adopted ASU 2016-13 and all subsequent amendments thereto effective January 1, 2023, using the modified retrospective method for all financial assets measured at amortized cost and off balance sheet credit exposures. Amounts for periods beginning on or after January 1, 2023, are presented under ASU 2016-13 and all prior period information is presented in accordance with previously applicable GAAP. At January 1, 2023, the Company recognized a cumulative adjustment to retained earnings of $6.6 million, net of tax, attributable to an increase in the allowance for credit losses (“ACL”) of $8.7 million, an increase in the allowance for off balance sheet credit exposures of $3.0 million, and an increase in deferred tax assets of $2.3 million. Included in the $8.7 million increase in the allowance for credit losses is $2.9 million that was recognized on PCD loans previously classified as purchased credit impaired (“PCI”) with a corresponding adjustment to the gross carrying amount of the loans. The Company adopted ASU 2016-13 using the prospective transition approach for PCD loans, which did not require re-evaluation of whether loans previously classified as PCI loans met the criteria of PCD assets at the date of adoption. The remaining noncredit discount will be accreted into interest income over the life of the individual loans beginning January 1, 2023.

The following table illustrates the impact of ASU 2016-13 (in thousands):

		December 31, 2022		Adoption impact of ASU 2016-13		Impact of PCD Gross Up		January 1, 2023
Allowance for credit losses:
Commercial real estate	$	10,821	$	879		2,652	$	14,352
Consumer real estate		4,028		1,952		166		6,146
Construction and land development		3,059		2,145		25		5,229
Commercial and industrial		3,997		1,451		27		5,475
Leases		1,293		(683)		28		638
Consumer and other		136		13		-		149
Total allowance for credit losses	$	23,334	$	5,757	$	2,898	$	31,989
Unfunded lending commitments(1)	$	-	$	3,029	$	-	$	3,029

⁽¹⁾ The unfunded lending commitments is recorded within other liabilities on the Consolidated Statements of Financial Condition. The related expense for unfunded lending commitments is recorded within provision for credit losses on the Consolidated Statements of Income.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which removes the accounting guidance for troubled debt restructurings and requires entities to evaluate whether a modification provided to a borrower result in a new loan or continuation of an existing loan. The amendments enhance existing disclosures and require new disclosures for receivables when there has been a modification in contractual cash flows due to a borrower experiencing financial difficulties. Additionally, the amendments require public business entities to disclose gross charge-off information by year of origination in the vintage disclosures. The guidance is effective for entities that have adopted ASU 2016-13 for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. The Company adopted ASU 2022-02 when it adopted ASU 2016-13 in January 2023.  The adoption did not have a material impact on the Company’s Consolidated Financial Statements.

Recently Issued Not Yet Effective Accounting Pronouncements:

During interim periods, the Company follows the accounting policies set forth in its annual audited financial statements for the year ended December 31, 2022, as filed in its Annual Report on Form 10-K with the Securities and Exchange

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Commission ("SEC"). The following is a summary of recent authoritative pronouncements issued but not yet effective that could impact the accounting, reporting, and/or disclosure of financial information by the Company.

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarifies that a contractual sale restriction should not be considered in measuring fair value. It also requires entities with investments in equity securities subject to contractual sale restrictions to disclose certain qualitative and quantitative information about such securities.  The guidance is effective for public companies for fiscal years beginning after December 15, 2023. All other entities have an extra year to adopt; early adoption is permitted.  The Company is assessing ASU 2022-03 and its impact on its accounting and disclosures.

In March 2023, the FASB issued ASU 2023-02, Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method. ASU 2023-02 permits reporting entities to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. ASU 2023-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2023.  The Company is assessing ASU 2023-02 and its impact on its accounting and disclosures.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 2. Business Combinations

Sunbelt Group, LLC

On September 1, 2022, Rains Agency Inc. (“Rains Agency”), an indirect wholly-owned subsidiary of SmartFinancial, Inc., completed the acquisition of substantially all the assets of Sunbelt Group, LLC (“Sunbelt”), a Tennessee limited liability company, pursuant to the Asset Purchase Agreement (the “Purchase Agreement”), dated September 1, 2022, by and among Rains Agency, Sunbelt, and A. Mark Slater, the sole member of Sunbelt.

In connection with the acquisition, Rains Agency acquired $349 thousand of assets and assumed $364 thousand of liabilities from Sunbelt. Pursuant to the Purchase Agreement, Rains Agency paid an aggregate amount of consideration to Sunbelt of $6.5 million, of which $5.2 million was paid in cash at the closing and the remainder of which will be payable in equal cash installments on September 1, 2023, and September 1, 2024 (the “Deferred Payments”).  The Deferred Payments are subject to acceleration in certain circumstances involving a change in control of Rains Agency and are subject to set-off for any indemnification or other obligations of the Sunbelt and its sole member to Rains Agency under the terms of the Purchase Agreement.  During 2023, Rains Agency changed its name to SBK Insurance, Inc.

The fair value of consideration paid exceeded the fair value of the identifiable assets and liabilities acquired and resulted in the establishment of goodwill in the amount of $4.6 million, representing the intangible value of Sunbelt’s business and reputation within the markets it served. The goodwill recognized is expected to be deductible for income tax purposes. The Company established an intangible asset related to customer relationships of $1.9 million, amortizing sum-of-the-years digits over 168 months (14 years).

The purchased assets and assumed liabilities were recorded at their acquisition date fair values and are summarized in the table below (in thousands).

			Initial
	As recorded		Fair value		Subsequent		As recorded
	by Sunbelt		adjustments		Adjustments		by the Company
Assets:
Cash & cash equivalents	$	319	$	—	$	—	$	319
Customer list intangible		—		1,948		—		1,948
Equipment, net		13		(13)		—		—
Other assets		17		—		—		17
Total assets acquired	$	349	$	1,935	$	—	$	2,284
Liabilities:
Payables and other liabilities	$	364	$	—	$	—	$	364
Total liabilities assumed		364		—		—		364
Excess of liabilities acquired over assets assumed	$	(15)
Aggregate fair value adjustments			$	1,935	$	—
Total identifiable net assets								1,920
Consideration transferred:
Purchase price								6,500
Total fair value of consideration transferred								6,500
Goodwill							$	4,580

Note 3. Earnings Per Share

Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding. Diluted earnings per common share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding and dilutive common share equivalents using the treasury stock method. Dilutive common share equivalents include common shares issuable upon exercise of outstanding stock options and restricted stock. The effect from the stock options and restricted stock on incremental shares from the assumed conversions for net income per share-basic and net income per share-diluted are

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

presented below. There were no antidilutive shares for the three and nine months ended September 30, 2023, and September 30, 2022, respectively.

The following is a summary of the basic and diluted earnings per share computation (dollars in thousands, except share and per share data):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Basic earnings per share computation:
Net income available to common shareholders	$	2,067	$	11,543	$	22,403	$	30,018
Average common shares outstanding – basic		16,807,548		16,749,255		16,801,840		16,734,298
Basic earnings per share	$	0.12	$	0.69	$	1.33	$	1.79
Diluted earnings per share computation:
Net income available to common shareholders	$	2,067	$	11,543	$	22,403	$	30,018
Average common shares outstanding – basic		16,807,548		16,749,255		16,801,840		16,734,298
Incremental shares from assumed conversions:
Stock options and restricted stock		111,087		122,767		105,485		133,672
Average common shares outstanding - diluted		16,918,635		16,872,022		16,907,325		16,867,970
Diluted earnings per common share	$	0.12	$	0.68	$	1.33	$	1.78

Note 4. Securities

Available-for-Sale Securities (“AFS”), which include any security for which the Company has no immediate plan to sell, but which may be sold in the future, are carried at fair value. Realized gains and losses, based on specifically identified amortized cost of the individual security, are included in other income. Unrealized gains and losses are recorded, net of related income tax effects, in accumulated other comprehensive income (loss). Premiums and discounts are amortized and accreted, respectively, to interest income using the constant effective yield method over the estimated life of the security. Prepayments are anticipated for mortgage-backed and Small Business Administration (“SBA”) securities. Premiums on callable securities are amortized to their earliest call date.

Held-to-Maturity Securities (“HTM”), which include any security for which the Company has both the positive intent and ability to hold until maturity, are carried at historical cost adjusted for amortization of premiums and accretion of discounts. Premiums and discounts are amortized and accreted, respectively, to interest income using the constant effective yield method over the security’s estimated life. Prepayments are anticipated for mortgage-backed and SBA securities. Premiums on callable securities are amortized to their earliest call date.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The amortized cost, gross unrealized gains and losses and fair value of securities AFS and HTM are summarized as follows (in thousands):

	September 30, 2023
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Available-for-sale:	Cost		Gains		Losses		Value
U.S. Treasury	$	84,550	$	—	$	(10,817)	$	73,733
U.S. Government-sponsored enterprises (GSEs)		59,683		1,430		(160)		60,953
Municipal securities		18,661		2		(1,158)		17,505
Other debt securities		34,784		67		(4,225)		30,626
Mortgage-backed securities (GSEs)		231,153		—		(28,839)		202,314
Total	$	428,831	$	1,499	$	(45,199)	$	385,131

	September 30, 2023
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Held-to-maturity:	Cost		Gains		Losses		Value
U.S. Treasury	$	150,126	$	—	$	(2,925)	$	147,201
U.S. Government-sponsored enterprises (GSEs)		49,642		—		(9,013)		40,629
Municipal securities		52,947		—		(8,872)		44,075
Mortgage-backed securities (GSEs)		29,598		—		(5,178)		24,420
Total	$	282,313	$	—	$	(25,988)	$	256,325

	December 31, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Available-for-sale:	Cost		Gains		Losses		Value
U.S. Treasury	$	241,506	$	—	$	(17,853)	$	223,653
U.S. Government-sponsored enterprises (GSEs)		1,593		—		(18)		1,575
Municipal securities		19,210		17		(616)		18,611
Other debt securities		32,959		—		(2,408)		30,551
Mortgage-backed securities (GSEs)		233,948		6		(24,451)		209,503
Total	$	529,216	$	23	$	(45,346)	$	483,893

	December 31, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Held-to-maturity:	Cost		Gains		Losses		Value
U.S. Treasury	$	150,295	$	—	$	(5,613)	$	144,682
U.S. Government-sponsored enterprises (GSEs)		50,539		—		(8,037)		42,502
Municipal securities		53,694		—		(7,550)		46,144
Mortgage-backed securities (GSEs)		31,421		—		(4,136)		27,285
Total	$	285,949	$	—	$	(25,336)	$	260,613

At September 30, 2023 and December 31, 2022, securities with a carrying value totaling approximately $347.9 million and $304.8 million, respectively, were pledged to secure public funds and securities sold under agreements to repurchase.

For the three and nine months ended September 30, 2023, the Company recorded no gross gains and for the three and nine months ended September 30, 2023, the Company recorded gross losses of $6.8 million and $6.8 million, related to the sale

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

of investment securities. There were no gross gains or gross losses related to the sale of investment securities for the three and nine months ended September 30, 2022.

The amortized cost and estimated fair value of securities at September 30, 2023 by contractual maturity for non-mortgage backed securities are shown below (in thousands). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2023
	Amortized		Fair
Available-for-sale:	Cost		Value
Due in one year or less	$	11,410	$	11,386
Due from one year to five years		56,074		49,911
Due from five years to ten years		119,939		112,003
Due after ten years		10,255		9,517
		197,678		182,817
Mortgage-backed securities		231,153		202,314
Total	$	428,831	$	385,131
Held-to-maturity:
Due in one year or less	$	150,126	$	147,201
Due from one year to five years		—		—
Due from five years to ten years		47,513		39,301
Due after ten years		55,076		45,403
		252,715		231,905
Mortgage-backed securities		29,598		24,420
Total	$	282,313	$	256,325

The following tables present the gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities AFS and HTM have been in a continuous unrealized loss position (in thousands):

	September 30, 2023
	Less than 12 Months					12 Months or Greater					Total
			Gross		Number			Gross		Number			Gross		Number
	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized		of
Available-for-sale:	Value		Losses		Securities	Value		Losses		Securities	Value		Losses		Securities
U.S. Treasury	$	—	$	—	—	$	73,733	$	(10,817)	9	$	73,733	$	(10,817)	9
U.S. Government-sponsored enterprises (GSEs)		20,181		(143)	4		1,488		(17)	3		21,669		(160)	7
Municipal securities		7,729		(283)	10		9,475		(875)	17		17,204		(1,158)	27
Other debt securities		2,654		(270)	2		26,980		(3,955)	25		29,634		(4,225)	27
Mortgage-backed securities (GSEs)		29,670		(547)	15		172,645		(28,292)	89		202,315		(28,839)	104
Total	$	60,234	$	(1,243)	31	$	284,321	$	(43,956)	143	$	344,555	$	(45,199)	174
	September 30, 2023
	Less than 12 Months					12 Months or Greater					Total
			Gross		Number			Gross		Number			Gross		Number
	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized		of
Held-to-maturity:	Value		Losses		Securities	Value		Losses		Securities	Value		Losses		Securities
U.S. Treasury	$	—	$	—	—	$	147,201	$	(2,925)	4	$	147,201	$	(2,925)	4
U.S. Government-sponsored enterprises (GSEs)		—		—	—		40,629		(9,013)	13		40,629		(9,013)	13
Municipal securities		—		—	—		44,076		(8,872)	35		44,076		(8,872)	35
Mortgage-backed securities (GSEs)		—		—	—		24,419		(5,178)	5		24,419		(5,178)	5
Total	$	—	$	—	—	$	256,325	$	(25,988)	57	$	256,325	$	(25,988)	57

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

	December 31, 2022
	Less than 12 Months					12 Months or Greater					Total
			Gross		Number			Gross		Number			Gross		Number
	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized		of
Available-for-sale:	Value		Losses		Securities	Value		Losses		Securities	Value		Losses		Securities
U.S. Treasury	$	134,414	$	(7,610)	9	$	89,239	$	(10,243)	11	$	223,653	$	(17,853)	20
U.S. Government-sponsored enterprises (GSEs)		1,266		(14)	1		309		(4)	2		1,575		(18)	3
Municipal securities		13,146		(616)	20		—		—	—		13,146		(616)	20
Other debt securities		25,044		(1,866)	20		5,506		(542)	6		30,550		(2,408)	26
Mortgage-backed securities (GSEs)		111,598		(8,968)	86		96,285		(15,483)	28		207,883		(24,451)	114
Total	$	285,468	$	(19,074)	136	$	191,339	$	(26,272)	47	$	476,807	$	(45,346)	183
	December 31, 2022
	Less than 12 Months					12 Months or Greater					Total
			Gross		Number			Gross		Number			Gross		Number
	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized		of
Held-to-maturity:	Value		Losses		Securities	Value		Losses		Securities	Value		Losses		Securities
U.S. Treasury	$	144,683	$	(5,613)	4	$	—	$	—	—	$	144,683	$	(5,613)	4
U.S. Government-sponsored enterprises (GSEs)	$	13,048	$	(2,503)	3	$	29,451	$	(5,534)	10	$	42,499	$	(8,037)	13
Municipal securities		40,770		(6,387)	28		5,375		(1,163)	7		46,145		(7,550)	35
Mortgage-backed securities (GSEs)		—		—	—		27,285		(4,136)	5		27,285		(4,136)	5
Total	$	198,501	$	(14,503)	35	$	62,111	$	(10,833)	22	$	260,612	$	(25,336)	57

For any securities classified as available-for-sale that are in an unrealized loss position at the balance sheet date, the Company assesses whether it intends to sell the security, or more likely than not will be required to sell the security before recovery of its amortized cost basis which would require a write-down to fair value through net income. Because the Company currently does not intend to sell those available-for-sale securities that have an unrealized loss at September 30, 2023, and it is not likely that they we will be required to sell the securities before recovery of their amortized cost bases, which may be maturity, the Company has determined that no write-down is necessary. In addition, the Company evaluates whether any portion of the decline in fair value of available-for-sale securities is the result of credit deterioration, which would require the recognition of an allowance for credit losses.  The unrealized losses associated with available-for-sale securities at September 30, 2023, are driven by changes in interest rates and are not due to the credit quality of the securities, and accordingly, no allowance for credit losses is considered necessary related to available-for-sale securities at September 30, 2023.  Management evaluates the financial performance of the issuers on a quarterly basis to determine if it is probable that the issuers can make all contractual principal and interest payments.

The unrealized losses in the Company’s held-to-maturity portfolio were caused by changes in the interest rate environment.  The Company has a zero-loss expectation for its U.S. treasury securities in addition to U.S. Government-sponsored enterprises (GSEs) and mortgage-backed securities (GSEs), and accordingly, no allowance for credit losses is estimated for these securities.  The held-to-maturity state and municipal securities are general obligation bonds which have a very low historical default rate due to issuers generally having unlimited taxing authority to service the debt.  All debt securities in an unrealized loss position as of September 30, 2023, continue to perform as scheduled and we do not believe there is a credit loss or a provision for credit losses is necessary.

The Company utilizes bond credit ratings assigned by third party ratings agencies to monitor the credit quality of debt securities held-to-maturity. At September 30, 2023, all debt securities classified as held-to-maturity were rated AA or higher by the ratings agencies. Updated credit ratings are obtained as they become available from the ratings agencies.

Allowance for Credit Losses

The Company adopted ASU 2016-13 on January 1, 2023, and based on the analysis of the underlying risk characteristics of its AFS and HTM portfolios, including credit ratings and other qualitative factors, there was no provision for credit

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

losses related to AFS or HTM securities recorded during the three and nine months ended September 30, 2023, because the ACL was deemed immaterial.  

Other Investments:

Our other investments consist of restricted non-marketable equity securities that have no readily determinable market value. Accordingly, when evaluating these securities for impairment, management considers the ultimate recoverability of the par value rather than recognizing temporary declines in value. As of September 30, 2023, the Company determined that there was no impairment on its other investment securities.

The following is the amortized cost and carrying value of other investments (in thousands):

	September 30,		December 31,
	2023		2022
Federal Reserve Bank stock	$	9,669	$	9,783
Federal Home Loan Bank stock		3,786		5,397
First National Bankers Bank stock		350		350
Total	$	13,805	$	15,530

Note 5. Loans and Leases and Allowance for Credit Losses

Portfolio Segmentation:

Major categories of loans and leases are summarized as follows (in thousands):

	September 30,		December 31,
	2023		2022
Commercial real estate	$	1,667,176	$	1,627,761
Consumer real estate		638,518		587,977
Construction and land development		373,068		402,501
Commercial and industrial		617,115		551,867
Leases		68,538		67,427
Consumer and other		14,584		16,094
Total loans and leases		3,378,999		3,253,627
Less: Allowance for credit losses		(33,687)		(23,334)
Loans and leases, net	$	3,345,312	$	3,230,293

The loan and lease portfolio is disaggregated into segments. There are six loan and lease portfolio segments that include commercial real estate, consumer real estate, construction and land development, commercial and industrial, leases, and consumer and other.

The following describe risk characteristics relevant to each of the portfolio segments:

Commercial Real Estate: Commercial real estate loans include owner-occupied commercial real estate loans and loans secured by income-producing properties. Owner-occupied commercial real estate loans to operating businesses are long-term financing of land and buildings. These loans are repaid by cash flow generated from the business operation. Real estate loans for income-producing properties such as apartment buildings, office and industrial buildings, and retail shopping centers are repaid from rent income derived from the properties. Loans within this portfolio segment are particularly sensitive to the valuation of real estate.

Consumer Real Estate: Consumer real estate loans include real estate loans secured by first liens, second liens, or open end real estate loans, such as home equity lines. These are repaid by various means such as a borrower’s income, sale of

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SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

the property, or rental income derived from the property. Loans within this portfolio segment are particularly sensitive to the valuation of real estate.

Construction and Land Development: Loans for real estate construction and development are repaid through cash flow related to the operations, sale or refinance of the underlying property. This portfolio segment includes extensions of credit to real estate developers or investors where repayment is dependent on the sale of the real estate or income generated from the real estate collateral. Loans within this portfolio segment are particularly sensitive to the valuation of real estate.

Commercial and Industrial: The commercial and industrial loan portfolio segment includes commercial and financial loans. These loans include those loans to commercial customers for use in normal business operations to finance working capital needs, equipment purchases, or expansion projects. Loans are repaid by business cash flows. Collection risk in this portfolio is driven by the creditworthiness of the underlying borrower, particularly cash flows from the customers’ business operations.

Leases: The lease portfolio segment includes leases to small and mid-size companies for equipment financing leases. These leases are secured by a secured interest in the equipment being leased.

Consumer and Other: The consumer loan portfolio segment includes direct consumer installment loans, overdrafts and other revolving credit loans, and educational loans. Loans in this portfolio are sensitive to unemployment and other key consumer economic measures.

The Bank occasionally enters into loan participation agreements with other banks in the ordinary course of business to diversify credit risk. For certain sold participation loans, the Bank has retained effective control of the loans, typically by restricting the participating institutions from pledging or selling their share of the loan without permission from the Bank. GAAP requires the participated portion of these loans to be recorded as secured borrowings. The participated portions of these loans are included in the Commercial Real Estate totals above with a corresponding liability reflected in other borrowings. At September 30, 2023 and December 31, 2022, the balance of such loans totaled $0 and $24.6 million, respectively.

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SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The following tables detail the changes in the allowance for credit losses by loan and lease classification (in thousands):

	Three Months Ended September 30, 2023
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and				Consumer
	Real Estate		Estate		Development		Industrial		Leases		and Other		Total
Beginning balance	$	14,314	$	6,748	$	5,446	$	5,504	$	586	$	149	$	32,747
Charged-off loans and leases		—		(9)		—		(179)		(143)		(86)		(417)
Recoveries of charge-offs		2		4		—		48		—		19		73
Provision charged to expense (1)		691		413		(369)		307		201		41		1,284
Ending balance	$	15,007	$	7,156	$	5,077	$	5,680	$	644	$	123	$	33,687

	Three Months Ended September 30, 2022
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and				Consumer
	Real Estate		Estate		Development		Industrial		Leases		and Other		Total
Beginning balance	$	10,600	$	3,835	$	2,904	$	3,659	$	807	$	133	$	21,938
Charged-off loans and leases		—		—		—		(51)		—		(180)		(231)
Recoveries of charge-offs		—		7		—		19		29		33		88
Provision charged to expense		(21)		166		272		208		198		151		974
Ending balance	$	10,579	$	4,008	$	3,176	$	3,835	$	1,034	$	137	$	22,769

	Nine Months Ended September 30, 2023
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and				Consumer
	Real Estate		Estate		Development		Industrial		Leases		and Other		Total
Beginning balance	$	10,821	$	4,028	$	3,059	$	3,997	$	1,293	$	136	$	23,334
Impact of adopting ASU 2016-13		879		1,952		2,145		1,451		(683)		13		5,757
PCD gross up		2,652		166		25		27		28		—		2,898
Charged-off loans and leases		—		(9)		—		(387)		(211)		(332)		(939)
Recoveries of charge-offs		5		13		25		153		—		187		383
Provision charged to expense (1)		650		1,006		(177)		439		217		119		2,254
Ending balance	$	15,007	$	7,156	$	5,077	$	5,680	$	644	$	123	$	33,687

	Nine Months Ended September 30, 2022
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and				Consumer
	Real Estate		Estate		Development		Industrial		Leases		and Other		Total
Beginning balance	$	9,781	$	3,454	$	1,882	$	3,781	$	330	$	124	$	19,352
Charged-off loans and leases		—		(33)		—		(240)		(108)		(482)		(863)
Recoveries of charge-offs		4		561		—		162		192		131		1,050
Provision charged to expense		794		26		1,294		132		620		364		3,230
Ending balance	$	10,579	$	4,008	$	3,176	$	3,835	$	1,034	$	137	$	22,769

(1) In the provision charged to expense there was a release of $489 thousand and $796 thousand for unfunded commitments through the provision for credit losses not reflected in the three and nine months ended September 30, 2023.

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SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The following tables detail the allowance for credit losses and recorded investment in loans by loan classification and by impairment evaluation method as of December 31, 2022, as determined in accordance with ASC 310 prior to the adoption of ASU 2016-13 (in thousands):

					Construction		Commercial				Consumer
	Commercial		Consumer		and Land		and				and
	Real Estate		Real Estate		Development		Industrial		Leases		Other		Total
December 31, 2022:
Performing loans and leases	$	10,815	$	3,913	$	2,674	$	3,997	$	1,293	$	136	$	22,828
Impaired loans and leases		—		—		385		—		—		—		385
		10,815		3,913		3,059		3,997		1,293		136		23,213
PCI loans and leases		6		115		—		—		—		—		121
Total allowance for loans and leases	$	10,821	$	4,028	$	3,059	$	3,997	$	1,293	$	136	$	23,334

					Construction		Commercial
	Commercial		Consumer		and Land		and				Consumer
	Real Estate		Real Estate		Development		Industrial		Leases		and Other		Total
December 31, 2022:
Performing loans and leases	$	1,611,815	$	578,342	$	400,114	$	549,974	$	66,459	$	16,091	$	3,222,795
Impaired loans and leases		—		1,283		858		—		—		—		2,141
		1,611,815		579,625		400,972		549,974		66,459		16,091		3,224,936
PCI loans and leases		15,946		8,352		1,529		1,893		968		3		28,691
Total loans and leases	$	1,627,761	$	587,977	$	402,501	$	551,867	$	67,427	$	16,094	$	3,253,627

We maintain the allowance for credit losses at a level that we deem appropriate to adequately cover the expected credit loss in the loan and lease portfolio. Our provision for loan and lease losses for the three and nine months ended September 30, 2023, is $1.3 million and $2.3 million, respectively, and $974 thousand and $3.2 million, during the three and nine months ended September 30, 2022, respectively. As of September 30, 2023, and December 31, 2022, our allowance for credit losses was $33.7 million and $23.3 million, respectively, which we deemed to be adequate at each of the respective dates. Our allowance for credit losses as a percentage of total loans and leases was 1.00% at September 30, 2023, and 0.72% at December 31, 2022.  

A description of the general characteristics of the risk grades used by the Company is as follows:

Pass: Loans and leases in this risk category involve borrowers of acceptable-to-strong credit quality and risk who have the apparent ability to satisfy their loan and lease obligations. Loans and leases in this risk grade would possess sufficient mitigating factors, such as adequate collateral or strong guarantors possessing the capacity to repay the debt if required, for any weakness that may exist.

Watch: Loans and leases in this risk category involve borrowers that exhibit characteristics, or are operating under conditions that, if not successfully mitigated as planned, have a reasonable risk of resulting in a downgrade within the next six to twelve months. Loans and leases may remain in this risk category for six months and then are either upgraded or downgraded upon subsequent evaluation.

Special Mention: Loans and leases in this risk grade are the equivalent of the regulatory definition of “Other Assets Especially Mentioned” classification. Loans and leases in this category possess some credit deficiency or potential weakness, which requires a high level of management attention. Potential weaknesses include declining trends in operating earnings and cash flows and /or reliance on the secondary source of repayment. If left uncorrected, these potential weaknesses may result in noticeable deterioration of the repayment prospects for the asset or in the Company’s credit position.

Substandard: Loans and leases in this risk grade are inadequately protected by the borrower’s current financial condition and payment capability or of the collateral pledged, if any. Loans and leases so classified have a well-defined weakness or

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SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

weaknesses that jeopardize the orderly repayment of debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans and leases in this risk grade have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or orderly repayment in full, on the basis of current existing facts, conditions and values, highly questionable and improbable. Possibility of loss is extremely high, but because of certain important and reasonably specific factors that may work to the advantage and strengthening of the exposure, its classification as an estimated loss is deferred until its more exact status may be determined.

Uncollectible: Loans and leases in this risk grade are considered to be non-collectible and of such little value that their continuance as bankable assets is not warranted. This does not mean the loan or lease has absolutely no recovery value, but rather it is neither practical nor desirable to defer writing off the loan or lease, even though partial recovery may be obtained in the future. Charge-offs against the allowance for credit losses are taken in the period in which the loan or lease becomes uncollectible. Consequently, the Company typically does not maintain a recorded investment in loans or leases within this category.

The Company evaluates the loan risk grading system definitions and allowance for credit loss methodology on an ongoing basis.  There were no changes to these subsequent to adoption ASU 2016-13 on January 1, 2023.

22

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The following tables outline the amount of each loan and lease classification and the amount categorized into each risk rating based on year of origination (in thousands):

	September 30, 2023
	Loans Amortized Cost Basis by Origination Year
															Revolving
															Loans
													Revolving		Converted
	2023		2022		2021		2020		2019		Prior		Loans		to Term		Total
Commercial real estate
Pass	$	168,217	$	553,613	$	436,468	$	187,188	$	141,248	$	118,422	$	14,878	$	8,163	$	1,628,197
Watch		20,665		1,269		2,418		2,652		3,848		267		-		-		31,119
Special mention		-		3,234		-		-		-		-		-		-		3,234
Substandard		968		-		3,145		51		-		462		-		-		4,626
Doubtful		-		-		-		-		-		-		-		-		-
Total commercial real estate		189,850		558,116		442,031		189,891		145,096		119,151		14,878		8,163		1,667,176
YTD gross charge-offs		-		-		-		-		-		-		-		-		-
Consumer real estate
Pass		94,979		179,838		100,852		55,222		34,531		53,597		109,227		3,032		631,278
Watch		171		71		319		289		-		108		1,714		-		2,672
Special mention		-		-		-		-		-		54		-		-		54
Substandard		198		905		-		-		164		2,908		339		-		4,514
Doubtful		-		-		-		-		-		-		-		-		-
Total consumer real estate		95,348		180,814		101,171		55,511		34,695		56,667		111,280		3,032		638,518
YTD gross charge-offs		-		-		-		-		-		(9)		-		-		(9)
Construction and land development
Pass		95,692		166,355		50,591		4,188		5,162		7,265		35,908		1,797		366,958
Watch		4,194		399		451		-		-		2		-		-		5,046
Special mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		36		620		-		408		-		-		1,064
Doubtful		-		-		-		-		-		-		-		-		-
Total construction and land development		99,886		166,754		51,078		4,808		5,162		7,675		35,908		1,797		373,068
YTD gross charge-offs		-		-		-		-		-		-		-		-		-
Commercial and industrial
Pass		137,793		174,721		67,809		24,379		11,313		26,674		164,939		8,006		615,634
Watch		-		631		214		129		75		75		138		-		1,262
Special mention		-		-		-		-		-		-		-		13		13
Substandard		206		-		-		-		-		-		-		-		206
Doubtful		-		-		-		-		-		-		-		-		-
Total commercial and industrial		137,999		175,352		68,023		24,508		11,388		26,749		165,077		8,019		617,115
YTD gross charge-offs		-		(154)		(50)		(183)		-		-		-		-		(387)
Leases
Pass		23,304		29,453		10,074		4,459		933		315		-		-		68,538
Watch		-		-		-		-		-		-		-		-		-
Special mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total leases		23,304		29,453		10,074		4,459		933		315		-		-		68,538
YTD gross charge-offs		(27)		(163)		(9)		-		(12)		-		-		-		(211)
Consumer and other
Pass		5,539		2,314		1,060		671		148		229		4,538		73		14,572
Watch		-		-		-		-		12		-		-		-		12
Special mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total consumer and other		5,539		2,314		1,060		671		160		229		4,538		73		14,584
YTD gross charge-offs		(22)		(115)		(62)		(48)		(26)		(59)		-		-		(332)
Total loans
Pass		525,524		1,106,294		666,854		276,107		193,335		206,502		329,490		21,071		3,325,177
Watch		25,030		2,370		3,402		3,070		3,935		452		1,852		-		40,111
Special mention		-		3,234		-		-		-		54		-		13		3,301
Substandard		1,372		905		3,181		671		164		3,778		339		-		10,410
Doubtful		-		-		-		-		-		-		-		-		-
Total loans	$	551,926	$	1,112,803	$	673,437	$	279,848	$	197,434	$	210,786	$	331,681	$	21,084	$	3,378,999
Total YTD gross charge-offs	$	(49)	$	(432)	$	(121)	$	(231)	$	(38)	$	(68)	$	-	$	-	$	(939)

23

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The following tables outline the amount of each loan and lease classification and the amount categorized into each risk rating as of December 31, 2022, prior to the adoption of ASU 2016-13 (in thousands):

	December 31, 2022
					Construction		Commercial
	Commercial		Consumer		and Land		and				Consumer
Non PCI Loans and Leases:	Real Estate		Real Estate		Development		Industrial		Leases		and Other		Total
Pass	$	1,579,387	$	576,428	$	399,846	$	545,210	$	66,459	$	16,057	$	3,183,387
Watch		29,810		1,496		224		4,523		—		19		36,072
Special mention		2,539		35		—		61		—		—		2,635
Substandard		79		1,666		902		180		—		15		2,842
Doubtful		—		—		—		—		—		—		—
Total		1,611,815		579,625		400,972		549,974		66,459		16,091		3,224,936
PCI Loans and Leases:
Pass		11,924		6,927		1,054		1,893		968		3		22,769
Watch		1,439		188		46		—		—		—		1,673
Special mention		11		54		—		—		—		—		65
Substandard		2,572		1,183		429		—		—		—		4,184
Doubtful		—		—		—		—		—		—		—
Total		15,946		8,352		1,529		1,893		968		3		28,691
Total loans and leases	$	1,627,761	$	587,977	$	402,501	$	551,867	$	67,427	$	16,094	$	3,253,627

Past Due Loans and Leases:

A loan or lease is considered past due if any required principal and interest payments have not been received as of the date such payments were required to be made under the terms of the loan or lease agreement. Generally, management places a loan or lease on nonaccrual when there is a clear indicator that the borrower’s cash flow may not be sufficient to meet payments as they become due, which is generally when a loan or lease is 90 days past due.

The following tables present an aging analysis of our loan and lease portfolio (in thousands):

	September 30, 2023
					90 Days
	30-59 Days		60-89 Days		or More		Total		Loans Not		Total
	Past Due		Past Due		Past Due		Past Due		Past Due		Loans
Commercial real estate	$	862	$	—	$	—	$	862	$	1,666,314	$	1,667,176
Consumer real estate		706		401		34		1,141		637,377		638,518
Construction and land development		110		408		—		518		372,550		373,068
Commercial and industrial		1,384		945		98		2,427		614,688		617,115
Leases		118		—		—		118		68,420		68,538
Consumer and other		95		—		97		192		14,392		14,584
Total	$	3,275	$	1,754	$	229	$	5,258	$	3,373,741	$	3,378,999

	December 31, 2022
					90 Days
	30-59 Days		60-89 Days		or More		Total		Loans Not		Total
	Past Due		Past Due		Past Due		Past Due		Past Due		Loans
Commercial real estate	$	54	$	—	$	—	$	54	$	1,627,707		1,627,761
Consumer real estate		594		—		—		594		587,383		587,977
Construction and land development		—		—		—		—		402,501		402,501
Commercial and industrial		185		18		—		203		551,664		551,867
Leases		1,024		84		143		1,251		66,176		67,427
Consumer and other		103		4		—		107		15,987		16,094
Total	$	1,960	$	106	$	143	$	2,209	$	3,251,418	$	3,253,627

24

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The table below presents the amortized cost basis of loans on nonaccrual status and loans past due 90 or more days and still accruing interest at September 30, 2023 and December 31, 2022. Also presented is the balance of loans on nonaccrual status at September 30, 2023 for which there was no related allowance for credit losses recorded (in thousands):

	September 30, 2023						December 31, 2022
	Total		Nonaccrual		Loans Past Due		Total		Loans Past Due
	Nonaccrual		With No Allowance		Over 90 Days		Nonaccrual		Over 90 Days
	Loans		for Credit Losses		Still Accruing		Loans		Still Accruing
Commercial real estate	$	741	$	—	$	—	$	—	$	—
Consumer real estate		2,064		1,154		34		1,665		—
Construction and land development		620		—		—		920		—
Commercial and industrial		314		—		98		180		—
Leases		195		—		—		28		143
Consumer and other		—		—		97		15		—
Total	$	3,934	$	1,154	$	229	$	2,808	$	143

The following table presents the amortized cost basis of collateral dependent loans, which are individually evaluated to determine expected credit losses (in thousands):

	September 30, 2023
	Real Estate		Other		Total
Commercial real estate	$	3,836	$	—	$	3,836
Consumer real estate		2,434		—		2,434
Construction and land development		1,411		—		1,411
Commercial and industrial		—		—		—
Leases		—		—		—
Consumer and other		—		—		—
Total	$	7,681	$	—	$	7,681

25

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Impaired Loans and Leases:

The following table presents impaired loans at December 31, 2022, as determined under ASC 310 prior to the adoption of ASU 2016-13. A loan or lease held for investment is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due (both principal and interest) according to the terms of the loan or lease agreement.  Presented are the recorded investment, unpaid principal balance and related allowance of impaired loans at December 31, 2022, by loan classification (in thousands):

	December 31, 2022
			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
Impaired loans and leases without a valuation allowance:
Commercial real estate	$	—	$	—	$	—
Consumer real estate		1,283		1,282		—
Construction and land development		—		—		—
Commercial and industrial		—		—		—
Leases		—		—		—
Consumer and other		—		—		—
		1,283		1,282		—
Impaired loans and leases with a valuation allowance:
Commercial real estate		—		—		—
Consumer real estate		—		—		—
Construction and land development		858		858		385
Commercial and industrial		—		—		—
Leases		—		—		—
Consumer and other		—		—		—
		858		858		385
PCI loans and leases:
Commercial real estate		500		580		6
Consumer real estate		684		646		115
Construction and land development		—		—		—
Commercial and industrial		—		—		—
Leases		—		—		—
Consumer and other		—		—		—
		1,184		1,226		121
Total impaired loans and leases	$	3,325	$	3,366	$	506

26

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The following table details the average recorded investment and the amount of interest income recognized on a cash basis for the three and nine months ended September 30, 2022, respectively, of impaired loans by loan classification as determined under ASC 310 prior to the adoption of ASU 2016-13 (in thousands):

	Three Months Ended September 30, 2022
	Average		Interest
	Recorded		Income
	Investment		Recognized
Impaired loans and leases without a valuation allowance:
Commercial real estate	$	304	$	—
Consumer real estate		1,742		72
Construction and land development		—		—
Commercial and industrial		—		—
Leases		—		—
Consumer and other		—		—
		2,046		72
Impaired loans and leases with a valuation allowance:
Commercial real estate		—		—
Consumer real estate		—		—
Construction and land development		858		—
Commercial and industrial		—		—
Leases		—		—
Consumer and other		—		—
		858		—
PCI loans and leases:
Commercial real estate		525		11
Consumer real estate		880		12
Construction and land development		—		—
Commercial and industrial		—		—
Leases		—		—
Consumer and other		—		—
		1,405		23
Total impaired loans and leases	$	4,309	$	95

	Nine Months Ended September 30, 2022
	Average		Interest
	Recorded		Income
	Investment		Recognized
Impaired loans and leases without a valuation allowance:
Commercial real estate	$	152	$	—
Consumer real estate		1,839		92
Construction and land development		—		—
Commercial and industrial		—		—
Leases		—		—
Consumer and other		—		—
		1,991		92
Impaired loans and leases with a valuation allowance:
Commercial real estate		429		—
Consumer real estate		87		—
Construction and land development		429		—
Commercial and industrial		32		—
Leases		—		—
Consumer and other		—		—
		977		—
PCI loans and leases:
Commercial real estate		765		46
Consumer real estate		879		40
Construction and land development		—		—
Commercial and industrial		—		—
Leases		—		—
Consumer and other		2		—
		1,646		86
Total impaired loans and leases	$	4,614	$	178

27

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Loan Modifications to Borrowers Experiencing Financial Difficulty:

The Company adopted ASU 2022-02, “Financial Instruments – Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures” (“ASU 2022-02”) effective January 1, 2023. The amendments in ASU 2022-02 eliminated the recognition and measure of troubled debt restructurings and enhanced disclosures for loan modifications to borrowers experiencing financial difficulty.

The table below shows the amortized cost of loans and leases made to borrowers experiencing financial difficulty that were modified during the three and nine months ended September 30, 2023 (dollars in thousands):

					Payment Delay				Total Class
	Payment		Term		and Term				of Financing
Three months ended September 30, 2023	Delay		Extension		Extension		Total		Receivable
Commercial real estate	$	—	$	528	$	—	$	528	0.03	%
Consumer real estate		—		514		—		514	0.08
Construction and land development		—		748		—		748	0.20
Commercial and industrial		—		—		—		—	-
Leases		—		—		—		—	-
Consumer and other		—		—		—		—	-
Total	$	—	$	1,790	$	—	$	1,790	0.05	%
Nine months ended September 30, 2023
Commercial real estate	$	403	$	566	$	—	$	969	0.06	%
Consumer real estate		—		514		—		514	0.08
Construction and land development		—		748		—		748	0.20
Commercial and industrial		63		—		153		216	0.04
Leases		—		—		—		—	-
Consumer and other		—		—		—		—	-
Total	$	466	$	1,828	$	153	$	2,447	0.07	%

The following table summarizes the financial impacts of loan modifications made to borrowers experiencing financial difficulty during the three and nine months ended September 30, 2023 (dollars in thousands):

	Weighted-Average
	Term		Weighted-Average
	Extension		Total Payment
Three months ended September 30, 2023	(in months)		Delay
Commercial real estate		12	$	—
Consumer real estate		20		—
Construction and land development		9		—
Commercial and industrial		—		—
Leases		—		—
Consumer and other		—		—
Nine months ended September 30, 2023
Commercial real estate		23	$	23
Consumer real estate		15		—
Construction and land development		9		—
Commercial and industrial		30		7
Leases		—		—
Consumer and other		—		—

No loan modifications made to borrowers experiencing financial difficulty, defaulted during the three and nine months ended September 30, 2023.

28

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The table below shows an age analysis of loans and leases made to borrowers experiencing financial difficulty that were modified on or after January 1, 2023, that date the Company adopted ASU 2022-02 (in thousands):

	September 30, 2023
					90 Days
			30-89 Days		or More
	Current		Past Due		Past Due		Nonaccrual		Total
Commercial real estate	$	—	$	—	$	—	$	968	$	968
Consumer real estate		139		—		—		376		515
Construction and land development		288		—		—		460		748
Commercial and industrial		—		—		—		216		216
Leases		—		—		—		—		—
Consumer and other		—		—		—		—		—
Total	$	427	$	—	$	—	$	2,020	$	2,447

As of December 31, 2022, prior to the adoption ASU 2022-02, management had approximately $101 thousand that meet the criteria of trouble debt restructured (“TDR”), none of which were on nonaccrual.

There were no loans modified as a TDR during the nine months ended September 30, 2022.

Foreclosure Proceedings and Balances:

As of September 30, 2023, there were two residential real estate properties totaling $304 thousand secured by real estate included in other real estate owned and there were no residential real estate loans in the process of foreclosure.

Note 6. Goodwill and Intangible Assets

In accordance with FASB ASC 350, Goodwill and Other, regarding testing goodwill for impairment provides an entity the option to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The Company performs its annual goodwill impairment test as of December 31 of each year.  Considering the recent economic conditions, the Company performed a Step 1 goodwill impairment test (which compares the fair value of a reporting unit with its carrying amount, including goodwill) at June 30, 2023, and the results indicated that there was no impairment. Management will continue to evaluate the economic conditions at future reporting periods for applicable changes.

The Company’s other intangible assets consist of core deposit, customer relationships and tradename.  They are initially recognized based on a valuation performed as of the consummation date. The core deposit intangible is amortized over the average remaining life of the acquired customer deposits, the customer relationships are amortized over a weighted average of 10.4 years and the tradename is amortized over five years.

29

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The carrying amount of goodwill and other intangible assets as of the dates indicated is summarized below (in thousands):

	September 30,		December 31,
	2023		2022
Goodwill:
Balance, beginning of period	$	96,145	$	91,565
Acquisition of Sunbelt		—		4,580
Balance, end of the period	$	96,145	$	96,145

	Core Deposit		Customer Relationships		Tradename
Amortized other intangible assets:	Intangibles		Intangibles		Intangibles		Total
September 30, 2023:
Beginning balance January 1, 2023, gross	$	17,470	$	5,670	$	63	$	23,203
Less: accumulated amortization		(9,329)		(2,164)		(63)		(11,556)
Balance, September 30, 2023, other intangible assets, net	$	8,141	$	3,506	$	-	$	11,647
December 31, 2022:
Beginning balance January 1, 2022, gross	$	17,470	$	3,722	$	63	$	21,255
Acquisition of Sunbelt		-		1,948		-		1,948
Balance, December 31, 2022, other intangible assets, gross		17,470		5,670		63		23,203
Less: accumulated amortization		(8,021)		(1,519)		(36)		(9,576)
Balance, December 31, 2022, other intangible assets, net	$	9,449	$	4,151	$	27	$	13,627

The aggregate amortization expense for other intangible assets for the three and nine months ended September 30, 2023, was $647 thousand and $2.0 million, respectively, and for the three and nine months ended September 30, 2022, was $650 thousand and $1.9 million, respectively.

As of September 30, 2023, the estimated aggregate amortization expense for future periods for intangibles is as follows (in thousands):

Remainder of 2023	$	643
2024		2,425
2025		2,256
2026		2,086
2027		1,904
Thereafter		2,333
Total	$	11,647

Note 7. Borrowings, Line of Credit and Subordinated Debt

Borrowings:

At September 30, 2023, total borrowings were $14.1 million compared to $41.9 million at December 31, 2022.  Borrowings consist of the following (in thousands):

	September 30,		December 31,
	2023		2022
Securities sold under customer repurchase agreements	$	6,117	$	4,775
Loan participation agreements(1)		—		24,585
Other borrowings		8,000		12,500
Total	$	14,117	$	41,860

(1) During the first quarter of 2023, the loan participation agreements were amended to permit sales accounting treatment and removed from other borrowings.

30

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Securities Sold Under Agreements to Repurchase:

Securities sold under repurchase agreements, which are secured borrowings, generally mature within one to four days from the transaction date. Securities sold under repurchase agreements are reflected at the amount of cash received in connection with the transaction. The Company may be required to provide additional collateral based on the fair value of the underlying securities. The Company monitors the fair value of the underlying securities on a daily basis.

The Company had securities sold under agreements to repurchase with commercial checking customers which were secured by government agency securities.  The carrying value of investment securities pledged as collateral under repurchase agreements was $7.6 million and $9.2 million at September 30, 2023 and December 31, 2022, respectively. The average balance of repurchase agreements during the nine-month period ended September 30, 2023, and 2022 was $5.0 million and $5.2 million, respectively.  The maximum month-end outstanding balance for the nine-month period ended September 30, 2023, and 2022 was $6.1 million and $5.9 million, respectively.

Other Borrowings:

The Company has a revolving line of credit for an aggregate amount of $35 million.  The maturity of the line of credit is February 1, 2025. At September 30, 2023, $8.0 million was outstanding under the line of credit, and $27.0 million of the line of credit remained available to the Company.

Subordinated Debt:

On September 28, 2018, the Company issued $40 million of 5.625% fixed-to-floating rate subordinated notes (the "Notes"), which was outstanding as of September 30, 2023 and December 31, 2022. Unamortized debt issuance cost was $422 thousand and $485 thousand at September 30, 2023 and December 31, 2022, respectively.

The Notes initially bears interest at a rate of 5.625% per annum from and including September 28, 2018, to but excluding October 2, 2023, with interest during this period payable semi-annually in arrears. From and including October 2, 2023, to but excluding the maturity date or early redemption date, the interest rate will, with the sunset of LIBOR, reset quarterly to an annual floating rate equal to three-month CME Term SOFR, plus 281.161 basis points, with interest during this period payable quarterly in arrears.  The Notes are redeemable by the Company, in whole or in part, on or after October 2, 2023, and at any time, in whole but not in part, upon the occurrence of certain events. The Notes have been structured to qualify initially as Tier 2 capital for the Company for regulatory capital purposes.

The Notes’ unamortized debt issuance costs totaled $422 thousand at September 30, 2023, and will be amortized through the Notes’ maturity date. Amortization expense totaled $21 thousand and $63 thousand for the three and nine months ended September 30, 2023, and 2022, respectively.

On September 1, 2021, the Company acquired $2.5 million of subordinated notes (“sub-debt”) from the acquisition of SCB. The sub-debt bears interest at a rate of 6.75% per annum until August 14, 2024, with the interest during this period payable semi-annually in arrears. From and including August 14, 2024, to but excluding the maturity date or early redemption date, the interest rate will reset quarterly to an annual floating rate equal to three-month LIBOR, or an alternative rate determined in accordance with the terms of the sub-debt if three-month LIBOR cannot be determined, plus 530.25 basis points, with interest during this period payable quarterly in arrears.  In relation to the three-month LIBOR rate being no longer available in the future, the Company anticipates using the three-month term SOFR rate in future repricing.  The sub-debt is redeemable by the Company, in whole or in part, on or after August 14, 2024, and at any time, in whole but not in part, upon the occurrence of certain events. The sub-debt has been structured to qualify initially as Tier 2 capital for the Company for regulatory capital purposes.

31

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 8. Employee Benefit Plans

401(k) Plan:

The Company provides a deferred salary reduction plan (“Plan”) under Section 401(k) of the Internal Revenue Code covering substantially all employees. After 90 days of service, the Company matches 100% of employee contributions up to 3% of compensation and 50% of employee contributions on the next 2% of compensation. The Company’s contribution to the Plan for the three- and nine-month periods ending September 30, 2023, was $475 thousand and $1.4 million, respectively.  The Company’s contribution to the Plan for the three and nine months ended September 30, 2022, was $419 thousand and $1.3 million, respectively.    

Equity Incentive Plans:

The Compensation Committee of the Company’s Board of Directors may grant or award eligible participants stock options, restricted stock, restricted stock units, stock appreciation rights, and other stock-based awards or any combination of awards (collectively referred to herein as "Rights"). At September 30, 2023, the Company had one active equity incentive plan available for future grants, the 2015 Stock Incentive Plan, which has 1,676,663 Rights available for future grants or awards.

The Company’s 2015 Stock Incentive Plan has 11,840 Rights issued. In addition, the Company has 4,500 Rights issued from the Cornerstone Non-Qualified Plan Options, which does not have any Rights available for future grants or awards.

Stock Options:

A summary of the status of stock option plans is presented in the following table:

		Weighted
		Average
		Exercisable
	Number	Price
Outstanding at December 31, 2022	32,045	$	12.04
Granted	—		—
Exercised	(15,705)		10.47
Forfeited	—		—
Outstanding at September 30, 2023	16,340	$	13.55

Information pertaining to stock options outstanding at September 30, 2023, is as follows:

		Options Outstanding				Options Exercisable
			Weighted-
			Average	Weighted-			Weighted-
			Remaining	Average			Average
Exercise		Number	Contractual	Exercise		Number	Exercise
Prices		Outstanding	Life	Price		Exercisable	Price
$	9.60	4,500	0.42 years	$	9.60	4,500	$	9.60
	15.05	11,840	2.00 years		15.05	11,840		15.05
Outstanding, end of period		16,340	1.57 years	$	13.55	16,340	$	13.55

The Company did not recognize any stock option-based compensation expense during the three and nine months ended September 30, 2023 and 2022, respectively, as all stock options issued are fully vested, and no future compensation cost will be recognized related to nonvested stock-based compensation arrangements granted under the Plans.

32

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

No stock options were exercised during the three months ended September 30, 2023.  Stock options of 15,705 shares were exercised during the nine-month period ended September 30, 2023.  Stock options of 603 and 32,003 shares were exercised during the three- and nine-month periods ended September 30, 2022, respectively. The income tax benefit recognized for the exercise of options during the nine months ended September 30, 2023, was a benefit of $60 thousand, and for the three and nine months ended September 30, 2022, was a benefit of $64 thousand and a benefit of $147 thousand, respectively.

No stock options were exercised during the three months ended September 30, 2023. The intrinsic value of options exercised during the nine months ended September 30, 2023, was $242 thousand, and $9 thousand and $565 thousand, during the three and nine months ended September 30, 2022, respectively. The aggregate intrinsic value of total options outstanding and exercisable options at September 30, 2023, was $128 thousand. Cash received from options exercised under all share-based payment arrangements for the nine months ended September 30, 2023, was $165 thousand.

Restricted Stock Awards:

A summary of the activity of the Company’s unvested restricted stock awards for the period ended September 30, 2023, is presented below:

		Weighted
		Average
		Grant-Date
	Number	Fair Value
Balance at December 31, 2022	129,836	$	19.61
Granted	89,582		26.23
Vested	(27,172)		23.39
Forfeited/expired	(9,912)		22.45
Balance at September 30, 2023	182,334	$	22.15

The Company measures the fair value of restricted stock awards based on the price of the Company’s common stock on the grant date, and compensation expense is recorded over the vesting period. The compensation expense for restricted stock awards during the three and nine months ended September 30, 2023, was $271 thousand and $1.2 million, respectively, and was $281 thousand and $991 thousand, during the three and nine months ended September 30, 2022, respectively.  As of September 30, 2023, there was $1.8 million of unrecognized compensation cost related to non-vested restricted stock awards granted under the plan. The cost is expected to be recognized over a weighted average period of 1.97 years. The grant-date fair value of restricted stock awards vested was $636 thousand for the nine months ended September 30, 2023.

Stock Appreciation Rights (“SARs”):

A summary of the status of SARs plans is presented in the following table:

		Weighted
		Average
	Number	Exercisable Price
Outstanding at December 31, 2022	36,000	$	18.25
Granted	—		—
Exercised	(8,000)		15.19
Forfeited	—		—
Outstanding at September 30, 2023	28,000	$	19.13

33

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Information pertaining to SARs outstanding at September 30, 2023, is as follows:

		SARs Outstanding				SARs Exercisable
			Weighted-
			Average	Weighted-
			Remaining	Average			Weighted- Average
Exercise		Number	Contractual	Exercise		Number	Exercise
Prices		Outstanding	Life		Price	Exercisable	Price
$	15.19	8,000	0.25 years	$	15.19	8,000	$	15.19
	20.70	20,000	1.25 years		20.70	—		—
	Outstanding, end of period	28,000	0.97 years	$	19.13	8,000	$	15.19

SARs compensation expense of $5 thousand and ($118) thousand was recognized for the three and nine months ended September 30, 2023, respectively, and $31 thousand and ($12) thousand for the three and nine months ended September 30, 2022.  The credit adjustment for the nine-month periods ended September 30, 2023, and September 30, 2022, respectively, is related to the fair value evaluation of SARs.  

Note 9. Commitments and Contingent Liabilities

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing and depository needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Such commitments involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amount recognized on the balance sheet. The majority of all commitments to extend credit are variable rate instruments while the standby letters of credit are primarily fixed rate instruments. The Company’s exposure to credit loss is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments as it does for on-balance sheet instruments.

A summary of the Company’s total contractual amount for all off-balance sheet commitments are as follows (in thousands):

	September 30,		December 31,
	2023		2022
Commitments to extend credit	$	746,921	$	911,998
Standby letters of credit		15,567		6,897

At September 30, 2023, and December 31, 2022, the allowance for these off-balance sheet commitments was $2.3 million and $85 thousand, respectively. With the adoption of ASU 2016-13, effective January 1, 2023, there was an increase in the allowance of $3.0 million on these off-balance sheet commitments. The expense (credit) related to the allowance for off-balance sheet commitments during the three and nine months ended September 30, 2023, was ($489) thousand and ($795) thousand, respectively, and was $0 thousand and $15 thousand, during the three and nine months ended September 30, 2022, respectively.  

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the customer. Collateral held varies, but may include accounts receivable, inventory, property and equipment, residential real estate, and income-producing commercial properties.

Standby letters of credit issued by the Company are conditional commitments to guarantee the performance of a customer to a third party. Those letters of credit are primarily issued to support public and private borrowing arrangements. The

34

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. Collateral held varies and is required in instances which the Company deems necessary. At September 30, 2023 and December 31, 2022, the carrying amount of liabilities related to the Company’s obligation to perform under standby letters of credit was insignificant.

The Company is subject in the normal course of business to various pending and threatened legal proceedings in which claims for monetary damages are asserted. Management, after consultation with legal counsel, does not anticipate that the aggregate ultimate liability arising out of litigation pending or threatened against the Company will be material to the Company’s consolidated financial position. On an on-going basis, the Company assesses any potential liabilities or contingencies in connection with such legal proceedings. For those matters where it is deemed probable that the Company will incur losses and the amount of the losses can be reasonably estimated, the Company would record an expense and corresponding liability in its consolidated financial statements.

Note 10. Fair Value Disclosures

Determination of Fair Value:

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. In accordance with the “Fair Value Measurements and Disclosures” ASC Topic 820, the fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.

ASC Topic 820 provides a consistent definition of fair value, which focuses on exit price in an orderly transaction between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact business at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is most representative of fair value under current market conditions.

Fair Value Hierarchy:

In accordance with this guidance, the Company groups its financial assets and financial liabilities generally measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

Level 1 – Valuation is based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 assets and liabilities generally include debt and equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2 – Valuation is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The valuation may be based on quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

Level 3 – Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which determination of fair value requires significant management judgment or estimation.

35

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The following methodologies were used by the Company in estimating fair value disclosures for financial instruments:

Securities available-for-sale – The fair value of U.S. Treasury, U.S. Government-sponsored enterprises, municipal securities, other debt securities and mortgage-backed securities, is estimated using a third party pricing service. The third party provider evaluates securities based on comparable investments with trades and market data and will utilize pricing models that use a variety of inputs, such as benchmark yields, reported trades, broker-dealer quotes, issuer spreads, benchmark securities, bids and offers as needed. These securities are generally classified as Level 2.

Derivative financial instruments and interest rate swap agreements – The fair value for derivative financial instruments and interest rate swap agreements is determined based on market prices, broker-dealer quotations on similar products, or other related input parameters. The derivative financial instruments are generally classified Level 2.

Recurring Measurements of Fair Value:

The tables below present the recorded amount of assets and liabilities measured at fair value on a recurring basis (in thousands):

			Quoted Prices in		Significant		Significant
			Active Markets		Other		Other
			for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
Description	Fair Value		(Level 1)		(Level 2)		(Level 3)
September 30, 2023:
Assets:
Securities available-for-sale:
U.S. Treasury	$	73,733	$	—	$	73,733	$	—
U.S. Government-sponsored enterprises (GSEs)		60,953		—		60,953		—
Municipal securities		17,505		—		17,505		—
Other debt securities		30,626		—		30,626		—
Mortgage-backed securities (GSEs)		202,314		—		202,314		—
Total securities available-for-sale		385,131		—		385,131		—
Derivative financial instruments and interest rate swap agreements		16,191		—		16,191		—
Total assets at fair value	$	401,322	$	—	$	401,322	$	—
Liabilities:
Derivative financial instruments and interest rate swap agreements	$	17,647	$	—	$	17,647	$	—
December 31, 2022:
Assets:
Securities available-for-sale:
U.S. Treasury	$	223,653	$	—	$	223,653	$	—
U.S. Government-sponsored enterprises (GSEs)		1,575		—		1,575		—
Municipal securities		18,611		—		18,611		—
Other debt securities		30,551		—		30,551		—
Mortgage-backed securities (GSEs)		209,503		—		209,503		—
Total securities available-for-sale		483,893		—		483,893		—
Derivative financial instruments and interest rate swap agreements		11,834		—		11,834		—
Total assets at fair value	$	495,727	$	—	$	495,727	$	—
Liabilities:
Derivative financial instruments and interest rate swap agreements	$	13,110	$	—	$	13,110	$	—

During the nine months ending September 30, 2023 and twelve months ended December 31, 2022, there were no transfers between Level 1 and Level 2 in the fair value hierarchy.

36

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Assets Measured at Fair Value on a Nonrecurring Basis:

Under certain circumstances management adjusts fair value for assets and liabilities although they are not measured at fair value on an ongoing basis. The following tables present the financial instruments carried on the consolidated balance sheets by caption and by level in the fair value hierarchy, for which a nonrecurring change in fair value has been recorded (in thousands):

			Quoted Prices in		Significant		Significant
			Active Markets		Other		Other
			for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
September 30, 2023:
Collateral dependent loans	$	4,315	$	—	$	—	$	4,315
Other real estate owned		271		—		—		271
December 31, 2022:
Collateral dependent loans	$	1,536	$	—	$	—	$	1,536
Other real estate owned		915		—		—		915

For Level 3 assets measured at fair value on a non-recurring basis, the significant unobservable inputs used in the fair value measurements are presented below (dollars in thousands):

					Weighted
			Valuation	Significant Other	Average of
	Fair Value		Technique	Unobservable Input	Input
September 30, 2023:
Collateral dependent loans	$	4,315	Appraisal	Appraisal discounts	39	%
Other real estate owned		271	Appraisal	Appraisal discounts	26	%
December 31, 2022:
Collateral dependent loans	$	1,536	Appraisal	Appraisal discounts	25	%
Other real estate owned		915	Appraisal	Appraisal discounts	29	%

Collateral dependent loans: A collateral dependent loan is measured based on the fair value of the collateral securing these loans, less selling costs. Collateral dependent loans are classified within Level 3 of the fair value hierarchy. Collateral may be real estate and/or business assets including equipment, inventory, and/or accounts receivable. The Company determines the value of the collateral based on independent appraisals performed by qualified licensed appraisers. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Appraised values are discounted for costs to sell and may be discounted further based on management’s historical knowledge, changes in market conditions from the date of the most recent appraisal, and/or management’s expertise and knowledge of the customer and the customer’s business. Such discounts by management are subjective and are typically significant unobservable inputs for determining fair value. Collateral dependent loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on the same factors discussed above.  The amount of valuation allowance on collateral dependent loans was $2.8 million and $506 thousand as of September 30, 2023, and December 31, 2022, respectively.

Other real estate owned: Other real estate owned, consisting of properties obtained through foreclosure or in satisfaction of loans, are initially recorded at fair value less estimated costs to sell upon transfer of the loans to other real estate. Subsequently, other real estate is carried at the lower of carrying value or fair value less costs to sell. Fair values are generally based on third party appraisals of the property and are classified within Level 3 of the fair value hierarchy. The

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SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

appraisals are sometimes further discounted based on management’s historical knowledge, and/or changes in market conditions from the date of the most recent appraisal, and/or management’s expertise and knowledge of the customer and the customer’s business. Such discounts are typically significant unobservable inputs for determining fair value. In cases where the carrying amount exceeds the fair value, less estimated costs to sell, the difference is recognized in noninterest expense.

Carrying value and estimated fair value:

The carrying amount and estimated fair value of the Company’s financial instruments are as follows (in thousands):

	Fair Value Measurements Using
	Carrying								Estimated
	Amount		Level 1		Level 2		Level 3		Fair Value
September 30, 2023:
Assets:
Cash and cash equivalents	$	400,258	$	400,258	$	—	$	—	$	400,258
Securities available-for-sale		385,131		—		385,131		—		385,131
Securities held-to-maturity		282,313		—		256,325		—		256,325
Other investments		13,805		N/A		N/A		N/A		N/A
Loans and leases, net and loans held for sale		3,348,046		—		—		3,210,772		3,210,772
Derivative financial instruments and interest rate swap agreements		16,191		—		16,191		—		16,191
Liabilities:
Noninterest-bearing demand deposits		923,763		—		923,763		—		923,763
Interest-bearing demand deposits		993,717		—		993,717		—		993,717
Money market and savings deposits		1,766,409		—		1,766,409		—		1,766,409
Time deposits		562,620		—		558,744		—		558,744
Borrowings		14,117		—		14,117		—		14,117
Subordinated debt		42,078		—		—		39,650		39,650
Derivative financial instruments and interest rate swap agreements		17,647		—		17,647		—		17,647
December 31, 2022:
Assets:
Cash and cash equivalents	$	266,424	$	266,424	$	—	$	—	$	266,424
Securities available-for-sale		483,893		—		483,893		—		483,893
Securities held-to-maturity		285,949		—		260,613				260,613
Other investments		15,530		N/A		N/A		N/A		N/A
Loans and leases, net and loans held for sale		3,232,045		—		—		3,143,921		3,143,921
Derivative financial instruments and interest rate swap agreements		11,834		—		11,834		—		11,834
Liabilities:
Noninterest-bearing demand deposits		1,072,449		—		1,072,449		—		1,072,449
Interest-bearing demand deposits		965,911		—		965,911		—		965,911
Money market and savings deposits		1,583,481		—		1,583,481		—		1,583,481
Time deposits		455,259		—		451,899		—		451,899
Borrowings		41,860		—		41,860		—		41,860
Subordinated debt		42,015		—		—		40,439		40,439
Derivative financial instruments and interest rate swap agreements		13,110		—		13,110		—		13,110

Limitations:

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

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SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 11.Derivatives Financial Instruments

Derivatives designated as fair value hedges:

Financial derivatives are reported at fair value in other assets or other liabilities. The accounting for changes in the fair value of a derivative depends on whether it has been designated and qualifies as part of a hedging relationship. For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative net investment hedge instrument, as well as the offsetting gain or loss on the hedged asset or liability attributable to the hedged risk, are recognized in current earnings. The gain or loss on the derivative instrument is presented on the same income statement line item as the earnings effect of the hedged item. The Company utilizes interest rate swaps designated as fair value hedges to mitigate the effect of changing interest rates on the fair values of fixed rate tax-exempt callable securities available-for-sale. The hedging strategy on securities converts the fixed interest rates to LIBOR-based variable interest rates. These derivatives are designated as partial term hedges of selected cash flows covering specified periods of time prior to the call dates of the hedged securities. The Company has adopted ASU 2017-12, Derivatives and Hedging (Topic 815) – Targeted Improvements to Accounting for Hedging Activities, which allows such partial term hedge designations.

During the fourth quarter of 2022 the Company dissolved this hedging relationship.  The effects of the Company’s fair value hedge relationships reported in interest income in 2022 on tax-exempt available-for-sale securities on the consolidated income statement were as follows (in thousands):

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2022		2022
Interest income on tax-exempt securities	$	403	$	1,183
Effects of fair value hedge relationships		(83)		(527)
Reported interest income on tax-exempt securities	$	320	$	656

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
Gain (loss) on fair value hedging relationship	2022		2022
Interest rate swap agreements - securities:
Hedged items	$	1,808	$	5,319
Derivative designated as hedging instruments		(1,808)		(5,319)
Carry amount of hedged assets - securities available-for-sale		36,165		36,165

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SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Derivatives Designated as Cash Flow Hedges:

The Company enters into interest rate derivative contracts on assets and liabilities that are designated as qualifying cash flow hedges.  The Company hedges the exposure to variability in expected future cash flows attributable to changes in contractual specified interest rates.  To qualify for hedge accounting, a formal assessment is prepared to determine whether the hedging relationship, both at inception and on an ongoing basis, is expected to be highly effective in offsetting cash flows attributable to the hedged risk. At inception, a statistical regression analysis is prepared to determine hedge effectiveness. At each reporting period thereafter, a statistical regression or qualitative analysis is performed. If it is determined that hedge effectiveness has not been or will not continue to be highly effective, then hedge accounting ceases and any gain or loss in accumulated other comprehensive income (“AOCI”) is recognized in earnings immediately. The cash flow hedges are recorded at fair value in other assets and liabilities on the consolidated balance sheets with changes in fair value recorded in AOCI, net of tax, see – Consolidated Statements of Comprehensive Income (Loss). Amounts recorded to AOCI are reclassified into earnings in the same period in which the hedged asset or liability affects earnings and are presented in the same income statement line item as the earnings effect of the hedged asset or liability, as future interest payments are made on the underlying assets.  At September 30, 2023, the Company estimates that in the next 12 months an additional $797 thousand will be reclassified as a decrease in interest income and $969 thousand will be reclassified as a decrease in interest expense.

At September 30, 2023 and December 31, 2022, cash flow hedges are as follows (in thousands):

		September 30, 2023				December 31, 2022
	Balance Sheet	Notional		Estimated		Notional		Estimated
	Location	Amount		Fair Value		Amount		Fair Value
Cash flow hedges:
Assets	Other assets	$	150,000	$	698	$	-	$	-
Liabilities	Other liabilities		100,000		(2,165)		100,000		(1,304)

The following table presents the effect of fair value and cash flow hedge accounting on AOCI (in thousands):

Derivatives in cash flow hedging relationships:		Amount of Gain (Loss) Recognized on OCI on Derivative	Location of Gain or (Loss) Recognized from AOCI into Income		Amount of Gain or (Loss) Reclassified from AOCI into Income
Three months ended September 30, 2023
Interest rate swaps - Assets	$	(432)	Interest income	$	(173)
Interest rate swaps - Liabilities		585	Interest expense		(157)
Three months ended September 30, 2022
Interest rate swaps - Assets	$	(1,775)	—	$	—
Interest rate swaps - Liabilities		—	—		—
Nine months ended September 30, 2023
Interest rate swaps - Assets	$	(2,165)	Interest income	$	(275)
Interest rate swaps - Liabilities		698	Interest expense		(165)
Nine months ended September 30, 2022
Interest rate swaps - Assets	$	(1,775)	—	$	—
Interest rate swaps - Liabilities		—	—		—

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SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The following table presents the effect of fair value and cash flow hedge accounting on the income statement (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Total interest income	$	55,448	$	—	$	160,823	$	—
Effects of cash flow hedge relationships		(173)		—		(275)		—
Reported total interest income	$	55,275	$	—	$	160,548	$	—
Total interest expense	$	24,426	$	—	$	62,150	$	—
Effects of cash flow hedge relationships		(157)		—		(165)		—
Reported total interest expense	$	24,269	$	—	$	61,985	$	—

Non-hedged derivatives:

The Company provides a loan hedging program to certain loan customers. Through this program, the Company originates a variable rate loan with the customer. The Company and the customer will then enter into a fixed interest rate swap. Lastly, an identical offsetting swap is entered into by the Company with a dealer bank. These “back-to-back” swap arrangements are intended to offset each other and allow the Company to book a variable rate loan, while providing the customer with a contract for fixed interest payments. In these arrangements, the Company’s net cash flow is equal to the interest income received from the variable rate loan originated with the customer. These customer swaps are not designated as hedging instruments and are recorded at fair value in other assets and other liabilities. Since the income statement impact of the offsetting positions is limited, any changes in fair value are recognized as other noninterest income in the current period.

At September 30, 2023 and December 31, 2022, interest rate swaps related to the Company’s loan hedging program that were outstanding are presented in the following table (in thousands):

	September 30, 2023				December 31, 2022
		Notional		Estimated		Notional		Estimated
		Amount		Fair Value		Amount		Fair Value
Interest rate swap agreements:
Assets	$	243,239	$	15,482	$	216,656	$	11,834
Liabilities		243,239		(15,482)		216,656		(11,834)

The Company establishes limits and monitors exposures for customer swap positions.  Any fees received to enter the swap agreements at inception are recognized in earnings when received and is included in noninterest income.  Such fees were as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Interest rate swap agreements	$	326	$	53	$	823	$	1,449

Collateral requirements:

These derivative rate contracts have collateral requirements, both at inception of the trade and as the value of each derivative position changes.  At September 30, 2023, collateral totaling $910 thousand and $1.4 million at December 31, 2022, was pledged to the derivative counterparties to comply with collateral requirements.

41

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 12. Leases

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. The Company follows the guidance of ASU No. 2016-02 and all subsequent ASUs that modified this topic (collectively referred to as “Topic 842”).

Substantially all of the leases in which the Company is the lessee are comprised of real estate for branches and office space with terms extending through 2034. All of our leases are classified as operating leases. Operating lease agreements are required to be recognized on the consolidated balance sheet as a right-of-use (“ROU”) asset and a corresponding lease liability.

The following table represents the consolidated balance sheet classification of the Company’s ROU assets and lease liabilities. The Company elected not to include short-term leases (i.e., leases with initial terms of twelve months or less), or equipment leases (deemed immaterial) on the consolidated balance sheet (in thousands):

		September 30,		December 31,
	Classification	2023		2022
Assets:
Operating lease right-of-use assets	Other assets	$	10,097	$	9,314
Liabilities:
Operating lease liabilities	Other liabilities	$	10,345	$	9,457

The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If, at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability. Regarding the discount rate, Topic 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term.

As of September 30, 2023, the weighted average remaining lease term was 9.18 years and the weighted average discount rate was 2.86%.

The following table represents lease costs and other lease information. As the Company elected, for all classes of underlying assets, not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as common area maintenance (in thousands).

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Lease costs:
Operating lease costs	$	438	$	403	$	1,247	$	1,220
Variable lease costs		30		26		87		76
Total	$	468	$	429	$	1,334	$	1,296
Other information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	393	$	385	$	1,142	$	1,163

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SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Future minimum payments for operating leases with initial or remaining terms of one year or more as of September 30, 2023, were as follows (in thousands):

	Amounts
Remainder of 2023	$	276
2024		1,455
2025		1,359
2026		1,291
2027		1,107
Thereafter		6,476
Total future minimum lease payments		11,964
Amounts representing interest		(1,619)
Present value of net future minimum lease payments	$	10,345

Note 13. Regulatory Matters

Regulatory Capital Requirements:

The final rules implementing the Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (Basel III rules) became effective January 1, 2015. In order to avoid restrictions on capital distributions and discretionary bonus payments to executives, under the new rules a covered banking organization is also required to maintain a “capital conservation buffer” in addition to its minimum risk-based capital requirements. This buffer is required to consist solely of common equity Tier 1, and the buffer applies to all three risk-based measurements (CET1, Tier 1 capital and total capital).  As of January 1, 2019, an additional amount of Tier 1 common equity equal to 2.5% of risk-weighted assets is required for compliance with the capital conservation buffer. The ratios for the Company and the Bank are currently sufficient to satisfy the fully phased-in conservation buffer. At September 30, 2023, the Company and the Bank exceeded the minimum regulatory requirements and exceeded the threshold for the “well capitalized” regulatory classification.

In December 2018, the Federal Reserve, Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation (“FDIC”) (collectively, the “agencies”) issued a final rule revising regulatory capital rules in anticipation of the adoption of ASU 2016-13 that provided an option to phase in over a three-year period on a straight line basis the day-one impact of the adoption on earnings and tier one capital. The Company adopted ASU 2016-13 on January 1, 2023, and has chosen the three year phase in option.  

Regulatory Restrictions on Dividends:

Pursuant to Tennessee banking law, the Bank may not, without the prior consent of the Commissioner of the Tennessee Department of Financial Institutions (the “TDFI”), pay any dividends to the Company in a calendar year in excess of the total of the Bank’s retained net income for that year plus the retained net income for the preceding two years.  Because this test involves a measure of net income, any charge on the Bank’s income statement, such as an impairment of goodwill, could impair the Bank’s ability to pay dividends to the Company. Under Tennessee corporate law, the Company is not permitted to pay dividends if, after giving effect to such payment, it would not be able to pay its debts as they become due in the usual course of business, or its total assets would be less than the sum of its total liabilities plus any amounts needed to satisfy any preferential rights if it were dissolving. In addition, in deciding whether to declare a dividend of any particular size, the Company’s board of directors must consider its and the Bank’s current and prospective capital, liquidity, and other needs. In addition to state law limitations on the Company’s ability to pay dividends, the Federal Reserve imposes limitations on the Company’s ability to pay dividends. Federal Reserve regulations limit dividends, stock repurchases and discretionary bonuses to executive officers if the Company’s regulatory capital is below the level of regulatory minimums plus the applicable capital conservation buffer.

During the nine months ended September 30, 2023, the Bank paid $10 million in dividends to the Company, and since the first quarter of 2023, the Company has paid a quarterly common stock dividend of $0.08 per share.    The amount and

43

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

timing of all future dividend payments by the Company, if any, is subject to discretion of the Company’s board of directors and will depend on the Company’s earnings, capital position, financial condition and other factors, including new regulatory capital requirements, as they become known to the Company.

Regulatory Capital Levels:

Actual and required capital levels at September 30, 2023, and December 31, 2022 are presented below (dollars in thousands):

									Minimum to be
									well
									capitalized under
					Minimum for				prompt
					capital				corrective action
		Actual			adequacy purposes				provisions1
	Amount		Ratio		Amount		Ratio		Amount		Ratio
September 30, 2023
SmartFinancial:
Total Capital (to Risk Weighted Assets)	$	449,546	11.90	%	$	302,100	8.00	%		N/A	N/A
Tier 1 Capital (to Risk Weighted Assets)		380,272	10.07	%		226,575	6.00	%		N/A	N/A
Common Equity Tier 1 Capital (to Risk Weighted Assets)		380,272	10.07	%		169,931	4.50	%		N/A	N/A
Tier 1 Capital (to Average Assets)2		380,272	8.13	%		187,074	4.00	%		N/A	N/A
SmartBank:
Total Capital (to Risk Weighted Assets)	$	447,326	11.87	%	$	301,538	8.00	%	$	376,922	10.00	%
Tier 1 Capital (to Risk Weighted Assets)		420,130	11.15	%		226,153	6.00	%		301,538	8.00	%
Common Equity Tier 1 Capital (to Risk Weighted Assets)		420,130	11.15	%		169,615	4.50	%		244,999	6.50	%
Tier 1 Capital (to Average Assets)2		420,130	9.00	%		186,792	4.00	%		233,490	5.00	%
December 31, 2022
SmartFinancial:
Total Capital (to Risk Weighted Assets)	$	425,957	11.40	%	$	298,966	8.00	%		N/A	N/A
Tier 1 Capital (to Risk Weighted Assets)		360,608	9.65	%		224,224	6.00	%		N/A	N/A
Common Equity Tier 1 Capital (to Risk Weighted Assets)		360,608	9.65	%		168,168	4.50	%		N/A	N/A
Tier 1 Capital (to Average Assets)		360,608	7.95	%		181,387	4.00	%		N/A	N/A
SmartBank:
Total Capital (to Risk Weighted Assets)	$	426,947	11.44	%	$	298,476	8.00	%	$	373,094	10.00	%
Tier 1 Capital (to Risk Weighted Assets)		403,613	10.82	%		223,857	6.00	%		298,476	8.00	%
Common Equity Tier 1 Capital (to Risk Weighted Assets)		403,613	10.82	%		167,892	4.50	%		242,511	6.50	%
Tier 1 Capital (to Average Assets)		403,613	8.90	%		181,383	4.00	%		226,729	5.00	%

¹The prompt corrective action provisions are applicable at the Bank level only.

²Average assets for the above calculations were based on the most recent quarter.

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SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 14. Other Comprehensive Income (Loss)

The changes in each component of accumulated other comprehensive income (loss), presented net of tax, were as follows (in thousands):

	Three Months Ended September 30, 2023
									Accumulated
	Securities		Securities		Fair Value				Other
	Available-for-		Transferred to		Municipal		Cash Flow		Comprehensive
	Sale		Held-to-Maturity		Security Hedges		Hedges		Income (Loss)
Beginning balance, June 30, 2023	$	(33,132)	$	(684)	$	—	$	(1,201)	$	(35,017)
Other comprehensive income (loss)		(4,325)		—		—		115		(4,210)
Reclassification of amounts included in net income		5,044		27		—		—		5,071
Net other comprehensive income (loss) during period		719		27		—		115		861
Ending balance, September 30, 2023	$	(32,413)	$	(657)	$	—	$	(1,086)	$	(34,156)
	Three Months Ended September 30, 2022
									Accumulated
	Securities		Securities		Fair Value				Other
	Available-for-		Transferred to		Municipal		Cash Flow		Comprehensive
	Sale		Held-to-Maturity		Security Hedges		Hedges		Income (Loss)
Beginning balance, June 30, 2022	$	(23,526)	$	(804)	$	(318)	$	—	$	(24,648)
Other comprehensive income (loss)		(14,942)		—		69		(1,317)		(16,190)
Reclassification of amounts included in net income		—		31		—		—		31
Net other comprehensive income (loss) during period		(14,942)		31		69		(1,317)		(16,159)
Ending balance, September 30, 2022	$	(38,468)	$	(773)	$	(249)	$	(1,317)	$	(40,807)

	Nine Months Ended September 30, 2023
									Accumulated
	Securities		Securities		Fair Value				Other
	Available-for-		Transferred to		Municipal		Cash Flow		Comprehensive
	Sale		Held-to-Maturity		Security Hedges		Hedges		Income (Loss)
Beginning balance, December 31, 2022	$	(33,616)	$	(742)	$	—	$	(966)	$	(35,324)
Other comprehensive income (loss)		(3,841)		—		—		(120)		(3,961)
Reclassification of amounts included in net income		5,044		85		—		—		5,129
Net other comprehensive income (loss) during period		1,203		85		—		(120)		1,168
Ending balance, September 30, 2023	$	(32,413)	$	(657)	$	—	$	(1,086)	$	(34,156)
	Nine Months Ended September 30, 2022
									Accumulated
	Securities		Securities		Fair Value				Other
	Available-for-		Transferred to		Municipal		Cash Flow		Comprehensive
	Sale		Held-to-Maturity		Security Hedges		Hedges		Income (Loss)
Beginning balance, December 31, 2021	$	25	$	665	$	753	$	—	$	1,443
Other comprehensive income (loss)		(38,493)		(1,490)		(1,002)		(1,317)		(42,302)
Reclassification of amounts included in net income		—		52		—		—		52
Net other comprehensive income (loss) during period		(38,493)		(1,438)		(1,002)		(1,317)		(42,250)
Ending balance, September 30, 2022	$	(38,468)	$	(773)	$	(249)	$	(1,317)	$	(40,807)

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

SmartFinancial, Inc. (the "Company," “SmartFinancial,” “we,” “our” or “us”) is a bank holding company whose principal activity is the ownership and management of its wholly owned subsidiary, SmartBank (the "Bank"). The Company provides a variety of financial services to individuals and corporate customers through its offices in East and Middle Tennessee, Alabama, and Florida. The Bank’s primary deposit products are noninterest-bearing and interest-bearing demand deposits, savings and money market deposits, and time deposits. Its primary lending products are commercial, residential, and consumer loans.

While we offer a wide range of commercial banking services, we focus on making loans secured primarily by commercial real estate and other types of secured and unsecured commercial loans to small and medium-sized businesses in a number of industries, as well as loans to individuals for a variety of purposes. Our principal sources of funds for loans and investing in securities are deposits and, to a lesser extent, borrowings. We offer a broad range of deposit products, including checking (“NOW”), savings, money market accounts and time deposits. We actively pursue business relationships by utilizing the business contacts of our senior management, other bank officers and our directors, thereby capitalizing on our knowledge of our local market areas.

Forward-Looking Statement

The Company may from time to time make written or oral statements, including statements contained in this report and information incorporated by reference herein (including, without limitation, certain statements in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2), 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, as amended (the “Exchange Act”). These statements are based on assumptions and estimates and are not guarantees of future performance. Any statements that do not relate to historical or current facts or matters are forward-looking statements. You can identify some of the forward-looking statements by the use of forward-looking words (and their derivatives), such as “may,” “will,” “could,” “project,” “believe,” “anticipate,” “expect,” “estimate,” “continue,” “potential,” “plan,” “forecast,” and the like, the negatives of such expressions, or the use of the future tense. Statements concerning current conditions may also be forward-looking if they imply a continuation of a current condition. These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, financial condition, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to:

● the impact of current and future economic and market conditions generally (including seasonality) and in the financial services industry, nationally and within our primary market areas (particularly Tennessee), including the effects of inflationary pressures, changes in interest rates, slowdowns in economic growth, and the potential for high unemployment rates, as well as the financial stress on borrowers and changes to customer and client behavior (including the velocity of loan repayment) and credit risk as a result of the foregoing;

● the risks of changes in interest rates on the level and composition of deposits (as well as the cost of, and competition for, deposits), loan demand, liquidity and the values of loan collateral, securities and market fluctuations, and interest rate sensitive assets and liabilities;

● adverse developments in the banking industry highlighted by high-profile bank failures and the impact of such developments on customer confidence, liquidity and regulatory responses to these developments (including increases in the cost of our deposit insurance assessments), our ability to effectively manage our liquidity risk and any growth plans and the availability of capital and funding;

● the possibility that our asset quality would decline or that we experience greater loan and lease losses than anticipated;

● the impact of liquidity needs on our results of operations and financial condition;

● competition from financial institutions and other financial service providers;

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

● the impact of recently enacted and future legislation and regulation on our business;

46

● weakness in the real estate market, including the secondary residential mortgage market, which can affect, among other things, the value of collateral securing mortgage loans, mortgage loan originations and delinquencies, profits on sales of mortgage loans, and the value of mortgage servicing rights;

● risks associated with our growth strategy, including a failure to implement our growth plans or an inability to manage our growth effectively;

● claims and litigation arising from our business activities and from the companies we acquire, which may relate to contractual issues, environmental laws, fiduciary responsibility, and other matters;

● the risks of mergers, acquisitions and divestitures, including our ability to continue to identify acquisition targets, successfully acquire and integrate desirable financial institutions and realize expected revenues and revenue synergies;

● cyber attacks, computer viruses or other malware that may breach the security of our websites or other systems we operate or rely upon for services to obtain unauthorized access to confidential information, destroy data, disable or degrade service, or sabotage our systems and negatively impact our operations and our reputation in the market, including as a result of increased remote working;

● results of examinations by our primary regulators, the TDFI, the Board of Governors of the Federal Reserve System (the “Federal Reserve”), and other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our allowance for credit losses, write-down assets, require us to reimburse customers, change the way we do business, or limit or eliminate certain other banking activities;

● government intervention in the U.S. financial system and the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve, as well as legislative, tax and regulatory changes that impact the money supply and inflation;

● our inability to pay dividends at current levels, or at all, because of inadequate future earnings, impairments to goodwill, regulatory restrictions or limitations, and changes in the composition of qualifying regulatory capital and minimum capital requirements;

● the relatively greater credit risk of commercial real estate loans and construction and land development loans in our loan and lease portfolio;

● unanticipated credit deterioration in our loan and lease portfolio or higher than expected loan and lease losses within one or more segments of our loan and lease portfolio;

● unexpected significant declines in the loan and lease portfolio due to the lack of economic expansion, increased competition, large prepayments, changes in regulatory lending guidance or other factors;

● unanticipated loan and lease delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather, natural disasters, acts of war or terrorism and other external events;

● changes in expected income tax expense or tax rates, including changes resulting from revisions in tax laws, regulations and case law;

● our ability to retain the services of key personnel;

● uncertainty related to the transition away from LIBOR;

● changes in accounting principles, policies, or guidelines, including the impact of ASU 2016-13 Current Expected Credit Loss (“CECL”);

● political instability, acts of God, or of war or terrorism, natural disasters, including in the Company’s footprint, health emergencies, epidemics or pandemics, or other catastrophic events that may affect general economic conditions;

● risks related to environmental, social and governance ("ESG") strategies and initiatives, the scope and pace of which could alter our reputation and shareholder, associate, customer and third-party affiliations;

● a deterioration of the credit rating for U.S. long-term sovereign debt, actions that the U.S. government may take to avoid exceeding the debt ceiling, and uncertainties surrounding the debt ceiling and the federal budget;

● the risk that the regulatory environment may not be conducive to or may prohibit the consummation of future mergers and/or business combinations, may increase the length of time and amount of resources required to consummate such transactions, and may reduce the anticipated benefit; and

● the impact of Tennessee’s anti-takeover statutes and certain of our charter provisions on potential acquisitions of us.

47

These and other factors that could cause results to differ materially from those described in the forward-looking statements can be found in SmartFinancial’s most recent annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, in each case filed with or furnished to the Securities and Exchange Commission (the “SEC”) and available on the SEC’s website (www.sec.gov). Undue reliance should not be placed on forward-looking statements. The Company disclaims any obligation to update or revise any forward-looking statements contained in this release, which speak only as of the date hereof, whether as a result of new information, future events, or otherwise.

Critical Accounting Estimates

Our Consolidated Financial Statements were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and follow general practices within the industries in which we operate.  The most significant accounting policies we follow are presented in Note 1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.  Application of these principles requires us to make estimates, assumptions, and judgments that affect the amounts reported in the Consolidated Financial Statements and accompanying notes.  Most accounting policies are not considered by management to be critical accounting policies.  Several factors are considered in determining whether or not a policy is critical in the preparation of the Consolidated Financial Statements.  These factors include among other things, whether the policy requires management to make difficult, subjective, and complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions.  The accounting policies which we believe to be most critical in preparing our Consolidated Financial Statements are presented in the section titled “Critical Accounting Policies” in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. On January 1, 2023, we adopted FASB ASU 2016-13 Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”) which significantly changes our methodology for determining our Allowance for Credit Losses (“ACL”) and ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, See Note 1. Recently Issued and Adopted Accounting Pronouncements in the Notes to our Consolidated Financial Statements in this Form 10-Q for further information related to these changes. There have been no other significant changes in the Company’s application of critical accounting policies since December 31, 2022.

Executive Summary

The following is a summary of the Company’s financial highlights and significant events during the third quarter and first nine months of 2023:

● Net income totaled $2.1 million, or $0.12 per diluted common share, during the third quarter of 2023 compared to $11.5 million, or $0.68 per diluted common share, for the same period in 2022.  

● Net income totaled $22.4 million, or $1.33 per diluted common share, during the first nine months of 2023 compared to $30.0 million, or $1.78 per diluted common share, for the same period in 2022.

● During the third quarter of 2023 the Company sold $159.6 million in available-for-sale securities, as part of a balance sheet optimization transaction that resulted in a $5.0 million loss, net of tax.

● Annualized return on average assets for the three months ended September 30, 2023, and 2022 was 0.17% and 0.95%, respectively.

● Annualized return on average assets for the nine months ended September 30, 2023, and 2022 was 0.63% and 0.85%, respectively.

● Net organic loan and lease increased year-to-date for 2023, with net loans and leases increasing $115.0 million from December 31, 2022.

● On January 1, 2023, the Company adopted ASU 2016-13, which resulted in a $8.7 million, or 37.1%, increase in the ACL at the adoption date, with initial adoption entry being recorded through retained earnings, net of tax.

48

Selected Financial Information

The following is a summary of certain financial information for the three- and nine-month periods ended September 30, 2023 and 2022 and as of September 30, 2023 and December 31, 2022 (dollars in thousands, except per share data):

	Three Months Ended									Nine Months Ended
	September 30,									September 30,
	2023			2022				Change		2023			2022				Change
Income Statement:
Interest income	$	55,275		$	42,297		$	12,978		$	160,548		$	111,521		$	49,027
Interest expense		24,269			5,589			18,680			61,985			11,632			50,353
Net interest income		31,006			36,708			(5,702)			98,563			99,889			(1,326)
Provision for credit losses		795			974			(179)			1,458			3,230			(1,772)
Net interest income after provision for credit losses		30,211			35,734			(5,523)			97,105			96,659			446
Noninterest income		691			6,250			(5,559)			14,746			20,590			(5,844)
Noninterest expense		28,516			27,230			1,286			83,455			78,874			4,581
Income before income taxes		2,386			14,754			(12,368)			28,396			38,375			(9,979)
Income tax expense		319			3,211			(2,892)			5,993			8,357			(2,364)
Net income	$	2,067		$	11,543		$	(9,476)		$	22,403		$	30,018		$	(7,615)
Per Share Data:
Basic income per common share	$	0.12		$	0.69		$	(0.57)		$	1.33		$	1.79		$	(0.47)
Diluted income per common share	$	0.12		$	0.68		$	(0.57)		$	1.33		$	1.78		$	(0.47)
Performance Ratios:
Return on average assets		0.17	%		0.95	%		(0.78)	%		0.63	%		0.85	%		(0.21)	%
Return on average shareholders' equity		1.84	%		10.77	%		(8.93)	%		6.80	%		9.46	%		(2.65)	%

	September 30,		December 31,
	2023		2022			Change
Balance Sheet:
Loans and leases, net	$	3,345,312	$	3,230,293	$	115,019
Deposits		4,246,509		4,077,100		169,409

Analysis of Results of Operations

Third quarter of 2023 compared to 2022

Net income was $2.1 million, or $0.12 per diluted common share, for the third quarter of 2023, compared to $11.5 million, or $0.68 per diluted common share, for the third quarter of 2022.  For the three months ended September 30, 2023, when compared to the comparable period in 2022, the decrease in net income of $9.5 million was primarily driven by a decline of $5.5 million in net interest income and provision in credit losses, $5.6 million in noninterest income, and an increase of $1.3 million in noninterest expense, offset by a reduction $2.9 million in income tax expense.  The decline in noninterest income was associated with a $6.8 million pre-tax loss on the sale of available-for-sale securities, as a result from the balance sheet optimization transaction described in the Securities Portfolio section.  The tax equivalent net interest margin was 2.81% for the third quarter of 2023, compared to 3.29% for the third quarter of 2022. Noninterest income to average assets was 0.06% for the third quarter of 2023, decreasing from 0.52% for the third quarter of 2022. Noninterest expense to average assets increased to 2.37% in the third quarter of 2023, from 2.25% in the third quarter of 2022.

First nine months of 2023 compared to 2022

Net income totaled $22.4 million, or $1.33 per diluted common share, for the nine months ended 2023, compared to $30.0 million, or $1.78 per diluted common share, for the nine months ended 2022.  The decrease of $7.6 million in net income for this period was primarily from the decrease of $5.8 million in noninterest income and an increase in of $4.6 million in noninterest expense, offset by a reduction of $2.4 million in income tax expense. The tax equivalent net interest margin was 3.01% for the first nine months of 2023, compared to 3.10% for the first nine months of 2022. Noninterest income to

49

average assets was 0.41% for the first nine months of 2023, decreasing from 0.59% for the first nine months of 2022. Noninterest expense to average assets increased to 2.35% in the first nine months of 2023, from 2.24% in the first nine months of 2022.

Net Interest Income and Yield Analysis

Third quarter of 2023 compared to 2022

Net interest income, taxable equivalent, decreased to $31.1 million for the third quarter of 2023, down from $36.9 million for the third quarter of 2022. Net interest income was positively impacted by the increase in balances of loans and leases and the increase in yield/rate on these interest-earning assets, offset by the increase in the cost of interest-bearing liabilities.  Average interest-earning assets decreased from $4.45 billion for the third quarter of 2022, to $4.40 billion for the third quarter of 2023, primarily from the decrease in our average cash balances, which was offset the Company’s continued organic loan and lease growth. Over this period, average loan and lease balances increased by $323.6 million, average interest-bearing deposits increased by $173.1 million and average borrowings increased by $3.1 million.  Average federal funds sold and other interest earning assets decreased by $358.3 million, average securities decreased $13.9 million and noninterest-bearing deposits decreased by $241.6 million. The tax equivalent net interest margin decreased to 2.81% for the third quarter of 2023, compared to 3.29% for the third quarter of 2022. The yield on earning assets increased from 3.79% for the third quarter of 2022, to 4.99% for the third quarter of 2023, primarily due the deployment of excess cash and cash equivalents into loans and leases and the increase in rates by the Federal Reserve. The cost of average interest-bearing deposits increased from 0.62% for the third quarter of 2022, to 2.84% for the third quarter of 2023, primarily due to the increase in rates by the Federal Reserve and increased pricing competition.

50

The following table summarizes the major components of net interest income and the related yields and costs for the period presented (dollars in thousands):

	Three Months Ended September 30,
	2023						2022
	Average				Yield/		Average				Yield/
	Balance		Interest		Cost		Balance		Interest		Cost
Assets:
Loans and leases, including fees1	$	3,360,678	$	47,539	5.61	%	$	3,037,092	$	35,127	4.59	%
Taxable securities		743,054		4,335	2.31	%		720,114		3,135	1.73	%
Tax-exempt securities2		64,707		451	2.77	%		101,559		732	2.86	%
Federal funds sold and other earning assets		229,487		3,045	5.26	%		587,755		3,474	2.34	%
Total interest-earning assets		4,397,926		55,370	4.99	%		4,446,520		42,468	3.79	%
Noninterest-earning assets		379,456						362,869
Total assets	$	4,777,382					$	4,809,389
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits	$	969,122		5,463	2.24	%	$	966,437		1,956	0.80	%
Money market and savings deposits		1,753,671		13,744	3.11	%		1,632,510		2,298	0.56	%
Time deposits		551,191		4,226	3.04	%		501,919		612	0.48	%
Total interest-bearing deposits		3,273,984		23,433	2.84	%		3,100,866		4,866	0.62	%
Borrowings		16,228		210	5.13	%		13,141		97	2.93	%
Subordinated debt		42,065		626	5.90	%		41,980		626	5.91	%
Total interest-bearing liabilities		3,332,277		24,269	2.89	%		3,155,987		5,589	0.70	%
Noninterest-bearing deposits		951,179						1,192,813
Other liabilities		48,494						35,224
Total liabilities		4,331,950						4,384,024
Shareholders' equity		445,432						425,365
Total liabilities and shareholders’ equity	$	4,777,382					$	4,809,389
Net interest income, taxable equivalent			$	31,101					$	36,879
Interest rate spread					2.11	%					3.09	%
Tax equivalent net interest margin					2.81	%					3.29	%
Percentage of average interest-earning assets to average interest-bearing liabilities					131.98	%					140.89	%
Percentage of average equity to average assets					9.32	%					8.84	%

¹Loans and leases include Paycheck Protection Program (“ PPP”) loans with an average balance of $2.7 million and $22.0 million for the three months ended September 30, 2023, and 2022, respectively.  Loan and lease fees included in loan and lease income was $809 thousand and $600 thousand for the three months ended September 30, 2023, and 2022, respectively. Loan and lease fee income for the three months ended September 30, 2023, and 2022, includes $10 thousand and $166 thousand accretion of loan fees on PPP loans, respectively.    

²Yields related to investment securities exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 21.0%. The taxable-equivalent adjustment was $95 thousand for the three months ended September 30, and $171 thousand for the three months ended September 30, 2022.

First nine months of 2023 compared to 2022

Net interest income, taxable equivalent, decreased to $98.9 million for the first nine months of 2023, down from $100.4 million for the first nine months of 2022. Net interest income was positively impacted, compared to the prior year, primarily by the increase in balances of loans and leases, securities, and the increase in yield on these interest-earning assets, offset by the increase in the cost of interest-bearing liabilities.  Average interest-earning assets increased from $4.33 billion for the first nine months of 2022, to $4.39 billion for the first nine months of 2023, primarily because of deployment of cash into loans and leases, and securities. Over this period, average loan and lease balances increased by $429.2 million, average securities increased $24.1million and average interest-bearing deposits increased by $177.2 million.  Average federal funds sold and other interest earning assets decreased by $396.3 million, average borrowings decreased $18.6 million and noninterest-bearing deposits decreased by $139.3 million.  The tax equivalent net interest margin decreased to 3.01% for the first nine months of 2023, compared to 3.10% for the first nine months of 2022. The yield on earning assets increased from 3.46% for the first nine months of 2022, to 4.90% for the first nine months of 2023, primarily due the deployment of excess cash and cash equivalents into loans and leases and the increase in rates by the Federal Reserve. The cost of average interest-bearing deposits increased from 0.41% for the first nine months of 2022 to 2.45% for the first nine months of 2023, primarily due to the increase in rates by the Federal Reserve and increased pricing competition.

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The following table summarizes the major components of net interest income and the related yields and costs for the period presented (dollars in thousands):

	Nine Months Ended September 30,
	2023						2022
	Average				Yield/		Average				Yield/
	Balance		Interest		Cost		Balance		Interest		Cost
Assets:
Loans and leases, including fees1	$	3,309,616	$	137,712	5.56	%	$	2,880,444	$	96,300	4.47	%
Taxable Securities		745,694		12,322	2.21	%		683,926		8,463	1.65	%
Tax-exempt securities2		65,170		1,349	2.77	%		102,872		1,873	2.43	%
Federal funds and other earning assets		267,124		9,448	4.73	%		663,400		5,389	1.09	%
Total interest-earning assets		4,387,604		160,831	4.90	%		4,330,642		112,025	3.46	%
Noninterest-earning assets		365,123						373,081
Total assets	$	4,752,727					$	4,703,723
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits	$	954,585		14,583	2.04	%	$	952,523		3,137	0.44	%
Money market and savings deposits		1,770,232		35,912	2.71	%		1,572,287		4,282	0.36	%
Time deposits		508,600		8,838	2.32	%		531,419		1,965	0.49	%
Total interest-bearing deposits		3,233,417		59,333	2.45	%		3,056,229		9,384	0.41	%
Borrowings		19,309		775	5.37	%		37,933		371	1.31	%
Subordinated debt		42,044		1,877	5.97	%		41,959		1,877	5.98	%
Total interest-bearing liabilities		3,294,770		61,985	2.52	%		3,136,121		11,632	0.50	%
Noninterest-bearing deposits		972,507						1,111,854
Other liabilities		44,703						31,412
Total liabilities		4,311,980						4,279,387
Shareholders' equity		440,747						424,336
Total liabilities and shareholders’ equity	$	4,752,727					$	4,703,723
Net interest income, taxable equivalent			$	98,846					$	100,393
Interest rate spread					2.39	%					2.96	%
Tax equivalent net interest margin					3.01	%					3.10	%
Percentage of average interest-earning assets to average interest-bearing liabilities					133.17	%					138.09	%
Percentage of average equity to average assets					9.27	%					9.02	%

¹Loans and leases include PPP loans with an average balance of $2.9 million and $36.6 million for the nine months ended September 30, 2023 and 2022, respectively.  Loan and lease fees included in loan and lease income was $4.7 million and $3.6 million for the nine months ended September 30, 2023 and 2022, respectively. Loan lease fee income for the nine months ended September 30, 2023, and 2022, includes $28 thousand and $1.9 million accretion of loan fees on PPP loans, respectively.    

²Yields related to investment securities exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 21.0%. The taxable-equivalent adjustment was $283 thousand for the nine months ended September 30, 2023, and $504 thousand for the nine months ended September 30, 2022.

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Noninterest Income

The following table summarizes noninterest income by category (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2023		2022			Change	2023		2022			Change
Service charges on deposit accounts	$	1,736	$	1,611	$	125	$	4,838	$	4,376	$	462
Loss on sale of securities		(6,801)		—		(6,801)		(6,801)		—		(6,801)
Mortgage banking		309		170		139		813		1,475		(662)
Investment services		1,461		1,051		410		3,766		3,186		580
Insurance commissions		1,153		864		289		3,551		2,363		1,188
Interchange and debit card transaction fees, net		1,357		1,356		1		4,087		4,107		(20)
Other		1,476		1,198		278		4,492		5,083		(591)
Total noninterest income	$	691	$	6,250	$	(5,559)	$	14,746	$	20,590	$	(5,844)

Third quarter of 2023 compared to 2022

Noninterest income decreased by $5.6 million during the third quarter of 2023 compared to the same period in 2022. This quarterly change in total noninterest income primarily resulted from the following:

● Loss on sale of securities was associated with a pre-tax loss on the sale of $159.6 million of available-for-sale securities and moving into higher yielding assets;

● Increase in investment services, related to organic growth and the new Dothan, Alabama advisory team hired during the second quarter of 2023;

● Increase in insurance commissions, driven by the addition of Sunbelt Group, LLC (“Sunbelt”) during the third quarter of 2022 and organic growth; and

● Increase in other, primarily related to increased fees from capital markets activity.

First nine months of 2023 compared to 2022

Noninterest income decreased by $5.8 million during the first nine months of 2023 compared to the same period in 2022. This change in total noninterest income primarily resulted from the following:

● Increase in service charges on deposit accounts, related to increased account activity;

● Loss on sale of securities was associated with a pre-tax loss on the sale of $159.6 million of available-for-sale securities and moving into higher yielding assets;

● Decrease in mortgage banking, related to lower volume of secondary market activity;

● Increase in investment services, primarily related to organic growth;

● Increase in insurance commissions, driven by the addition of Sunbelt during the third quarter of 2022 and organic growth; and

● Decrease in other, primarily related to decreased fees from capital markets activity.

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Noninterest Expense

The following table summarizes noninterest expense by category (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2023		2022			Change	2023		2022			Change
Salaries and employee benefits	$	16,785	$	16,317	$	468	$	49,474	$	47,036	$	2,438
Occupancy and equipment		3,547		3,167		380		10,073		9,020		1,053
FDIC insurance		825		705		120		2,241		2,022		219
Other real estate and loan related expense		603		565		38		1,616		1,930		(314)
Advertising and marketing		346		288		58		1,006		985		21
Data processing and technology		2,378		1,872		506		6,777		5,185		1,592
Professional services		735		822		(87)		2,307		2,809		(502)
Amortization of intangibles		647		650		(3)		1,981		1,919		62
Merger related and restructuring expenses		110		87		23		110		607		(497)
Other		2,540		2,757		(217)		7,870		7,361		509
Total noninterest expense	$	28,516	$	27,230	$	1,286	$	83,455	$	78,874	$	4,581

Third quarter of 2023 compared to 2022

Noninterest expense increased by $1.3 million in the third quarter of 2023 as compared to the same period in 2022. The quarterly increase in total noninterest expense primarily resulted from the following:

● Increase in salary and employee benefits, related to overall franchise growth, and to a lesser extent, the Sunbelt acquisition completed in September 2022;

● Increase in occupancy and equipment, related to overall franchise growth; and

● Increase in data processing and technology, as a result of enhancements to our core systems.

First nine months of 2023 compared to 2022

Noninterest expense increased by $4.6 million in the first nine months of 2023 as compared to the same period in 2022. The change in total noninterest expense primarily resulted from the following:

● Increase in salary and employee benefits, related to overall franchise growth;

● Increase in occupancy and equipment, due to ongoing infrastructure and facilities added to accommodate growth in operations; and

● Increase in data processing and technology, primarily from continued infrastructure build.

Taxes

Third quarter of 2023 compared to 2022

In the third quarter of 2023 income tax expense totaled $319 thousand compared to $3.2 million in the third quarter of 2022. The effective tax rate was approximately 13.4% in the third quarter of 2023 compared to 21.8% in the third quarter of 2022. The primary reason for the 8.4% decline in the effective tax rate was due to lower earnings, largely from the $6.8 million pre-tax loss on sale of available-for-sale securities during the current quarter.

First nine months of 2023 compared to 2022

In the first nine months of 2023 income tax expense totaled $6.0 million compared to $8.4 million in the first nine months of 2022.  The effective tax rate was approximately 21.1% for first nine months of 2023 compared to 21.8% for the nine months of 2022.

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Loan and Lease Portfolio

The Company had total net loans and leases outstanding of approximately $3.35 billion at September 30, 2023, compared to $3.23 billion at December 31, 2022. Loans secured by real estate, consisting of commercial and residential property, are the principal component of our loan and lease portfolio.

The following tables summarize the composition of our loan and lease portfolio for the periods presented (dollars in thousands):

			% of				% of
	September 30,		Gross		December 31,		Gross
	2023		Total		2022		Total
Commercial real estate	$	1,667,176	49.3	%	$	1,627,761	50.0	%
Consumer real estate		638,518	18.9	%		587,977	18.1	%
Construction and land development		373,068	11.0	%		402,501	12.4	%
Commercial and industrial		617,115	18.3	%		551,867	17.0	%
Leases		68,538	2.0	%		67,427	2.1	%
Consumer and other		14,584	0.4	%		16,094	0.5	%
Total loans and leases		3,378,999	100.0	%		3,253,627	100.0	%
Less: Allowance for credit losses		(33,687)				(23,334)
Loans and leases, net	$	3,345,312			$	3,230,293

Loan and Lease Portfolio Maturities

The following table sets forth the maturity distribution of our loans and leases at September 30, 2023, including the interest rate sensitivity for loans and leases maturing after one year (in thousands):

											Rate Structure for Loans and Leases
											Maturing Over One Year
	One Year		One through			Five through	Over Fifteen				Fixed		Floating
	or Less		Five Years			Fifteen Years	Years		Total		Rate		Rate
Commercial real estate-mortgage	$	70,903	$	924,631	$	663,524	$	8,118	$	1,667,176	$	991,329	$	604,944
Consumer real estate-mortgage		33,588		215,674		199,146		190,110		638,518		280,763		324,167
Construction and land development		108,970		161,354		74,130		28,614		373,068		141,211		122,887
Commercial and industrial		151,422		367,104		92,291		6,298		617,115		370,626		95,067
Leases		2,481		65,901		156		—		68,538		66,057		—
Consumer and other		7,574		6,528		428		54		14,584		6,270		740
Total loans and leases	$	374,938	$	1,741,192	$	1,029,675	$	233,194	$	3,378,999	$	1,856,256	$	1,147,805

Nonaccrual, Past Due, and Restructured Loans and Leases

Nonperforming loans and leases as a percentage of total gross loans and leases, net of deferred fees, was 0.12% as of September 30, 2023, and 0.09% December 31, 2022, respectively. Total nonperforming assets as a percentage of total assets was 0.12% as of September 30, 2023, and 0.10% as of December 31, 2022, respectively.

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The following table is a summary of our loans and leases that were past due at least 30 days but less than 89 days and 90 days or more past due for the periods presented (dollars in thousands):

			Accruing Loans				Accruing Loans
			30-89 Days				90 Days or More				Total Accruing
			Past Due				Past Due				Past Due Loans
					Percentage of				Percentage of				Percentage of
		Total			Loans in				Loans in				Loans in
		Loans		Amount	Category			Amount	Category			Amount	Category
September 30, 2023
Commercial real estate	$	1,667,176	$	862	0.05	%	$	-	-	%	$	862	0.05	%
Consumer real estate		638,518		1,107	0.17			34	0.01			1,141	0.18
Construction and land development		373,068		518	0.14			-	-			518	0.14
Commercial and industrial		617,115		2,329	0.38			98	0.02			2,427	0.39
Leases		68,538		118	0.17			-	-			118	0.17
Consumer and other		14,584		95	0.65			97	0.67			192	1.32
Total	$	3,378,999	$	5,029	0.15		$	229	-		$	5,258	0.16
December 31, 2022
Commercial real estate	$	1,627,761	$	54	-	%	$	-	-	%	$	54	-	%
Consumer real estate		587,977		594	0.10			-	-			594	0.10
Construction and land development		402,501		-	-			-	-			-	-
Commercial and industrial		551,867		203	0.04			-	-			203	0.04
Leases		67,427		1,108	1.64			143	0.21			1,251	1.86
Consumer and other		16,094		107	0.66			-	-			107	0.66
Total	$	3,253,627	$	2,066	0.06		$	143	-		$	2,209	0.07

The following table is a summary of our nonaccrual loans and leases for the periods presented (dollars in thousands):

	September 30, 2023						December 31, 2022
			Nonaccrual Loans						Nonaccrual Loans
					Percentage of						Percentage of
		Total			Loans in			Total			Loans in
		Loans		Amount	Category			Loans		Amount	Category
Commercial real estate	$	1,667,176	$	741	0.04	%	$	1,627,761	$	-	-	%
Consumer real estate		638,518		2,064	0.32			587,977		1,665	0.28
Construction and land development		373,068		620	0.17			402,501		920	0.23
Commercial and industrial		617,115		314	0.05			551,867		180	0.03
Leases		68,538		195	0.28			67,427		28	0.04
Consumer and other		14,584		-	-			16,094		15	0.09
Total	$	3,378,999	$	3,934	0.12		$	3,253,627	$	2,808	0.09
Allowance for credit losses to nonaccrual loans				856.30%						830.98%

Allocation of the Allowance for Credit Losses

We maintain the allowance at a level that we deem appropriate to adequately cover change in the loan and lease portfolio. Our provision for credit losses for loans and leases for the nine months ended September 30, 2023, is $2.3 million compared to $3.2 million in the same period of 2022, a decrease of $976 thousand.  As of September 30, 2023, and December 31, 2022, our allowance for credit losses was $33.7 million and $23.3 million, respectively, which we deemed to be adequate at each of the respective dates. The increase was primarily the result of the implementation ASU 2016-13, which resulted in an increase of $8.7 million to the allowance for credit losses. See Note 1. Recently Issued and Adopted Accounting Pronouncements in the Notes to our Consolidated Financial Statements in this Form 10-Q for further information related to this change.  Our allowance for credit loss as a percentage of total loans and leases was 1.00% at September 30, 2023 and 0.72% at December 31, 2022, respectively.

The following table sets forth, based on management's best estimate, the allocation of the allowance for credit losses on loans and leases to categories of loans and leases and loan and lease balances by category and the percentage of loans and

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leases in each category to total loans and leases and allowance for credit losses as a percentage of total loans and leases within each loan and lease category for each period presented (dollars in thousands):

			Percentage of Loans					Ratio of Allowance
	Amount of		in Each Category			Total		Allocated to Loans in
	Allowance Allocated		to Total Loans			Loans		Each Category
September 30, 2023
Commercial real estate	$	15,007		49.3	%	$	1,667,176		0.90	%
Consumer real estate		7,156		18.9			638,518		1.12
Construction and land development		5,077		11.0			373,068		1.36
Commercial and industrial		5,680		18.3			617,115		0.92
Leases		644		2.0			68,538		0.94
Consumer and other		123		0.4			14,584		0.84
Total	$	33,687		100.0	%	$	3,378,999		1.00
December 31, 2022
Commercial real estate	$	10,821		50.0	%	$	1,627,761		0.66	%
Consumer real estate		4,028		18.1			587,977		0.69
Construction and land development		3,059		12.4			402,501		0.76
Commercial and industrial		3,997		17.0			551,867		0.72
Leases		1,293		2.1			67,427		1.92
Consumer and other		136		0.5			16,094		0.85
Total	$	23,334		100.0	%	$	3,253,627		0.72

The allocation by category is determined based on the loans and leases individually assigned call code and risk rating. Specific valuation allowances was $2.8 million at September 30, 2023, and $385 thousand at December 31, 2022.  

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Analysis of the Allowance for Credit Losses

The following is a summary of changes in the allowance for credit losses for the periods presented including the ratio of the allowance for credit losses to total loans and leases as of the end of each period (dollars in thousands):

							Ratio of Net (charge-offs)
	Provision for		Net (charge-offs)		Average		Recoveries to
	Credit Losses		Recoveries		Loans		Average Loans
Three Months Ended September 30, 2023
Commercial real estate	$	691	$	2	$	1,655,592		-	%
Consumer real estate		413		(5)		632,102		-
Construction and land development		(369)		-		384,166		-
Commercial and industrial		307		(131)		606,183		(0.02)
Leases		201		(143)		67,515		(0.21)
Consumer and other		41		(67)		15,120		(0.44)
Total	$	1,284	$	(344)	$	3,360,678		(0.01)
Three Months Ended September 30, 2022
Commercial real estate	$	(21)		-	$	1,531,028		-	%
Consumer real estate		166		7		546,286		0.00
Construction and land development		272		-		383,488		-
Commercial and industrial		208		(32)		497,378		(0.01)
Leases		198		29		63,831		0.05
Consumer and other		151		(147)		15,081		(0.97)
Total	$	974	$	(143)	$	3,037,092		-
Nine Months Ended September 30, 2023
Commercial real estate	$	650	$	5	$	1,636,661		-	%
Consumer real estate		1,006		4		618,883		-
Construction and land development		(177)		25		382,005		0.01
Commercial and industrial		439		(234)		590,088		(0.04)
Leases		217		(211)		67,076		(0.31)
Consumer and other		119		(145)		14,903		(0.97)
Total	$	2,254	$	(556)	$	3,309,616		(0.02)
Nine Months Ended September 30, 2022
Commercial real estate	$	794		4	$	1,471,905		-	%
Consumer real estate		26		528		504,007		0.10
Construction and land development		1,294		-		350,872		-
Commercial and industrial		132		(78)		479,392		(0.02)
Leases		620		84		60,836		0.14
Consumer and other		364		(351)		13,432		(2.61)
Total	$	3,230	$	187	$	2,880,444		0.01

Securities Portfolio

Our available-for-sale securities portfolio is carried at fair market value and our held-to-maturity securities portfolio is carried at amortized cost, and consists primarily of Federal agency bonds, mortgage-backed securities, state and municipal securities and other debt securities. Our securities portfolio decreased from $769.8 million at December 31, 2022, to $667.4 million at September 30, 2023, primarily as a result of the sale of $159.6 million in available-for-sale securities, which were predominantly US Treasury securities, yielding 1.37% for a pre-tax loss of $6.8 million.  This sale was part of a balance sheet optimization transaction where the proceeds were redeployed into higher yielding assets.  The Company estimates that the loss will be recovered through incremental earnings by no later than 12 months.  Our securities to asset ratio has decreased from 16.7% at December 31, 2022, to 13.9% at September 30, 2023.

The following table presents the contractual maturity of the Company’s securities by contractual maturity date and average yields based on amortized cost (for all obligations on a fully taxable basis) at September 30, 2023 (dollars in thousands).

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The composition and maturity/repricing distribution of the securities portfolio is subject to change depending on rate sensitivity, capital and liquidity needs.

	One Year				One through				Five through				Over Ten
	or Less				Five Years				Ten Years				Years				Total
			Weighted				Weighted				Weighted				Weighted				Weighted
			Average				Average				Average				Average				Average
Available-for-sale:		Amount	Yield (1)			Amount	Yield (1)			Amount	Yield (1)			Amount	Yield (1)			Amount	Yield (1)
U.S. Treasury	$	—	-	%	$	51,670	1.26	%	$	32,880	1.28	%	$	—	-	%	$	84,550	1.27	%
U.S. Government agencies		11,280	5.39			225	6.46			48,178	6.66			—	-			59,683	6.42
State and political subdivisions		130	5.56			3,185	2.72			5,591	3.06			9,755	3.80			18,661	3.41
Other debt securities		—	-			993	3.65			33,291	4.84			500	4.50			34,784	4.80
Mortgage-backed securities		40	1.73			6,949	1.57			83,056	2.63			141,108	2.75			231,153	2.67
Total securities	$	11,450	5.38		$	63,022	1.42		$	202,996	3.74		$	151,363	2.82		$	428,831	3.12
Held-to-maturity:
U.S. Treasury	$	150,126	1.47	%	$	—	-	%	$	—	-	%	$	—	-	%	$	150,126	1.47	%
U.S. Government agencies		—	-			—	-			43,269	1.84			6,373	2.01			49,642	1.86
State and political subdivisions		—	-			—	-			4,247	2.20			48,700	2.13			52,947	2.14
Other debt securities		—	-			—	-			—	-			—	-			—	-
Mortgage-backed securities		—	-			—	-			4,847	2.14			24,751	2.11			29,598	2.11
Total securities	$	150,126	1.47		$	—	-		$	52,363	1.90		$	79,824	2.11		$	282,313	1.73

(1) Based on amortized cost, taxable equivalent basis

Deposits

Deposits are the primary source of funds for the Company’s lending and investing activities. The Company provides a range of deposit services to businesses and individuals, including noninterest-bearing checking accounts, interest-bearing checking accounts, savings accounts, money market accounts, IRAs and CDs. These accounts generally earn interest at rates the Company establishes based on market factors and the anticipated amount and timing of funding needs. The establishment or continuity of a core deposit relationship can be a factor in loan pricing decisions. While the Company’s primary focus is on establishing customer relationships to attract core deposits, at times, the Company uses brokered deposits and other wholesale deposits to supplement its funding sources. As of September 30, 2023, brokered deposits represented approximately 0.75% of total deposits.

The following tables summarize the average balances outstanding and average interest rates for each major category of deposits for the three- and nine-month periods ending September 30, 2023 and 2022, respectively (dollars in thousands):

	Three Months Ended						Three Months Ended
	September 30, 2023						September 30, 2022
	Average		% of		Average		Average		% of		Average
	Balance		Total		Rate		Balance		Total		Rate
Noninterest-bearing demand	$	951,179	22.5	%	—	%	$	1,192,813	27.8	%	—	%
Interest-bearing demand		969,122	22.9	%	2.24	%		966,437	22.5	%	0.80	%
Money market and savings		1,753,671	41.5	%	3.11	%		1,632,510	38.0	%	0.56	%
Time deposits		551,191	13.0	%	3.04	%		501,919	11.7	%	0.48	%
Total average deposits	$	4,225,163	100.0	%	2.20	%	$	4,293,679	100.0	%	0.45	%

	Nine Months Ended						Nine Months Ended
	September 30, 2023						September 30, 2022
	Average		% of		Average		Average		% of		Average
	Balance		Total		Rate		Balance		Total		Rate
Noninterest-bearing demand	$	972,507	23.1	%	—	%	$	1,111,854	26.7	%	—	%
Interest-bearing demand		954,585	22.7	%	2.04	%		952,523	22.9	%	0.44	%
Money market and savings		1,770,232	42.1	%	2.71	%		1,572,287	37.7	%	0.36	%
Time deposits		508,600	12.1	%	2.32	%		531,419	12.7	%	0.49	%
Total average deposits	$	4,205,924	100.0	%	1.89	%	$	4,168,083	100.0	%	0.30	%

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The Company believes its deposit product offerings are properly structured to attract and retain core deposit relationships. The average cost of interest-bearing deposits for the three months ended September 30, 2023, and 2022, was 2.84% and 0.62%, respectively. The increase cost was primarily attributable to the increases in rates and increased pricing competition.  The average cost of interest-bearing deposits for the nine months ended September 30, 2023, and 2022, was 2.45% and 0.41%, respectively. The increase cost was primarily attributable to the increases in rates and increased pricing competition.

Total deposits as of September 30, 2023, were $4.25 billion, which was an increase of $169.4 million from December 31, 2022. This increase was primarily from organic deposit growth. As of September 30, 2023, the Company had outstanding time deposits under $250,000 with balances of $334.4 million and time deposits over $250,000 with balances of $228.2 million.

The following table summarizes the maturities of time deposits $250,000 or more (in thousands).

	September 30,
	2023
Three months or less	$	45,247
Three to six months		96,790
Six to twelve months		54,978
More than twelve months		31,147
Total	$	228,162

The Company's estimated uninsured deposits totaled $1.7 billion at September 30, 2023, compared to $1.6 billion at December 31, 2022, representing 40.9% and 40.4% of total deposits at September 30, 2023, and December 31, 2022, respectively.  These estimates were derived using the same methodologies and assumptions used for the Bank's regulatory reporting.  

Borrowings

The Company uses short-term borrowings and long-term debt to provide both funding and, to a lesser extent, regulatory capital using debt at the Company level which can be downstreamed as Tier 1 capital to the Bank. Borrowings totaled $14.1 million at September 30, 2023, and consisted of short-term borrowings of $8.0 million, and $6.1 million of securities sold under repurchase agreements. Long-term debt totaled $42.1 million at September 30, 2023, and $42.0 million at December 31, 2022, and consisted entirely of subordinated debt.  For more information regarding our borrowings, see "Part I - Item 1. Consolidated Financial Statements - Note 7 – Borrowings, Line of Credit and Subordinated Debt."

Capital Resources

The Company uses leverage analysis to examine the potential of the institution to increase assets and liabilities using the current capital base. The key measurements included in this analysis are the Bank’s Common Equity Tier 1 capital, Tier 1 capital, leverage and total capital ratios. At September 30, 2023 and December 31, 2022, our capital ratios, including our Bank’s capital ratios, exceeded regulatory minimum capital requirements. From time to time we may be required to support the capital needs of our bank subsidiary. We believe we have various capital raising techniques available to us to provide for the capital needs of our bank, if necessary. For more information regarding our capital, leverage and total capital ratios, see “Part I - Item 1. Consolidated Financial Statements - Note 13 - Regulatory Matters.”

Liquidity and Off-Balance Sheet Arrangements

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing and depository needs of its customers. At September 30, 2023, we had $746.9 million of pre-approved but unused lines of credit and $15.6 million of standby letters of credit. These commitments generally have fixed expiration dates and many will expire without being drawn upon. The total commitment level does not necessarily represent future cash requirements. If needed to fund these outstanding commitments, the Bank has the ability to liquidate Federal funds sold or securities available-for-sale, or on a short-term basis to borrow and purchase Federal funds from other financial

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institutions.  For more information regarding our off-balance sheet arrangements, see “Part I - Item 1. Consolidated Financial Statements - Note 9 – Commitments and Contingent Liabilities.”

Market Risk and Liquidity Risk Management

The Bank’s Asset Liability Management Committee (“ALCO”) oversees market risk management and establishes risk measures, limits on policy guidelines for managing the amount of interest rate risk and its effect on net interest income and capital. A variety of measures are used to provide for a comprehensive overview of the Company’s magnitude of interest rate risk, the distribution of risk, the level of risk over time and the exposure to changes in certain interest rate relationships.  We utilize an independent third party earnings simulation model as the primary quantitative tool in measuring the amount of interest rate risk associated with changing market rates. The model quantifies the effects of various interest rate scenarios on projected net interest income and net income over the next 12-24 months. The model measures the impact on net interest income relative to a flat-rate case scenario of hypothetical fluctuations in interest rates over the next 12-24 months. These simulations incorporate assumptions regarding balance sheet growth and mix, pricing and the repricing and maturity characteristics of the existing and projected balance sheet. The impact of interest rate, caps and floors, is also included in the model. Other interest rate-related risks such as prepayment, basis and option risk are also considered. In addition, third parties will join the meetings of ALCO to provide feedback regarding future balance sheet structure, earnings and liquidity strategies.  ALCO continuously monitors and manages the balance between interest rate-sensitive assets and liabilities. The objective is to manage the impact of fluctuating market rates on net interest income within acceptable levels. In order to meet this objective, management may lengthen or shorten the duration of assets or liabilities.

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 leases and deposits. ALCO determines the most appropriate amounts of on-balance sheet and off-balance sheet items. The primary measurements we use to help us manage interest rate sensitivity are 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.

Earnings Simulation Model We believe interest rate risk is effectively measured by our earnings simulation modeling. Earning assets, interest-bearing liabilities and off-balance sheet financial instruments are combined with simulated forecasts of interest rates for the next 12 months. 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 our static interest rate forecast over the next 12 months, limits in the decline in net interest income are as follows:

	Estimated % Change in Net Interest Income Over 12 Months
September 30, 2023:
Instantaneous, Parallel Change in Prevailing Interest Rates Equal to:
100 basis points increase	(2.82)%
200 basis points increase	(5.84)%
100 basis points decrease	3.22%
200 basis points decrease	5.54%

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.

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To help monitor our related risk, we’ve established the following policy limits regarding simulated changes in our economic value of equity:

	Current Estimated Instantaneous Rate Change
September 30, 2023:
Instantaneous, Parallel Change in Prevailing Interest Rates Equal to:
100 basis points increase	(1.32)%
200 basis points increase	(3.98)%
100 basis points decrease	1.56%
200 basis points decrease	1.93%

At September 30, 2023, our model results indicated that we were within our policy limits.

Liquidity Risk Management

The purpose of liquidity risk management is to ensure that there are sufficient cash flows to satisfy loan and lease 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.

Changes in interest rates also affect our liquidity position. We currently price deposits in response to market rates and intend 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 and lease payments are a relatively stable source of funds, but loan and lease payoffs and deposit flows fluctuate significantly, being influenced by interest rates, general economic conditions and competition. Additionally, debt securities 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 $161.6 million in securities that mature throughout the next 12 months. The Company also has unused borrowing capacity in the amount of $905.4 million available with the Federal Reserve, Federal Home Loan Bank, several correspondent banks and a line of credit. With these sources of funds, the Company currently anticipates adequate liquidity to meet the expected obligations of its customers.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The information presented in the Market Risk and Liquidity Risk Management section of the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of this report is incorporated herein by reference.

ITEM 4. CONTROLS AND PROCEDURES

Under the supervision and with the participation of management, including SmartFinancial’s Chief Executive Officer and Chief Financial Officer, SmartFinancial has evaluated the effectiveness of its disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of September 30, 2023 (the “Evaluation Date”). Based on such evaluation, SmartFinancial’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date, SmartFinancial’s disclosure controls and procedures were effective to ensure that information required to be disclosed by SmartFinancial in the reports that it files or submits under the Exchange Act is (i) accumulated and communicated to SmartFinancial’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decision regarding the required disclosure and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

There were no changes in SmartFinancial’s internal control over financial reporting during SmartFinancial’s fiscal quarter ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, SmartFinancial’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

SmartFinancial, Inc. and its wholly owned subsidiary, SmartBank, are periodically involved as a plaintiff or a defendant in various legal actions in the ordinary course of business. While the outcome of these matters is not currently determinable, management does not expect the disposition of any of these matters to have a material adverse impact on the Company’s financial condition, financial statements or results of operations.

Item 1A. Risk Factors.

In addition to the other information set forth in this report, you should carefully consider the factors discussed under “Part I – Item 1A – Risk Factors” in our Form 10-K for the year ended December 31, 2022, and under “Part II – Item 1A – Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023. These factors could materially and adversely affect our business, financial condition, liquidity, results of operations and capital position, and could cause our actual results to differ materially from our historical results or the results contemplated by the forward-looking statements contained in this report. Please be aware that these risks may change over time and other risks may prove to be important in the future.

There are no material changes during the period covered by this Report to the risk factors previously disclosed in our Form 10-K for the year ended December 31, 2022 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.

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

(a) Not applicable

(b) Not applicable

(c) Issuer Purchases of Registered Equity Securities

On November 20, 2018, the Company announced that its board of directors had authorized a stock repurchase plan pursuant to which the Company may purchase up to $10.0 million in shares of the Company’s outstanding common stock. Stock repurchases under the plan will be made from time to time in the open market, at the discretion of the management of the Company, and in accordance with applicable legal requirements. The stock repurchase plan does not obligate the Company to repurchase any dollar amount or number of shares, and the program may be extended, modified, amended, suspended, or discontinued at any time. As of September 30, 2023, we have purchased $5.5 million of the authorized $10.0 million and may purchase up to an additional $4.5 million in the Company’s outstanding common stock.

The following table summarizes the Company’s repurchase activity during the three months ended September 30, 2023.

					Maximum
					Number (or
					Approximate
					Dollar Value) of
					Shares That May
				Total Number of Shares	Yet Be Purchased
	Total Number of	Weighted		Purchased as Part of	Under the Plans
	Shares	Average Price Paid		Publicly Announced	or Programs (in
Period	Repurchased	Per Share		Plans or Programs	thousands)
July 1, 2023 to July 31, 2023	—	$	—	—	$	4,484
August 1, 2023 to August 31, 2023	—		—	—		4,484
September 1, 2023 to September 30, 2023	—		—	—		4,484
Total	—	$	—	—	$	4,484

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Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

Pursuant to Item 408(a) of Regulation S-K, none of the Company's directors or executive officers adopted, terminated or modified a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the three months ended September 30, 2023.

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Item 6. Exhibits

Exhibit No.	Description	Location
2.1	Asset Purchase Agreement, dated as of September 1, 2022, by Sunbelt Group, LLC, A. Mark Slater., and Rains Agency Inc.	Incorporated by reference to Exhibit 2.1 to Form 8-K filed September 6, 2022
3.1	Second Amended and Restated Charter of SmartFinancial, Inc.	Incorporated by reference to Exhibit 3.3 to Form 8-K filed September 2, 2015
3.2	Second Amended and Restated Bylaws of SmartFinancial, Inc.	Incorporated by reference to Exhibit 3.1 to Form 8-K filed October 26, 2015
10.1	Separation Agreement, dated as of September 27, 2023, by SmartFinancial, Inc., SmartBank, and Gregory L. Davis	Filed herewith.
31.1	Certification pursuant to Rule 13a -14(a)/15d-14(a)	Filed herewith.
31.2	Certification pursuant to Rule 13a -14(a)/15d-14(a)	Filed herewith.
32.1	Certification pursuant to 18 USC Section 1350 -Sarbanes-Oxley Act of 2002	Furnished herewith.
32.2	Certification pursuant to 18 USC Section 1350 -Sarbanes-Oxley Act of 2002	Furnished herewith.
101	Interactive Data Files (formatted as Inline XBRL)	Filed herewith.
104	Cover Page Interactive Data File (Formatted as Inline XBRL and contained in Exhibit 101)	Filed herewith

*     Certain schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant will furnish a copy of any omitted schedule to the Securities and Exchange Commission upon request.

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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.

		SmartFinancial, Inc.
Date:	November 9, 2023	/s/ William Y. Carroll, Jr.
		William Y. Carroll, Jr.
		President and Chief Executive Officer
		(principal executive officer)
Date:	November 9, 2023	/s/ Ronald J. Gorczynski
		Ronald J. Gorczynski
		Executive Vice President and Chief Financial Officer
		(principal financial officer and accounting officer)

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EX-10.1

Exhibit 10.1

SEPARATION AGREEMENT

THIS AGREEMENT (the “Agreement”) is entered into as of the Effective Date, as defined in Paragraph 6 hereof, by and between SmartFinancial, Inc. (the “Holding Company”), SmartBank (together with the Holding Company, the “Bank”) and Gregory L. Davis (“Employee”). Together, the Bank and Employee may be referred to hereinafter as the “Parties”.

In consideration of the payments, covenants and releases described below, and in consideration of other good and valuable consideration, the receipt and sufficiency of all of which is hereby acknowledged, the Bank and Employee agree as follows:

1.Separation of Employment; Termination of Employment Agreement.

a.Employee resigned from employment with the Bank effective September 29, 2023 (the “Separation Date”). Employee acknowledges and agrees that, effective as of the Separation Date, his Employment Agreement with the Bank, dated as of March 9, 2020 (the “Employment Agreement”) shall terminate without further action by the Parties, and that the Bank shall have no continuing obligations to Employee under the Employment Agreement; provided, however, that Sections 7, 8, 9, 12, 13 and 15 of the Employment Agreement, as well as any other section of the Employment Agreement necessary to enforce such sections, shall survive and remain in full force and effect in accordance with their terms; and provided, further, that the “Post-Termination Period” (as defined in the Employment Agreement) shall be for period of 24 months following the Separation Date (instead of 12 months).

b.Employee will be paid any salary or wages earned unpaid through the Separation Date, as well as and any unreimbursed business expenses (if such expenses have been incurred and submitted in accordance with Bank policy no later than seven (7) days after the Separation Date). Employee acknowledges and agrees that, other than the amounts described in the preceding sentence, he has been paid all wages and accrued benefits to which he is entitled through the date of execution of this Agreement. Other than the payments set forth in this Agreement, the parties agree that the Bank owes no additional amounts to Employee for wages, back pay, severance pay, bonuses, damages, accrued vacation, benefits, insurance, sick leave, other leave, or any other reason.

2.Consideration for this Agreement. In consideration of Employee’s promises and the General Release of Claims and Covenant Not To Sue contained in Paragraph 3 of this Agreement, the Bank agrees that, effective as of the Separation Date, 6,402 restricted shares of Holding Company common stock (the “Restricted Shares”) held by Employee shall become fully-vested, subject to withholding for taxes (the “Consideration”).  The Bank’s agreement to provide the Consideration is specifically contingent upon Employee (a) executing this Agreement and not revoking this Agreement, as set forth in Paragraph 6 below; and (b) complying with his obligations under this Agreement, the Employment Agreement and any other continuing contractual obligations he owes to the Bank.

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3. General Release of Claims and Covenant Not To Sue.

a.General Release of Claims. In consideration of the payments made to Employee by the Bank and the promises contained in this Agreement, Employee on behalf of himself/herself and his/her agents and successors in interest, hereby UNCONDITIONALLY RELEASES AND DISCHARGES the Bank, its successors, subsidiaries, parent companies, assigns, joint ventures, and affiliated companies and their respective agents, legal representatives, shareholders, attorneys, employees, members, managers, officers and directors (collectively, the “Releasees”) from ALL CLAIMS, LIABILITIES, DEMANDS AND CAUSES OF ACTION which he may by law release, as well as all contractual obligations not expressly set forth in this Agreement, whether known or unknown, fixed or contingent, that he may have or claim to have against any Releasee for any reason as of the date of execution of this Agreement. This General Release and Covenant Not To Sue includes, but is not limited to, claims arising under federal, state or local laws prohibiting employment discrimination; claims arising under severance plans and contracts; and claims growing out of any legal restrictions on the Bank’s rights to terminate its employees or to take any other employment action, whether statutory, contractual or arising under common law or case law. Employee specifically acknowledges and agrees that he is releasing any and all rights under federal, state and local employment laws including without limitation the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 1981, the Americans With Disabilities Act, the Family and Medical Leave Act, the Genetic Information Nondiscrimination Act, the anti-retaliation provisions of the Fair Labor Standards Act, the Employee Retirement Income Security Act, the Equal Pay Act, the Occupational Safety and Health Act, the Worker Adjustment and Retraining Notification Act, the Employee Polygraph Protection Act, the Fair Credit Reporting Act, the Tennessee Human Rights Act, and any and all other local, state, and federal law claims arising under statute or common law. It is agreed that this is a general release and it is to be broadly construed as a release of all claims, except as set forth in Paragraph 3(e) below.

b.Covenant Not to Sue. Except as expressly set forth in Paragraph 4 below, Employee further hereby AGREES NOT TO FILE A LAWSUIT or other legal claim or charge to assert against any of the Releasees any claim released by this Agreement.

c.Acknowledgement Regarding Payments and Benefits. Employee acknowledges and agrees that he has been paid all wages and accrued benefits to which he is entitled through the date of execution of this Agreement. Other than the payments set forth in this Agreement, the Parties agree that the Bank owes no additional amounts to Employee for wages, back pay, severance pay, bonuses, damages, accrued vacation, benefits, insurance, sick leave, other leave, or any other reason.

d.Other Representations and Acknowledgements. This Agreement is intended to and does settle and resolve all claims of any nature that Employee might have against the Bank arising out of their employment relationship or the termination of employment or relating to any other matter, except as set forth in Paragraph 3(e) below. By signing this Agreement, Employee acknowledges that he is doing so knowingly and voluntarily, that he understands that he may be releasing claims he may not know about, and that he is waiving all rights he may have had under

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any law that is intended to protect him from waiving unknown claims. This Agreement shall not in any way be construed as an admission by the Bank or any of the Releasees of wrongdoing or liability or that Employee has any rights against the Bank or any of the Releasees. Employee represents and agrees that he has not transferred or assigned, to any person or entity, any claim that he is releasing in this Paragraph 3.

e.Exceptions to General Release. Nothing in this Agreement is intended as, or shall be deemed or operate as, a release by Employee of (i) any rights of Employee under this Agreement; (ii) any vested benefits under any Bank-sponsored benefit plans; (iii) any rights under COBRA or similar state law; (iv) any recovery to which Employee may be entitled pursuant to workers’ compensation and unemployment insurance laws; (v) Employee’s right to challenge the validity of his release of claims under the ADEA; (vi) any rights or claims under federal, state, or local law that cannot, as a matter of law, be waived by private agreement; and (vii) any claims arising after the date on which Employee executes this Agreement.

4.Protected Rights. Employee understands that nothing contained in this Agreement limits Employee’s ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (“Government Agencies”). Employee further understands that this Agreement does not limit Employee’s ability to communicate or share information with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agencies. However, based on Employee’s release of claims set forth in Paragraph 3 of this Agreement, Employee understands that Employee is releasing all claims and causes of action that Employee might personally pursue or that might be pursued in Employee’s name and, to the extent permitted by applicable law, Employee’s right to recover monetary damages or obtain injunctive relief that is personal to Employee in connection with such claims and causes of action.

5.Acknowledgment. Employee shall have until the twenty-first (21^st) day after he receives this Agreement to execute this Agreement. If he does not execute the Agreement by that date, the offer contained in this Agreement shall be revoked by the Bank. The Bank hereby advises Employee to consult with an attorney prior to executing this Agreement and Employee acknowledges and agrees that the Bank has advised, and hereby does advise, him of his opportunity to consult an attorney or other advisor and has not in any way discouraged him from doing so. Employee expressly acknowledges and agrees that he has been offered twenty-one (21) days to consider this Agreement before signing it, that he has read this Agreement and Release carefully, that he has had sufficient time and opportunity to consult with an attorney or other advisor of his choosing concerning the execution of this Agreement. Employee acknowledges and agrees that he fully understands that the Agreement is final and binding, that it contains a full release of all claims and potential claims, and that the only promises or representations he has relied upon in signing this Agreement are those specifically contained in the Agreement itself. Employee acknowledges and agrees that he is signing this Agreement voluntarily, with the full intent of releasing the Bank and the Releasees from all claims covered by Paragraph 3.

6.Revocation and Effective Date. The Parties agree Employee may revoke the Agreement at will within seven (7) days after he executes the Agreement by giving written notice of revocation

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to Bank. Such notice must be delivered to Ron Gorczynski and must actually be received by such person at or before the above-referenced seven-day deadline. Such revocation notice may be sent to Ron Gorczynski at ron.gorczynski@smartbank.com or 5401 Kingston Pike #600, Knoxville, TN 37919. The Agreement may not be revoked after the expiration of the seven-day deadline. In the event that Employee revokes the Agreement within the revocation period described in this Paragraph, this Agreement shall not be effective or enforceable, and all rights and obligations hereunder shall be void and of no effect. Assuming that Employee does not revoke this Agreement within the revocation period described above, the effective date of this Agreement (the “Effective Date”) shall be the eighth (8^th) day after the day on which Employee executes this Agreement.

7.Confidentiality Obligations.

a.Employee agrees to keep the terms and conditions of this Agreement confidential and not to disclose them to anyone except his spouse, financial advisors, attorneys, or as otherwise required by law, provided that before Employee shares this Agreement with his spouse, financial advisor, or attorney, Employee agrees to notify him or her of this confidentiality requirement.

b.Employee agrees that he will not, directly or indirectly, use, distribute, or disclose to any person any confidential or proprietary information regarding the Bank’s and/or any Releasees’ business, including but not limited to, practices, procedures, and policies; trade secrets; techniques; technology; studies and reports; marketing and business plans; financial information; employment information; and any and all other information of the Bank and/or any Releasees that is valuable to the Bank or such Releasee(s) and not generally known outside of the Bank or such Releasee(s). This obligation shall remain in effect for as long as the information or materials in question retain their status as confidential. This Agreement does not, however, prohibit disclosure of information that was or becomes generally known or available to the public through no fault of Employee.

c.Notwithstanding the foregoing obligations and restrictions regarding confidential information, nothing in this Agreement shall prohibit or restrict, or is intended to prohibit or restrict, Employee from: (i) disclosing information that is required to be disclosed by law, court order or other valid and appropriate legal process; provided, however, that in the event such disclosure is required by law, Employee shall provide the Bank with prompt notice of such requirement so that the Bank may seek an appropriate protective order prior to any such required disclosure by Employee; (ii) reporting possible violations of federal, state, or local law or regulation to any governmental agency or entity, or from making other disclosures that are protected under the whistleblower provisions of federal, state, or local law or regulation, and Employee shall not need the prior authorization of the Bank to make any such reports or disclosures and shall not be required to notify the Bank that Employee has made such reports or disclosures; or (iii) disclosing the underlying facts or circumstances relating to any claim of sexual harassment. In addition, Employee is hereby given notice that he shall not be criminally or civilly liable under any federal or state trade secret law for: (iv) disclosing a trade secret (as defined by 18 U.S.C. § 1839) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, in either event solely for the purpose of reporting or investigating a suspected violation of law; or (v) disclosing a trade secret (as defined by 18 U.S.C. § 1839) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

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8.Return of Property. Employee represents and warrants he has returned to the Bank all documents, materials, equipment, keys, recordings, client contact information, other client-related information, sales information, workforce information, production information, computer data, and other material and information relating to Bank or any of the other Releasees, or the business of the Bank or any of the other Releasees (“Bank Property”), and that he has not retained or provided to anyone else any copies, excerpts, transcripts, descriptions, portions, abstracts, or other representations of Bank Property. To the extent that Employee has any Bank Property in electronic form (including, but not limited to, Bank-related e-mail), Employee represents and warrants that, after returning such electronic Bank Property as described in this Paragraph, he has permanently deleted such Bank Property from all non-Bank-owned computers, mobile devices, electronic media, cloud storage (e.g. DropBox), or other media devices, or equipment. Employee further represents and warrants that he has not provided and will not provide any Bank Property to any third party, including any documents, equipment, or other tangible property, but with the exception of non-confidential materials generally distributed by Bank to clients or the general public.

9.Final Agreement. Subject to Section 1(a), this Agreement contains the entire agreement between the Bank and Employee with respect to the subject matter hereof. The Parties agree that this Agreement may not be modified except by a written document signed by both Parties. The Parties agree that this Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.

10.Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the state of Tennessee without giving effect to its conflict of law principles.

11.Severability. With the exception of the release contained in Paragraph 3, the provisions of this Agreement are severable and if any part of it is found to be unenforceable the other paragraphs shall remain fully and validly enforceable. If the general release and covenant not to sue set forth in Paragraph 3 of this Agreement is found to be unenforceable, this Agreement shall be null and void and Employee will be required to return to the Bank all Consideration already paid to Employee. The language of all valid parts of this Agreement shall in all cases be construed as a whole, according to fair meaning, and not strictly for or against any of the parties.

12.Waiver. The failure of either party to enforce any of the provisions of this Agreement shall in no way be construed to be a waiver of any such provision. Any waiver of any provision of this Agreement must be in a writing signed by the party making such waiver. No waiver of any breach of this Agreement shall be held to be a waiver of any other or subsequent breach.

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The Parties hereby signify their agreement to these terms by their signatures below.

Employee /s/ Gregory L. Davis​ ​​ ​​ ​​ ​ Gregory L. Davis Date: ​ ​9/27/23​ ​​ ​​ ​​ ​ SmartBank By: /s/ William Y. Carroll, Jr.​ ​​ ​ William Y. Carroll, Jr. President and Chief Executive Officer Date: ​ ​9/27/23​ ​​ ​​ ​

SmartFinancial, Inc.

By: /s/ William Y. Carroll, Jr.​ ​​ ​

William Y. Carroll, Jr.

President and Chief Executive Officer

Date: ​ ​9/27/23​ ​​ ​​ ​

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EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, William Y. Carroll, Jr., certify that:

1.    I have reviewed this quarterly report on Form 10-Q of SmartFinancial, Inc. (the “Registrant”);

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4.    The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)    Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)    Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.    The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: November 9, 2023

/s/ William Y. Carroll, Jr.

William Y. Carroll, Jr.

President and Chief Executive Officer

(principal executive officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Ronald J. Gorczynski, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of SmartFinancial, Inc. (the “Registrant”);

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4.    The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)    Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)    Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.    The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: November 9, 2023

/s/ Ronald J. Gorczynski

Ronald J. Gorczynski

Executive Vice President and Chief Financial Officer

(principal financial officer and accounting officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of SmartFinancial, Inc., (the “Company”) on Form 10-Q for the quarter ended September 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William Y. Carroll, Jr., President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.    The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 9, 2023

/s/ William Y. Carroll, Jr.

William Y. Carroll, Jr.

President and Chief Executive Officer

(principal executive officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of SmartFinancial, Inc., (the “Company”) on Form 10-Q for the quarter ended September 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ronald J. Gorczynski, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.    The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 9, 2023

/s/ Ronald J. Gorczynski

Ronald J. Gorczynski

Executive Vice President and Chief Financial Officer

(principal financial and accounting officer)

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Cover Page - shares	9 Months Ended
	Sep. 30, 2023	Nov. 03, 2023
Cover page [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
Entity File Number	001-37661
Entity Registrant Name	SMARTFINANCIAL INC.
Entity Incorporation, State or Country Code	TN
Entity Tax Identification Number	62-1173944
Entity Address, Address Line One	5401 Kingston Pike, Suite 600
Entity Address, City or Town	Knoxville
Entity Address, State or Province	TN
City Area Code	865
Entity Address, Postal Zip Code	37919
Local Phone Number	437-5700
Title of 12(b) Security	Common Stock, par value $1.00
Trading Symbol	SMBK
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		16,994,543
Amendment Flag	false
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Entity Central Index Key	0001038773
Current Fiscal Year End Date	--12-31

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
ASSETS:
Cash and due from banks	$ 62,950	$ 44,265
Interest-bearing deposits with banks	297,652	206,849
Federal funds sold	39,656	15,310
Total cash and cash equivalents	400,258	266,424
Securities available-for-sale, at fair value		483,893
Securities available-for-sale, at fair value, post ASU 2019-04	385,131
Securities held-to-maturity, at amortized cost		285,949
Securities held-to-maturity, at amortized cost, post ASU 2019-04	282,313
Other investments	13,805	15,530
Loans held for sale	2,734	1,752
Loans and leases, post ASU 2019-04	3,378,999
Less: Allowance for credit losses	(33,687)
Loans and leases, net	3,345,312
Loans and leases		3,253,627
Less: Allowance for loan and lease losses		(23,334)
Loans and leases, net		3,230,293
Premises and equipment, net	92,020	92,511
Other real estate owned	1,370	1,436
Goodwill and other intangibles, net	107,792	109,772
Bank owned life insurance	82,914	81,470
Other assets	83,522	68,468
Total assets	4,797,171	4,637,498
Deposits:
Noninterest-bearing demand	923,763	1,072,449
Interest-bearing demand	993,717	965,911
Money market and savings	1,766,409	1,583,481
Time deposits	562,620	455,259
Total deposits	4,246,509	4,077,100
Borrowings	14,117	41,860
Subordinated debt	42,078	42,015
Other liabilities	47,815	44,071
Total liabilities	4,350,519	4,205,046
Shareholders' equity:
Preferred stock, $1 par value; 2,000,000 shares authorized; No shares issued and outstanding
Common stock, $1 par value; 40,000,000 shares authorized; 16,994,543 and 16,900,805 shares issued and outstanding, respectively	16,995	16,901
Additional paid-in capital	295,542	294,330
Retained earnings	168,271	156,545
Accumulated other comprehensive income (loss)	(34,156)	(35,324)
Total shareholders' equity	446,652	432,452
Total liabilities and shareholders' equity	$ 4,797,171	$ 4,637,498

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Securities held to maturity, fair value	$ 256,325	$ 260,613
Preferred stock, par value (in dollars per share)	$ 1	$ 1
Preferred stock, shares authorized (in shares)	2,000,000	2,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, shares authorized (in shares)	40,000,000	40,000,000
Common stock, shares issued (in shares)	16,994,543	16,900,805
Common stock, shares outstanding (in shares)	16,994,543	16,900,805

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CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Interest income:
Loans and leases, including fees	$ 47,539	$ 35,127	$ 137,712	$ 96,300
Securities:
Taxable	4,335	3,135	12,322	8,463
Tax-exempt	356	561	1,066	1,369
Federal funds sold and other earning assets	3,045	3,474	9,448	5,389
Total interest income	55,275	42,297	160,548	111,521
Interest expense:
Deposits	23,433	4,866	59,333	9,384
Borrowings	210	97	775	371
Subordinated debt	626	626	1,877	1,877
Total interest expense	24,269	5,589	61,985	11,632
Net interest income	31,006	36,708	98,563	99,889
Provision for credit losses		974		3,230
Provision for credit losses, post ASU 2019-04	795		1,458
Net interest income after provision for credit losses	30,211	35,734	97,105	96,659
Noninterest income:
Service charges on deposit accounts	1,736	1,611	4,838	4,376
Loss on sale of securities	(6,801)		(6,801)
Mortgage banking	309	170	813	1,475
Investment services	1,461	1,051	3,766	3,186
Insurance commissions	1,153	864	3,551	2,363
Interchange and debit card transaction fees, net	1,357	1,356	4,087	4,107
Other	1,476	1,198	4,492	5,083
Total noninterest income	691	6,250	14,746	20,590
Noninterest expense:
Salaries and employee benefits	16,785	16,317	49,474	47,036
Occupancy and equipment	3,547	3,167	10,073	9,020
FDIC insurance	825	705	2,241	2,022
Other real estate and loan related expense	603	565	1,616	1,930
Advertising and marketing	346	288	1,006	985
Data processing and technology	2,378	1,872	6,777	5,185
Professional services	735	822	2,307	2,809
Amortization of intangibles	647	650	1,981	1,919
Merger related and restructuring expenses	110	87	110	607
Other	2,540	2,757	7,870	7,361
Total noninterest expense	28,516	27,230	83,455	78,874
Income before income tax expense	2,386	14,754	28,396	38,375
Income tax expense	319	3,211	5,993	8,357
Net income	$ 2,067	$ 11,543	$ 22,403	$ 30,018
Earnings per common share:
Basic (in dollars per share)	$ 0.12	$ 0.69	$ 1.33	$ 1.79
Diluted (in dollars per share)	$ 0.12	$ 0.68	$ 1.33	$ 1.78
Weighted average common shares outstanding:
Basic (in shares)	16,807,548	16,749,255	16,801,840	16,734,298
Diluted (in shares)	16,918,635	16,872,022	16,907,325	16,867,970

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Net Income (Loss)	$ 2,067	$ 11,543	$ 22,403	$ 30,018
Other comprehensive income (loss):
Unrealized holding gains (losses) on securities available-for-sale	(5,830)	(20,147)	(5,178)	(51,899)
Tax effect	1,505	5,205	1,337	13,406
Reclassification of unrealized gain (loss) on securities transferred from available-for-sale to held-to-maturity				(2,009)
Tax effect				519
Amortization of unrealized gains (losses) on investment securities transferred from available-for-sale to held-to-maturity	37	43	115	70
Tax effect	(10)	(12)	(30)	(18)
Reclassification adjustment for realized losses (gains) included in net income	6,801		6,801
Tax effect	(1,757)		(1,757)
Unrealized gains (losses) on securities available-for-sale, net of tax	746	(14,911)	1,288	(39,931)
Total other comprehensive income (loss)	861	(16,159)	1,168	(42,250)
Comprehensive income (loss)	2,928	(4,616)	23,571	(12,232)
Fair Value Hedging [Member]
Other comprehensive income (loss):
Unrealized gains (losses) on fair value municipal security hedges and cash flow hedges		92		(1,351)
Tax effect		(23)		349
Unrealized gains (losses) on fair value municipal security and cash flow hedge instruments arising during the period, net of tax		69		(1,002)
Unrealized gains (losses) on cash flow hedges		92		(1,351)
Cash Flow Hedging [Member]
Other comprehensive income (loss):
Unrealized gains (losses) on fair value municipal security hedges and cash flow hedges	154	(1,775)	(163)	(1,775)
Tax effect	(39)	458	43	458
Unrealized gains (losses) on fair value municipal security and cash flow hedge instruments arising during the period, net of tax	115	(1,317)	(120)	(1,317)
Unrealized gains (losses) on cash flow hedges	$ 154	$ (1,775)	$ (163)	$ (1,775)

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock [Member] Cumulative Effect, Period of Adoption, Adjusted Balance [Member]	Common Stock [Member]	Additional Paid-in Capital [Member] Cumulative Effect, Period of Adoption, Adjusted Balance [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member] Cumulative Effect, Period of Adoption, Adjusted Balance [Member]	Retained Earnings [Member] Cumulative Effect, Period of Adoption, Adjustment [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member] Cumulative Effect, Period of Adoption, Adjusted Balance [Member]	AOCI Attributable to Parent [Member]	Cumulative Effect, Period of Adoption, Adjusted Balance [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member]	Total
BALANCE at Dec. 31, 2021		$ 16,803		$ 292,937			$ 118,247		$ 1,443			$ 429,430
BALANCE (in shares) at Dec. 31, 2021		16,802,990
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income							30,018					30,018
Other comprehensive income (loss)									(42,250)			(42,250)
Stock options exercised		$ 32		238								$ 270
Stock options exercised (in shares)		32,003										32,003
Restricted stock		$ 61		(61)
Restricted stock (in shares)		60,515
Restricted stock withheld for taxes		$ (8)		(198)								$ (206)
Restricted stock withheld for taxes (in shares)		(7,953)
Stock compensation expense				991								991
Common stock dividends							(3,542)					(3,542)
BALANCE at Sep. 30, 2022		$ 16,888		293,907			144,723		(40,807)			414,711
BALANCE (in shares) at Sep. 30, 2022		16,887,555
BALANCE at Jun. 30, 2022		$ 16,898		293,815			134,362		(24,648)			420,427
BALANCE (in shares) at Jun. 30, 2022		16,898,405
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income							11,543					11,543
Other comprehensive income (loss)									(16,159)			(16,159)
Stock options exercised		$ 1		6								$ 7
Stock options exercised (in shares)		603										603
Restricted stock withheld for taxes		$ (8)		(198)								$ (206)
Restricted stock withheld for taxes (in shares)		(7,953)
Restricted stock, forfeitures		$ (3)		3
Restricted stock, forfeitures (in shares)		(3,500)
Stock compensation expense				281								281
Common stock dividends							(1,182)					(1,182)
BALANCE at Sep. 30, 2022		$ 16,888		293,907			144,723		(40,807)			414,711
BALANCE (in shares) at Sep. 30, 2022		16,887,555
BALANCE (Accounting Standards Update 2016-13 [Member]) at Dec. 31, 2022						$ (6,606)					$ (6,606)
BALANCE at Dec. 31, 2022	$ 16,901	$ 16,901	$ 294,330	294,330	$ 149,939		156,545	$ (35,324)	(35,324)	$ 425,846		432,452
BALANCE (in shares) at Dec. 31, 2022	16,900,805	16,900,805
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income							22,403					22,403
Other comprehensive income (loss)									1,168			1,168
Stock options exercised		$ 16		149								$ 165
Stock options exercised (in shares)		15,705										15,705
Restricted stock		$ 80		(80)
Restricted stock (in shares)		79,670
Restricted stock withheld for taxes		$ (2)		(33)								$ (35)
Restricted stock withheld for taxes (in shares)		(1,637)
Stock compensation expense				1,176								1,176
Common stock dividends							(4,071)					(4,071)
BALANCE at Sep. 30, 2023		$ 16,995		295,542			168,271		(34,156)			446,652
BALANCE (in shares) at Sep. 30, 2023		16,994,543
BALANCE at Jun. 30, 2023		$ 17,004		295,296			167,564		(35,017)			444,847
BALANCE (in shares) at Jun. 30, 2023		17,004,092
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income							2,067					2,067
Other comprehensive income (loss)									861			$ 861
Stock options exercised (in shares)												0
Restricted stock withheld for taxes		$ (2)		(33)								$ (35)
Restricted stock withheld for taxes (in shares)		(1,637)
Restricted stock, forfeitures		$ (7)		7
Restricted stock, forfeitures (in shares)		(7,912)
Stock compensation expense				272								272
Common stock dividends							(1,360)					(1,360)
BALANCE at Sep. 30, 2023		$ 16,995		$ 295,542			$ 168,271		$ (34,156)			$ 446,652
BALANCE (in shares) at Sep. 30, 2023		16,994,543

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY [Abstract]
Common stock dividend, per share	$ 0.08	$ 0.07	$ 0.24	$ 0.21

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Cash flows from operating activities:
Net income	$ 22,403	$ 30,018
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	8,372	7,474
Accretion of fair value purchase accounting adjustments, net		(762)
Amortization of intangible assets	1,981	1,919
Provision for Loan and Lease Losses		3,230
Provision for credit losses, post ASU 2019-04	1,458
Stock compensation expense	1,176	991
Loss on sale of securities available-for-sale	6,801
Deferred income tax expense (benefit)	1,801	(500)
Increase in cash surrender value of bank owned life insurance	(1,445)	(1,382)
Net losses from sale and write-downs of other real estate owned	12	66
Net gains from mortgage banking	(813)	(1,475)
Origination of loans held for sale	(28,585)	(47,840)
Proceeds from sales of loans held for sale	28,416	51,676
Net (gain) loss from sale of fixed assets	56	(261)
Net change in:
Accrued interest receivable	(919)	(2,062)
Accrued interest payable	1,458	(993)
Other assets	(11,885)	(26,998)
Other liabilities	(2,278)	28,480
Net cash provided by operating activities	28,009	41,581
Cash flows from investing activities:
Proceeds from sales	152,775
Proceeds from maturities, calls and paydowns	32,404	32,143
Purchases	(94,424)	(295,347)
Proceeds from maturities, calls and paydowns	1,986	1,345
Purchases		(50,575)
Proceeds from sales of other investments	2,669	1,054
Purchases of other investments	(944)	(88)
Net increase in loans and leases	(148,006)	(404,770)
Proceeds from sale of fixed assets	633	1,460
Purchases of premises and equipment	(4,016)	(10,690)
Proceeds from sale of other real estate owned	326	488
Net cash (paid) received from business combinations		(4,881)
Net cash used by investing activities	(56,597)	(729,861)
Cash flows from financing activities:
Net increase in deposits	169,521	258,872
Net increase (decrease) in securities sold under agreements to repurchase	1,342	838
Proceeds from borrowings	26,000	5,000
Repayment of borrowings	(30,500)	(75,000)
Cash dividends paid	(4,071)	(3,542)
Issuance of common stock, net of restricted shares withheld for taxes	130	64
Net cash provided by financing activities	162,422	186,232
Net change in cash and cash equivalents	133,834	(502,048)
Cash and cash equivalents, beginning of period	266,424	1,045,077
Cash and cash equivalents, end of period	400,258	543,029
Supplemental disclosures of cash flow information:
Cash paid during the period for interest	60,437	12,624
Net cash paid during the period for income taxes	9,406	8,255
Noncash investing and financing activities:
Recognition of operating lease assets in exchange for lease liabilities	1,751	53
Acquisition of real estate through foreclosure	$ 272
Transfer of securities from available-for-sale to held-to-maturity		162,378
Change in goodwill due to acquisition		$ 4,580

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Presentation of Financial Information

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Presentation of Financial Information

Note 1. Presentation of Financial Information

Nature of Business:

SmartFinancial, Inc. (the "Company," “SmartFinancial,” “we,” “our” or “us”) is a bank holding company whose principal activity is the ownership and management of its wholly owned subsidiary, SmartBank (the "Bank"). The Company provides a variety of financial services to individuals and corporate customers through its offices in East and Middle Tennessee, Alabama, and Florida. The Bank’s primary deposit products are noninterest-bearing and interest-bearing demand deposits, savings and money market deposits, and time deposits. Its primary lending products are commercial, residential, and consumer loans.

Basis of Presentation and Accounting Estimates:

The accounting and financial reporting policies of the Company and its wholly owned subsidiary conform to U.S. generally accepted accounting principles (“GAAP”) and reporting guidelines of banking regulatory authorities and regulators. The accompanying interim consolidated financial statements for the Company and its wholly owned subsidiary have not been audited. All material intercompany balances and transactions have been eliminated.

In management’s opinion, all accounting adjustments necessary to accurately reflect the financial position and results of operations on the accompanying financial statements have been made. These adjustments are normal and recurring accruals considered necessary for a fair and accurate presentation. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for credit losses, the valuation of foreclosed assets and deferred taxes, the fair value of financial instruments, goodwill, and the fair value of assets acquired, and liabilities assumed in acquisitions. The results for interim periods are not necessarily indicative of results for the full year or any other interim periods. The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes appearing in the Company’s annual report on Form 10-K for the year ended December 31, 2022.

Allowance for Credit Losses (“ACL”):

As described below under Recently Issued and Adopted Accounting Pronouncements, the Company adopted ASU 2016-13 effective January 1, 2023, which requires the estimation of an allowance for credit losses in accordance with the Current Expected Credit Losses (“CECL”) methodology. This standard applies to all financial assets measured at amortized cost and off-balance sheet credit exposures, including loans, investment securities and unfunded commitments.  We applied the standard’s provisions using the modified retrospective method as a cumulative-effect adjustment to retained earnings as of January 1, 2023.  With this transition method, we did not have to restate comparative prior periods presented in the financial statements related to Topic 326, but will present comparative prior periods disclosures using the previous accounting guidance for the allowance for loan losses.  This adoption method is considered a change in accounting principle requiring additional disclosure of the nature of and reason for the change, which is solely a result of the adoption of the required standard.

In connection with the adoption of ASU 2016-13, the Company revised certain accounting policies and implemented certain accounting policy elections. The revised accounting policies are described below:

ACL - Held-to-Maturity (“HTM”) Securities - The Company measures expected credit losses on HTM securities on a collective basis by major security type with each type sharing similar risk characteristics. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The Company has made the election to exclude accrued interest receivable on HTM securities from the estimate of credit losses and report accrued interest separately on the consolidated balance sheets. See Note 4 - Securities, for additional information related to the Company’s allowance for credit losses on HTM securities.

ACL - Available-for-Sale (“AFS”) Securities - For AFS securities in an unrealized loss position, the Company first evaluates whether it intends to sell, or whether it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either of these criteria regarding intent or requirement to sell is met, the AFS security amortized cost basis is written down to fair value through income. If the criteria is not met, the Company is required to assess whether the decline in fair value has resulted from credit losses or noncredit-related factors. If the assessment indicates a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists, and an allowance for credit loss is recorded through income as a component of provision for credit loss expense. If the assessment indicates that a credit loss does not exist, the Company records the decline in fair value through other comprehensive income, net of related income tax effects. The Company has made the election to exclude accrued interest receivable on AFS securities from the estimate of credit losses and report accrued interest separately on the consolidated balance sheets. Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit loss expense. Losses are charged against the allowance when management believes the uncollectibility of an AFS security is confirmed or when either of the criteria regarding intent or requirement to sell is met. See Note 4 - Securities, for additional information related to the Company’s allowance for credit losses on AFS securities.

ACL – Loans and Leases – The ACL reflects management’s estimate of expected losses that will result from the inability of our clients to make required loan and lease payments.  Loans and leases deemed to be uncollectible are charged against the ACL, while recoveries of previously charged-off amounts are credited to the ACL.  Management uses systematic methodologies to determine its ACL for loans and leases held for investment and certain off-balance-sheet exposures.  The ACL is a valuation account that is subtracted from the amortized cost basis to present the net amount expected to be collected on the loan and lease portfolio.  Management considers the effects of past events, current conditions, and reasonable and supportable forecasts on the collectability of the loan and lease portfolio.  The ACL recorded on the balance sheet reflects management’s best estimate of expected credit losses.  The Company’s ACL is calculated using collectively assessed and individually assessed loans and leases.

The ACL is measured on a collective pool basis when similar risk characteristics exist. Loans with similar risk characteristics are grouped into homogenous segments.  The Company segmented the loan and lease portfolio by call code and risk rating.  The loan portfolio reserve estimate is calculated using a non-discounted cash flow method for probability of default and loss given default values.  This method utilizes the Company’s data along with peer data that is regressed against the national unemployment rate.  The lease portfolio’s reserve estimate is based on the open pool methodology which is a simplified process of capturing losses by quarter over the life of a lease divided by the balance of all leases originated.

Management considers forward-looking information in estimating expected credit losses.  The Company uses an average of Fannie Mae and Federal Open Market Committee projections of the national unemployment rate to determine the best estimate of expected credit losses.  For the contractual term that extends beyond the reasonable and supportable forecast period, the Company reverts to the long term mean of historical factors using a straight-line approach.  The Company uses an eight-quarter forecast and a four-quarter reversion period.

Management considers the need to qualitatively adjust expected credit losses for information not already captured in the loss estimation.  The qualitative factors considered by management include: (1) effectiveness of the Company’s loan and lease policies and procedures; (2) the experience, ability and depth of lending management and other relevant staff; and (3) the quality of external and internal loan review and internal controls.  

Loans that do not share risk characteristics are evaluated on an individual basis. The Company maintains a net book balance threshold of $500,000 for individually evaluated loans unless further analysis in the future suggests a change is needed to this threshold based on the credit environment at that time.  For collateral dependent financial assets where the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the financial asset to be provided substantially through the operation or sale of the collateral, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the asset as of the measurement date. When repayment is expected to be from the operation of the collateral,

expected credit losses are calculated as the amount by which the amortized cost basis of the financial asset exceeds the present value of expected cash flows from the operation of the collateral. When repayment is expected to be from the sale of the collateral, expected credit losses are calculated as the amount by which the amortized costs basis of the financial asset exceeds the fair value of the underlying collateral less estimated cost to sell. The allowance for credit losses may be zero if the fair value of the collateral at the measurement date exceeds the amortized cost basis of the financial asset.  If the loan is not collateral dependent, the measurement of loss is based on the difference between the expected and contractual future cash flows of the loan.

Management measures expected credit losses over the contractual term of a loan. When determining the contractual term, the Company considers expected prepayments but is precluded from considering expected extensions, renewals, or modifications, unless the Company reasonably expects it will execute a loan modification (“LM”) with a borrower.  In the event of a reasonably expected LM, the Company factors the reasonably-expected LM into the current expected credit losses estimate.  

Purchased credit-deteriorated, otherwise referred to herein as (“PCD”), assets are defined as acquired individual financial assets (or acquired groups of financial assets with similar risk characteristics) that, as of the date of acquisition, have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by the Company’s assessment. The Company records acquired PCD loans by adding the expected credit losses (i.e. allowance for credit losses) to the purchase price of the financial assets rather than recording through the provision for credit losses in the income statement.  The expected credit loss, as of the acquisition day, of a PCD loan is added to the allowance for credit losses.  The non-credit discount or premium is the difference between the unpaid principal balance and the amortized cost basis as of the acquisition date.  Subsequent to the acquisition date, the change in the ACL on PCD loans is recognized through the provision for credit losses.  The non-credit discount or premium is accreted or amortized, respectively, into interest income over the remaining life of the PCD loan on a level-yield basis.  In accordance with the transition requirements within the standard, the Company’s purchased credit-impaired loans (“PCI”) were treated as PCD loans.

The Company follows its nonaccrual policy by reversing contractual interest income in the income statement when the Company places a loan on nonaccrual status.  Therefore, management excludes the accrued interest receivable balance from the amortized cost basis in measuring expected credit losses on the portfolio and does not record an allowance for credit losses on accrued interest receivable.  As of September 30, 2023, and December 31, 2022, the accrued interest receivables for loans recorded in other assets were $11.5 million and $9.8 million, respectively.

ACL – Off Balance Sheet Credit Exposures – The Company has a variety of assets that have a component that qualifies as an off-balance sheet exposure.  These primarily include undrawn portions of revolving lines of credit and standby letters of credit.  The expected losses associated with these exposures within the unfunded portion of the expected credit loss will be recorded as a liability on the balance sheet with an offsetting income statement expense.  Management has determined that all of the Company’s off-balance-sheet credit exposures are not unconditionally cancellable.  As of September 30, 2023, the liability recorded for expected credit losses on unfunded commitments in Other Liabilities was $2.3 million.  The current adjustment to the ACL for unfunded commitments is recognized through the provision for credit losses in the Consolidated Statement of Income.

Recently Issued and Adopted Accounting Pronouncements:

In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326) (“ASU 2016-13”), and has issued subsequent amendments thereto, which introduces the current expected credit losses (“CECL”) methodology. Among other things, ASU 2016-13 requires the measurement of all expected credit losses for financial assets, including loans and held-to-maturity debt securities, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The new model requires institutions to calculate and estimate losses that are expected to be incurred through the financial asset's contractual life through a provision for credit losses, including loans obtained as a result of any acquisition not deemed to be PCD. ASU 2016-13 also requires the allowance for credit losses for PCD loans to be determined in a manner similar to that of other financial assets measured

at amortized cost; however, the initial allowance determined at acquisition is added to the purchase price rather than recorded as provision expense. In accordance with ASU 2016-13, the disclosure of credit quality indicators related to the amortized cost of financing receivables is further disaggregated by year of origination (or vintage). The Company adopted ASU 2016-13 and all subsequent amendments thereto effective January 1, 2023, using the modified retrospective method for all financial assets measured at amortized cost and off balance sheet credit exposures. Amounts for periods beginning on or after January 1, 2023, are presented under ASU 2016-13 and all prior period information is presented in accordance with previously applicable GAAP. At January 1, 2023, the Company recognized a cumulative adjustment to retained earnings of $6.6 million, net of tax, attributable to an increase in the allowance for credit losses (“ACL”) of $8.7 million, an increase in the allowance for off balance sheet credit exposures of $3.0 million, and an increase in deferred tax assets of $2.3 million. Included in the $8.7 million increase in the allowance for credit losses is $2.9 million that was recognized on PCD loans previously classified as purchased credit impaired (“PCI”) with a corresponding adjustment to the gross carrying amount of the loans. The Company adopted ASU 2016-13 using the prospective transition approach for PCD loans, which did not require re-evaluation of whether loans previously classified as PCI loans met the criteria of PCD assets at the date of adoption. The remaining noncredit discount will be accreted into interest income over the life of the individual loans beginning January 1, 2023.

The following table illustrates the impact of ASU 2016-13 (in thousands):

		December 31, 2022		Adoption impact of ASU 2016-13		Impact of PCD Gross Up		January 1, 2023
Allowance for credit losses:
Commercial real estate	$	10,821	$	879		2,652	$	14,352
Consumer real estate		4,028		1,952		166		6,146
Construction and land development		3,059		2,145		25		5,229
Commercial and industrial		3,997		1,451		27		5,475
Leases		1,293		(683)		28		638
Consumer and other		136		13		-		149
Total allowance for credit losses	$	23,334	$	5,757	$	2,898	$	31,989
Unfunded lending commitments(1)	$	-	$	3,029	$	-	$	3,029

⁽¹⁾ The unfunded lending commitments is recorded within other liabilities on the Consolidated Statements of Financial Condition. The related expense for unfunded lending commitments is recorded within provision for credit losses on the Consolidated Statements of Income.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which removes the accounting guidance for troubled debt restructurings and requires entities to evaluate whether a modification provided to a borrower result in a new loan or continuation of an existing loan. The amendments enhance existing disclosures and require new disclosures for receivables when there has been a modification in contractual cash flows due to a borrower experiencing financial difficulties. Additionally, the amendments require public business entities to disclose gross charge-off information by year of origination in the vintage disclosures. The guidance is effective for entities that have adopted ASU 2016-13 for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. The Company adopted ASU 2022-02 when it adopted ASU 2016-13 in January 2023.  The adoption did not have a material impact on the Company’s Consolidated Financial Statements.

Recently Issued Not Yet Effective Accounting Pronouncements:

During interim periods, the Company follows the accounting policies set forth in its annual audited financial statements for the year ended December 31, 2022, as filed in its Annual Report on Form 10-K with the Securities and Exchange

Commission ("SEC"). The following is a summary of recent authoritative pronouncements issued but not yet effective that could impact the accounting, reporting, and/or disclosure of financial information by the Company.

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarifies that a contractual sale restriction should not be considered in measuring fair value. It also requires entities with investments in equity securities subject to contractual sale restrictions to disclose certain qualitative and quantitative information about such securities.  The guidance is effective for public companies for fiscal years beginning after December 15, 2023. All other entities have an extra year to adopt; early adoption is permitted.  The Company is assessing ASU 2022-03 and its impact on its accounting and disclosures.

In March 2023, the FASB issued ASU 2023-02, Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method. ASU 2023-02 permits reporting entities to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. ASU 2023-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2023.  The Company is assessing ASU 2023-02 and its impact on its accounting and disclosures.

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Business Combinations

9 Months Ended

Sep. 30, 2023

Business Combinations [Abstract]

Business Combinations

Note 2. Business Combinations

Sunbelt Group, LLC

On September 1, 2022, Rains Agency Inc. (“Rains Agency”), an indirect wholly-owned subsidiary of SmartFinancial, Inc., completed the acquisition of substantially all the assets of Sunbelt Group, LLC (“Sunbelt”), a Tennessee limited liability company, pursuant to the Asset Purchase Agreement (the “Purchase Agreement”), dated September 1, 2022, by and among Rains Agency, Sunbelt, and A. Mark Slater, the sole member of Sunbelt.

In connection with the acquisition, Rains Agency acquired $349 thousand of assets and assumed $364 thousand of liabilities from Sunbelt. Pursuant to the Purchase Agreement, Rains Agency paid an aggregate amount of consideration to Sunbelt of $6.5 million, of which $5.2 million was paid in cash at the closing and the remainder of which will be payable in equal cash installments on September 1, 2023, and September 1, 2024 (the “Deferred Payments”).  The Deferred Payments are subject to acceleration in certain circumstances involving a change in control of Rains Agency and are subject to set-off for any indemnification or other obligations of the Sunbelt and its sole member to Rains Agency under the terms of the Purchase Agreement.  During 2023, Rains Agency changed its name to SBK Insurance, Inc.

The fair value of consideration paid exceeded the fair value of the identifiable assets and liabilities acquired and resulted in the establishment of goodwill in the amount of $4.6 million, representing the intangible value of Sunbelt’s business and reputation within the markets it served. The goodwill recognized is expected to be deductible for income tax purposes. The Company established an intangible asset related to customer relationships of $1.9 million, amortizing sum-of-the-years digits over 168 months (14 years).

The purchased assets and assumed liabilities were recorded at their acquisition date fair values and are summarized in the table below (in thousands).

			Initial
	As recorded		Fair value		Subsequent		As recorded
	by Sunbelt		adjustments		Adjustments		by the Company
Assets:
Cash & cash equivalents	$	319	$	—	$	—	$	319
Customer list intangible		—		1,948		—		1,948
Equipment, net		13		(13)		—		—
Other assets		17		—		—		17
Total assets acquired	$	349	$	1,935	$	—	$	2,284
Liabilities:
Payables and other liabilities	$	364	$	—	$	—	$	364
Total liabilities assumed		364		—		—		364
Excess of liabilities acquired over assets assumed	$	(15)
Aggregate fair value adjustments			$	1,935	$	—
Total identifiable net assets								1,920
Consideration transferred:
Purchase price								6,500
Total fair value of consideration transferred								6,500
Goodwill							$	4,580

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Earnings Per Share

9 Months Ended

Sep. 30, 2023

Earnings Per Share [Abstract]

Earnings Per Share

Note 3. Earnings Per Share

Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding. Diluted earnings per common share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding and dilutive common share equivalents using the treasury stock method. Dilutive common share equivalents include common shares issuable upon exercise of outstanding stock options and restricted stock. The effect from the stock options and restricted stock on incremental shares from the assumed conversions for net income per share-basic and net income per share-diluted are

presented below. There were no antidilutive shares for the three and nine months ended September 30, 2023, and September 30, 2022, respectively.

The following is a summary of the basic and diluted earnings per share computation (dollars in thousands, except share and per share data):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Basic earnings per share computation:
Net income available to common shareholders	$	2,067	$	11,543	$	22,403	$	30,018
Average common shares outstanding – basic		16,807,548		16,749,255		16,801,840		16,734,298
Basic earnings per share	$	0.12	$	0.69	$	1.33	$	1.79
Diluted earnings per share computation:
Net income available to common shareholders	$	2,067	$	11,543	$	22,403	$	30,018
Average common shares outstanding – basic		16,807,548		16,749,255		16,801,840		16,734,298
Incremental shares from assumed conversions:
Stock options and restricted stock		111,087		122,767		105,485		133,672
Average common shares outstanding - diluted		16,918,635		16,872,022		16,907,325		16,867,970
Diluted earnings per common share	$	0.12	$	0.68	$	1.33	$	1.78

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Securities

9 Months Ended

Sep. 30, 2023

Securities [Abstract]

Securities

Note 4. Securities

Available-for-Sale Securities (“AFS”), which include any security for which the Company has no immediate plan to sell, but which may be sold in the future, are carried at fair value. Realized gains and losses, based on specifically identified amortized cost of the individual security, are included in other income. Unrealized gains and losses are recorded, net of related income tax effects, in accumulated other comprehensive income (loss). Premiums and discounts are amortized and accreted, respectively, to interest income using the constant effective yield method over the estimated life of the security. Prepayments are anticipated for mortgage-backed and Small Business Administration (“SBA”) securities. Premiums on callable securities are amortized to their earliest call date.

Held-to-Maturity Securities (“HTM”), which include any security for which the Company has both the positive intent and ability to hold until maturity, are carried at historical cost adjusted for amortization of premiums and accretion of discounts. Premiums and discounts are amortized and accreted, respectively, to interest income using the constant effective yield method over the security’s estimated life. Prepayments are anticipated for mortgage-backed and SBA securities. Premiums on callable securities are amortized to their earliest call date.

The amortized cost, gross unrealized gains and losses and fair value of securities AFS and HTM are summarized as follows (in thousands):

	September 30, 2023
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Available-for-sale:	Cost		Gains		Losses		Value
U.S. Treasury	$	84,550	$	—	$	(10,817)	$	73,733
U.S. Government-sponsored enterprises (GSEs)		59,683		1,430		(160)		60,953
Municipal securities		18,661		2		(1,158)		17,505
Other debt securities		34,784		67		(4,225)		30,626
Mortgage-backed securities (GSEs)		231,153		—		(28,839)		202,314
Total	$	428,831	$	1,499	$	(45,199)	$	385,131

	September 30, 2023
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Held-to-maturity:	Cost		Gains		Losses		Value
U.S. Treasury	$	150,126	$	—	$	(2,925)	$	147,201
U.S. Government-sponsored enterprises (GSEs)		49,642		—		(9,013)		40,629
Municipal securities		52,947		—		(8,872)		44,075
Mortgage-backed securities (GSEs)		29,598		—		(5,178)		24,420
Total	$	282,313	$	—	$	(25,988)	$	256,325

	December 31, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Available-for-sale:	Cost		Gains		Losses		Value
U.S. Treasury	$	241,506	$	—	$	(17,853)	$	223,653
U.S. Government-sponsored enterprises (GSEs)		1,593		—		(18)		1,575
Municipal securities		19,210		17		(616)		18,611
Other debt securities		32,959		—		(2,408)		30,551
Mortgage-backed securities (GSEs)		233,948		6		(24,451)		209,503
Total	$	529,216	$	23	$	(45,346)	$	483,893

	December 31, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Held-to-maturity:	Cost		Gains		Losses		Value
U.S. Treasury	$	150,295	$	—	$	(5,613)	$	144,682
U.S. Government-sponsored enterprises (GSEs)		50,539		—		(8,037)		42,502
Municipal securities		53,694		—		(7,550)		46,144
Mortgage-backed securities (GSEs)		31,421		—		(4,136)		27,285
Total	$	285,949	$	—	$	(25,336)	$	260,613

At September 30, 2023 and December 31, 2022, securities with a carrying value totaling approximately $347.9 million and $304.8 million, respectively, were pledged to secure public funds and securities sold under agreements to repurchase.

For the three and nine months ended September 30, 2023, the Company recorded no gross gains and for the three and nine months ended September 30, 2023, the Company recorded gross losses of $6.8 million and $6.8 million, related to the sale

of investment securities. There were no gross gains or gross losses related to the sale of investment securities for the three and nine months ended September 30, 2022.

The amortized cost and estimated fair value of securities at September 30, 2023 by contractual maturity for non-mortgage backed securities are shown below (in thousands). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2023
	Amortized		Fair
Available-for-sale:	Cost		Value
Due in one year or less	$	11,410	$	11,386
Due from one year to five years		56,074		49,911
Due from five years to ten years		119,939		112,003
Due after ten years		10,255		9,517
		197,678		182,817
Mortgage-backed securities		231,153		202,314
Total	$	428,831	$	385,131
Held-to-maturity:
Due in one year or less	$	150,126	$	147,201
Due from one year to five years		—		—
Due from five years to ten years		47,513		39,301
Due after ten years		55,076		45,403
		252,715		231,905
Mortgage-backed securities		29,598		24,420
Total	$	282,313	$	256,325

The following tables present the gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities AFS and HTM have been in a continuous unrealized loss position (in thousands):

	September 30, 2023
	Less than 12 Months					12 Months or Greater					Total
			Gross		Number			Gross		Number			Gross		Number
	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized		of
Available-for-sale:	Value		Losses		Securities	Value		Losses		Securities	Value		Losses		Securities
U.S. Treasury	$	—	$	—	—	$	73,733	$	(10,817)	9	$	73,733	$	(10,817)	9
U.S. Government-sponsored enterprises (GSEs)		20,181		(143)	4		1,488		(17)	3		21,669		(160)	7
Municipal securities		7,729		(283)	10		9,475		(875)	17		17,204		(1,158)	27
Other debt securities		2,654		(270)	2		26,980		(3,955)	25		29,634		(4,225)	27
Mortgage-backed securities (GSEs)		29,670		(547)	15		172,645		(28,292)	89		202,315		(28,839)	104
Total	$	60,234	$	(1,243)	31	$	284,321	$	(43,956)	143	$	344,555	$	(45,199)	174
	September 30, 2023
	Less than 12 Months					12 Months or Greater					Total
			Gross		Number			Gross		Number			Gross		Number
	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized		of
Held-to-maturity:	Value		Losses		Securities	Value		Losses		Securities	Value		Losses		Securities
U.S. Treasury	$	—	$	—	—	$	147,201	$	(2,925)	4	$	147,201	$	(2,925)	4
U.S. Government-sponsored enterprises (GSEs)		—		—	—		40,629		(9,013)	13		40,629		(9,013)	13
Municipal securities		—		—	—		44,076		(8,872)	35		44,076		(8,872)	35
Mortgage-backed securities (GSEs)		—		—	—		24,419		(5,178)	5		24,419		(5,178)	5
Total	$	—	$	—	—	$	256,325	$	(25,988)	57	$	256,325	$	(25,988)	57

	December 31, 2022
	Less than 12 Months					12 Months or Greater					Total
			Gross		Number			Gross		Number			Gross		Number
	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized		of
Available-for-sale:	Value		Losses		Securities	Value		Losses		Securities	Value		Losses		Securities
U.S. Treasury	$	134,414	$	(7,610)	9	$	89,239	$	(10,243)	11	$	223,653	$	(17,853)	20
U.S. Government-sponsored enterprises (GSEs)		1,266		(14)	1		309		(4)	2		1,575		(18)	3
Municipal securities		13,146		(616)	20		—		—	—		13,146		(616)	20
Other debt securities		25,044		(1,866)	20		5,506		(542)	6		30,550		(2,408)	26
Mortgage-backed securities (GSEs)		111,598		(8,968)	86		96,285		(15,483)	28		207,883		(24,451)	114
Total	$	285,468	$	(19,074)	136	$	191,339	$	(26,272)	47	$	476,807	$	(45,346)	183
	December 31, 2022
	Less than 12 Months					12 Months or Greater					Total
			Gross		Number			Gross		Number			Gross		Number
	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized		of
Held-to-maturity:	Value		Losses		Securities	Value		Losses		Securities	Value		Losses		Securities
U.S. Treasury	$	144,683	$	(5,613)	4	$	—	$	—	—	$	144,683	$	(5,613)	4
U.S. Government-sponsored enterprises (GSEs)	$	13,048	$	(2,503)	3	$	29,451	$	(5,534)	10	$	42,499	$	(8,037)	13
Municipal securities		40,770		(6,387)	28		5,375		(1,163)	7		46,145		(7,550)	35
Mortgage-backed securities (GSEs)		—		—	—		27,285		(4,136)	5		27,285		(4,136)	5
Total	$	198,501	$	(14,503)	35	$	62,111	$	(10,833)	22	$	260,612	$	(25,336)	57

For any securities classified as available-for-sale that are in an unrealized loss position at the balance sheet date, the Company assesses whether it intends to sell the security, or more likely than not will be required to sell the security before recovery of its amortized cost basis which would require a write-down to fair value through net income. Because the Company currently does not intend to sell those available-for-sale securities that have an unrealized loss at September 30, 2023, and it is not likely that they we will be required to sell the securities before recovery of their amortized cost bases, which may be maturity, the Company has determined that no write-down is necessary. In addition, the Company evaluates whether any portion of the decline in fair value of available-for-sale securities is the result of credit deterioration, which would require the recognition of an allowance for credit losses.  The unrealized losses associated with available-for-sale securities at September 30, 2023, are driven by changes in interest rates and are not due to the credit quality of the securities, and accordingly, no allowance for credit losses is considered necessary related to available-for-sale securities at September 30, 2023.  Management evaluates the financial performance of the issuers on a quarterly basis to determine if it is probable that the issuers can make all contractual principal and interest payments.

The unrealized losses in the Company’s held-to-maturity portfolio were caused by changes in the interest rate environment.  The Company has a zero-loss expectation for its U.S. treasury securities in addition to U.S. Government-sponsored enterprises (GSEs) and mortgage-backed securities (GSEs), and accordingly, no allowance for credit losses is estimated for these securities.  The held-to-maturity state and municipal securities are general obligation bonds which have a very low historical default rate due to issuers generally having unlimited taxing authority to service the debt.  All debt securities in an unrealized loss position as of September 30, 2023, continue to perform as scheduled and we do not believe there is a credit loss or a provision for credit losses is necessary.

The Company utilizes bond credit ratings assigned by third party ratings agencies to monitor the credit quality of debt securities held-to-maturity. At September 30, 2023, all debt securities classified as held-to-maturity were rated AA or higher by the ratings agencies. Updated credit ratings are obtained as they become available from the ratings agencies.

Allowance for Credit Losses

The Company adopted ASU 2016-13 on January 1, 2023, and based on the analysis of the underlying risk characteristics of its AFS and HTM portfolios, including credit ratings and other qualitative factors, there was no provision for credit

losses related to AFS or HTM securities recorded during the three and nine months ended September 30, 2023, because the ACL was deemed immaterial.  

Other Investments:

Our other investments consist of restricted non-marketable equity securities that have no readily determinable market value. Accordingly, when evaluating these securities for impairment, management considers the ultimate recoverability of the par value rather than recognizing temporary declines in value. As of September 30, 2023, the Company determined that there was no impairment on its other investment securities.

The following is the amortized cost and carrying value of other investments (in thousands):

	September 30,		December 31,
	2023		2022
Federal Reserve Bank stock	$	9,669	$	9,783
Federal Home Loan Bank stock		3,786		5,397
First National Bankers Bank stock		350		350
Total	$	13,805	$	15,530

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Loans and Leases and Allowance for Credit Losses

9 Months Ended

Sep. 30, 2023

Receivables [Abstract]

Loans and Leases and Allowance for Credit Losses

Note 5. Loans and Leases and Allowance for Credit Losses

Portfolio Segmentation:

Major categories of loans and leases are summarized as follows (in thousands):

	September 30,		December 31,
	2023		2022
Commercial real estate	$	1,667,176	$	1,627,761
Consumer real estate		638,518		587,977
Construction and land development		373,068		402,501
Commercial and industrial		617,115		551,867
Leases		68,538		67,427
Consumer and other		14,584		16,094
Total loans and leases		3,378,999		3,253,627
Less: Allowance for credit losses		(33,687)		(23,334)
Loans and leases, net	$	3,345,312	$	3,230,293

The loan and lease portfolio is disaggregated into segments. There are six loan and lease portfolio segments that include commercial real estate, consumer real estate, construction and land development, commercial and industrial, leases, and consumer and other.

The following describe risk characteristics relevant to each of the portfolio segments:

Commercial Real Estate: Commercial real estate loans include owner-occupied commercial real estate loans and loans secured by income-producing properties. Owner-occupied commercial real estate loans to operating businesses are long-term financing of land and buildings. These loans are repaid by cash flow generated from the business operation. Real estate loans for income-producing properties such as apartment buildings, office and industrial buildings, and retail shopping centers are repaid from rent income derived from the properties. Loans within this portfolio segment are particularly sensitive to the valuation of real estate.

Consumer Real Estate: Consumer real estate loans include real estate loans secured by first liens, second liens, or open end real estate loans, such as home equity lines. These are repaid by various means such as a borrower’s income, sale of

the property, or rental income derived from the property. Loans within this portfolio segment are particularly sensitive to the valuation of real estate.

Construction and Land Development: Loans for real estate construction and development are repaid through cash flow related to the operations, sale or refinance of the underlying property. This portfolio segment includes extensions of credit to real estate developers or investors where repayment is dependent on the sale of the real estate or income generated from the real estate collateral. Loans within this portfolio segment are particularly sensitive to the valuation of real estate.

Commercial and Industrial: The commercial and industrial loan portfolio segment includes commercial and financial loans. These loans include those loans to commercial customers for use in normal business operations to finance working capital needs, equipment purchases, or expansion projects. Loans are repaid by business cash flows. Collection risk in this portfolio is driven by the creditworthiness of the underlying borrower, particularly cash flows from the customers’ business operations.

Leases: The lease portfolio segment includes leases to small and mid-size companies for equipment financing leases. These leases are secured by a secured interest in the equipment being leased.

Consumer and Other: The consumer loan portfolio segment includes direct consumer installment loans, overdrafts and other revolving credit loans, and educational loans. Loans in this portfolio are sensitive to unemployment and other key consumer economic measures.

The Bank occasionally enters into loan participation agreements with other banks in the ordinary course of business to diversify credit risk. For certain sold participation loans, the Bank has retained effective control of the loans, typically by restricting the participating institutions from pledging or selling their share of the loan without permission from the Bank. GAAP requires the participated portion of these loans to be recorded as secured borrowings. The participated portions of these loans are included in the Commercial Real Estate totals above with a corresponding liability reflected in other borrowings. At September 30, 2023 and December 31, 2022, the balance of such loans totaled $0 and $24.6 million, respectively.

The following tables detail the changes in the allowance for credit losses by loan and lease classification (in thousands):

	Three Months Ended September 30, 2023
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and				Consumer
	Real Estate		Estate		Development		Industrial		Leases		and Other		Total
Beginning balance	$	14,314	$	6,748	$	5,446	$	5,504	$	586	$	149	$	32,747
Charged-off loans and leases		—		(9)		—		(179)		(143)		(86)		(417)
Recoveries of charge-offs		2		4		—		48		—		19		73
Provision charged to expense (1)		691		413		(369)		307		201		41		1,284
Ending balance	$	15,007	$	7,156	$	5,077	$	5,680	$	644	$	123	$	33,687

	Three Months Ended September 30, 2022
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and				Consumer
	Real Estate		Estate		Development		Industrial		Leases		and Other		Total
Beginning balance	$	10,600	$	3,835	$	2,904	$	3,659	$	807	$	133	$	21,938
Charged-off loans and leases		—		—		—		(51)		—		(180)		(231)
Recoveries of charge-offs		—		7		—		19		29		33		88
Provision charged to expense		(21)		166		272		208		198		151		974
Ending balance	$	10,579	$	4,008	$	3,176	$	3,835	$	1,034	$	137	$	22,769

	Nine Months Ended September 30, 2023
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and				Consumer
	Real Estate		Estate		Development		Industrial		Leases		and Other		Total
Beginning balance	$	10,821	$	4,028	$	3,059	$	3,997	$	1,293	$	136	$	23,334
Impact of adopting ASU 2016-13		879		1,952		2,145		1,451		(683)		13		5,757
PCD gross up		2,652		166		25		27		28		—		2,898
Charged-off loans and leases		—		(9)		—		(387)		(211)		(332)		(939)
Recoveries of charge-offs		5		13		25		153		—		187		383
Provision charged to expense (1)		650		1,006		(177)		439		217		119		2,254
Ending balance	$	15,007	$	7,156	$	5,077	$	5,680	$	644	$	123	$	33,687

	Nine Months Ended September 30, 2022
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and				Consumer
	Real Estate		Estate		Development		Industrial		Leases		and Other		Total
Beginning balance	$	9,781	$	3,454	$	1,882	$	3,781	$	330	$	124	$	19,352
Charged-off loans and leases		—		(33)		—		(240)		(108)		(482)		(863)
Recoveries of charge-offs		4		561		—		162		192		131		1,050
Provision charged to expense		794		26		1,294		132		620		364		3,230
Ending balance	$	10,579	$	4,008	$	3,176	$	3,835	$	1,034	$	137	$	22,769

(1) In the provision charged to expense there was a release of $489 thousand and $796 thousand for unfunded commitments through the provision for credit losses not reflected in the three and nine months ended September 30, 2023.

The following tables detail the allowance for credit losses and recorded investment in loans by loan classification and by impairment evaluation method as of December 31, 2022, as determined in accordance with ASC 310 prior to the adoption of ASU 2016-13 (in thousands):

					Construction		Commercial				Consumer
	Commercial		Consumer		and Land		and				and
	Real Estate		Real Estate		Development		Industrial		Leases		Other		Total
December 31, 2022:
Performing loans and leases	$	10,815	$	3,913	$	2,674	$	3,997	$	1,293	$	136	$	22,828
Impaired loans and leases		—		—		385		—		—		—		385
		10,815		3,913		3,059		3,997		1,293		136		23,213
PCI loans and leases		6		115		—		—		—		—		121
Total allowance for loans and leases	$	10,821	$	4,028	$	3,059	$	3,997	$	1,293	$	136	$	23,334

					Construction		Commercial
	Commercial		Consumer		and Land		and				Consumer
	Real Estate		Real Estate		Development		Industrial		Leases		and Other		Total
December 31, 2022:
Performing loans and leases	$	1,611,815	$	578,342	$	400,114	$	549,974	$	66,459	$	16,091	$	3,222,795
Impaired loans and leases		—		1,283		858		—		—		—		2,141
		1,611,815		579,625		400,972		549,974		66,459		16,091		3,224,936
PCI loans and leases		15,946		8,352		1,529		1,893		968		3		28,691
Total loans and leases	$	1,627,761	$	587,977	$	402,501	$	551,867	$	67,427	$	16,094	$	3,253,627

We maintain the allowance for credit losses at a level that we deem appropriate to adequately cover the expected credit loss in the loan and lease portfolio. Our provision for loan and lease losses for the three and nine months ended September 30, 2023, is $1.3 million and $2.3 million, respectively, and $974 thousand and $3.2 million, during the three and nine months ended September 30, 2022, respectively. As of September 30, 2023, and December 31, 2022, our allowance for credit losses was $33.7 million and $23.3 million, respectively, which we deemed to be adequate at each of the respective dates. Our allowance for credit losses as a percentage of total loans and leases was 1.00% at September 30, 2023, and 0.72% at December 31, 2022.  

A description of the general characteristics of the risk grades used by the Company is as follows:

Pass: Loans and leases in this risk category involve borrowers of acceptable-to-strong credit quality and risk who have the apparent ability to satisfy their loan and lease obligations. Loans and leases in this risk grade would possess sufficient mitigating factors, such as adequate collateral or strong guarantors possessing the capacity to repay the debt if required, for any weakness that may exist.

Watch: Loans and leases in this risk category involve borrowers that exhibit characteristics, or are operating under conditions that, if not successfully mitigated as planned, have a reasonable risk of resulting in a downgrade within the next six to twelve months. Loans and leases may remain in this risk category for six months and then are either upgraded or downgraded upon subsequent evaluation.

Special Mention: Loans and leases in this risk grade are the equivalent of the regulatory definition of “Other Assets Especially Mentioned” classification. Loans and leases in this category possess some credit deficiency or potential weakness, which requires a high level of management attention. Potential weaknesses include declining trends in operating earnings and cash flows and /or reliance on the secondary source of repayment. If left uncorrected, these potential weaknesses may result in noticeable deterioration of the repayment prospects for the asset or in the Company’s credit position.

Substandard: Loans and leases in this risk grade are inadequately protected by the borrower’s current financial condition and payment capability or of the collateral pledged, if any. Loans and leases so classified have a well-defined weakness or

weaknesses that jeopardize the orderly repayment of debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans and leases in this risk grade have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or orderly repayment in full, on the basis of current existing facts, conditions and values, highly questionable and improbable. Possibility of loss is extremely high, but because of certain important and reasonably specific factors that may work to the advantage and strengthening of the exposure, its classification as an estimated loss is deferred until its more exact status may be determined.

Uncollectible: Loans and leases in this risk grade are considered to be non-collectible and of such little value that their continuance as bankable assets is not warranted. This does not mean the loan or lease has absolutely no recovery value, but rather it is neither practical nor desirable to defer writing off the loan or lease, even though partial recovery may be obtained in the future. Charge-offs against the allowance for credit losses are taken in the period in which the loan or lease becomes uncollectible. Consequently, the Company typically does not maintain a recorded investment in loans or leases within this category.

The Company evaluates the loan risk grading system definitions and allowance for credit loss methodology on an ongoing basis.  There were no changes to these subsequent to adoption ASU 2016-13 on January 1, 2023.

The following tables outline the amount of each loan and lease classification and the amount categorized into each risk rating based on year of origination (in thousands):

	September 30, 2023
	Loans Amortized Cost Basis by Origination Year
															Revolving
															Loans
													Revolving		Converted
	2023		2022		2021		2020		2019		Prior		Loans		to Term		Total
Commercial real estate
Pass	$	168,217	$	553,613	$	436,468	$	187,188	$	141,248	$	118,422	$	14,878	$	8,163	$	1,628,197
Watch		20,665		1,269		2,418		2,652		3,848		267		-		-		31,119
Special mention		-		3,234		-		-		-		-		-		-		3,234
Substandard		968		-		3,145		51		-		462		-		-		4,626
Doubtful		-		-		-		-		-		-		-		-		-
Total commercial real estate		189,850		558,116		442,031		189,891		145,096		119,151		14,878		8,163		1,667,176
YTD gross charge-offs		-		-		-		-		-		-		-		-		-
Consumer real estate
Pass		94,979		179,838		100,852		55,222		34,531		53,597		109,227		3,032		631,278
Watch		171		71		319		289		-		108		1,714		-		2,672
Special mention		-		-		-		-		-		54		-		-		54
Substandard		198		905		-		-		164		2,908		339		-		4,514
Doubtful		-		-		-		-		-		-		-		-		-
Total consumer real estate		95,348		180,814		101,171		55,511		34,695		56,667		111,280		3,032		638,518
YTD gross charge-offs		-		-		-		-		-		(9)		-		-		(9)
Construction and land development
Pass		95,692		166,355		50,591		4,188		5,162		7,265		35,908		1,797		366,958
Watch		4,194		399		451		-		-		2		-		-		5,046
Special mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		36		620		-		408		-		-		1,064
Doubtful		-		-		-		-		-		-		-		-		-
Total construction and land development		99,886		166,754		51,078		4,808		5,162		7,675		35,908		1,797		373,068
YTD gross charge-offs		-		-		-		-		-		-		-		-		-
Commercial and industrial
Pass		137,793		174,721		67,809		24,379		11,313		26,674		164,939		8,006		615,634
Watch		-		631		214		129		75		75		138		-		1,262
Special mention		-		-		-		-		-		-		-		13		13
Substandard		206		-		-		-		-		-		-		-		206
Doubtful		-		-		-		-		-		-		-		-		-
Total commercial and industrial		137,999		175,352		68,023		24,508		11,388		26,749		165,077		8,019		617,115
YTD gross charge-offs		-		(154)		(50)		(183)		-		-		-		-		(387)
Leases
Pass		23,304		29,453		10,074		4,459		933		315		-		-		68,538
Watch		-		-		-		-		-		-		-		-		-
Special mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total leases		23,304		29,453		10,074		4,459		933		315		-		-		68,538
YTD gross charge-offs		(27)		(163)		(9)		-		(12)		-		-		-		(211)
Consumer and other
Pass		5,539		2,314		1,060		671		148		229		4,538		73		14,572
Watch		-		-		-		-		12		-		-		-		12
Special mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total consumer and other		5,539		2,314		1,060		671		160		229		4,538		73		14,584
YTD gross charge-offs		(22)		(115)		(62)		(48)		(26)		(59)		-		-		(332)
Total loans
Pass		525,524		1,106,294		666,854		276,107		193,335		206,502		329,490		21,071		3,325,177
Watch		25,030		2,370		3,402		3,070		3,935		452		1,852		-		40,111
Special mention		-		3,234		-		-		-		54		-		13		3,301
Substandard		1,372		905		3,181		671		164		3,778		339		-		10,410
Doubtful		-		-		-		-		-		-		-		-		-
Total loans	$	551,926	$	1,112,803	$	673,437	$	279,848	$	197,434	$	210,786	$	331,681	$	21,084	$	3,378,999
Total YTD gross charge-offs	$	(49)	$	(432)	$	(121)	$	(231)	$	(38)	$	(68)	$	-	$	-	$	(939)

The following tables outline the amount of each loan and lease classification and the amount categorized into each risk rating as of December 31, 2022, prior to the adoption of ASU 2016-13 (in thousands):

	December 31, 2022
					Construction		Commercial
	Commercial		Consumer		and Land		and				Consumer
Non PCI Loans and Leases:	Real Estate		Real Estate		Development		Industrial		Leases		and Other		Total
Pass	$	1,579,387	$	576,428	$	399,846	$	545,210	$	66,459	$	16,057	$	3,183,387
Watch		29,810		1,496		224		4,523		—		19		36,072
Special mention		2,539		35		—		61		—		—		2,635
Substandard		79		1,666		902		180		—		15		2,842
Doubtful		—		—		—		—		—		—		—
Total		1,611,815		579,625		400,972		549,974		66,459		16,091		3,224,936
PCI Loans and Leases:
Pass		11,924		6,927		1,054		1,893		968		3		22,769
Watch		1,439		188		46		—		—		—		1,673
Special mention		11		54		—		—		—		—		65
Substandard		2,572		1,183		429		—		—		—		4,184
Doubtful		—		—		—		—		—		—		—
Total		15,946		8,352		1,529		1,893		968		3		28,691
Total loans and leases	$	1,627,761	$	587,977	$	402,501	$	551,867	$	67,427	$	16,094	$	3,253,627

Past Due Loans and Leases:

A loan or lease is considered past due if any required principal and interest payments have not been received as of the date such payments were required to be made under the terms of the loan or lease agreement. Generally, management places a loan or lease on nonaccrual when there is a clear indicator that the borrower’s cash flow may not be sufficient to meet payments as they become due, which is generally when a loan or lease is 90 days past due.

The following tables present an aging analysis of our loan and lease portfolio (in thousands):

	September 30, 2023
					90 Days
	30-59 Days		60-89 Days		or More		Total		Loans Not		Total
	Past Due		Past Due		Past Due		Past Due		Past Due		Loans
Commercial real estate	$	862	$	—	$	—	$	862	$	1,666,314	$	1,667,176
Consumer real estate		706		401		34		1,141		637,377		638,518
Construction and land development		110		408		—		518		372,550		373,068
Commercial and industrial		1,384		945		98		2,427		614,688		617,115
Leases		118		—		—		118		68,420		68,538
Consumer and other		95		—		97		192		14,392		14,584
Total	$	3,275	$	1,754	$	229	$	5,258	$	3,373,741	$	3,378,999

	December 31, 2022
					90 Days
	30-59 Days		60-89 Days		or More		Total		Loans Not		Total
	Past Due		Past Due		Past Due		Past Due		Past Due		Loans
Commercial real estate	$	54	$	—	$	—	$	54	$	1,627,707		1,627,761
Consumer real estate		594		—		—		594		587,383		587,977
Construction and land development		—		—		—		—		402,501		402,501
Commercial and industrial		185		18		—		203		551,664		551,867
Leases		1,024		84		143		1,251		66,176		67,427
Consumer and other		103		4		—		107		15,987		16,094
Total	$	1,960	$	106	$	143	$	2,209	$	3,251,418	$	3,253,627

The table below presents the amortized cost basis of loans on nonaccrual status and loans past due 90 or more days and still accruing interest at September 30, 2023 and December 31, 2022. Also presented is the balance of loans on nonaccrual status at September 30, 2023 for which there was no related allowance for credit losses recorded (in thousands):

	September 30, 2023						December 31, 2022
	Total		Nonaccrual		Loans Past Due		Total		Loans Past Due
	Nonaccrual		With No Allowance		Over 90 Days		Nonaccrual		Over 90 Days
	Loans		for Credit Losses		Still Accruing		Loans		Still Accruing
Commercial real estate	$	741	$	—	$	—	$	—	$	—
Consumer real estate		2,064		1,154		34		1,665		—
Construction and land development		620		—		—		920		—
Commercial and industrial		314		—		98		180		—
Leases		195		—		—		28		143
Consumer and other		—		—		97		15		—
Total	$	3,934	$	1,154	$	229	$	2,808	$	143

The following table presents the amortized cost basis of collateral dependent loans, which are individually evaluated to determine expected credit losses (in thousands):

	September 30, 2023
	Real Estate		Other		Total
Commercial real estate	$	3,836	$	—	$	3,836
Consumer real estate		2,434		—		2,434
Construction and land development		1,411		—		1,411
Commercial and industrial		—		—		—
Leases		—		—		—
Consumer and other		—		—		—
Total	$	7,681	$	—	$	7,681

Impaired Loans and Leases:

The following table presents impaired loans at December 31, 2022, as determined under ASC 310 prior to the adoption of ASU 2016-13. A loan or lease held for investment is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due (both principal and interest) according to the terms of the loan or lease agreement.  Presented are the recorded investment, unpaid principal balance and related allowance of impaired loans at December 31, 2022, by loan classification (in thousands):

	December 31, 2022
			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
Impaired loans and leases without a valuation allowance:
Commercial real estate	$	—	$	—	$	—
Consumer real estate		1,283		1,282		—
Construction and land development		—		—		—
Commercial and industrial		—		—		—
Leases		—		—		—
Consumer and other		—		—		—
		1,283		1,282		—
Impaired loans and leases with a valuation allowance:
Commercial real estate		—		—		—
Consumer real estate		—		—		—
Construction and land development		858		858		385
Commercial and industrial		—		—		—
Leases		—		—		—
Consumer and other		—		—		—
		858		858		385
PCI loans and leases:
Commercial real estate		500		580		6
Consumer real estate		684		646		115
Construction and land development		—		—		—
Commercial and industrial		—		—		—
Leases		—		—		—
Consumer and other		—		—		—
		1,184		1,226		121
Total impaired loans and leases	$	3,325	$	3,366	$	506

The following table details the average recorded investment and the amount of interest income recognized on a cash basis for the three and nine months ended September 30, 2022, respectively, of impaired loans by loan classification as determined under ASC 310 prior to the adoption of ASU 2016-13 (in thousands):

	Three Months Ended September 30, 2022
	Average		Interest
	Recorded		Income
	Investment		Recognized
Impaired loans and leases without a valuation allowance:
Commercial real estate	$	304	$	—
Consumer real estate		1,742		72
Construction and land development		—		—
Commercial and industrial		—		—
Leases		—		—
Consumer and other		—		—
		2,046		72
Impaired loans and leases with a valuation allowance:
Commercial real estate		—		—
Consumer real estate		—		—
Construction and land development		858		—
Commercial and industrial		—		—
Leases		—		—
Consumer and other		—		—
		858		—
PCI loans and leases:
Commercial real estate		525		11
Consumer real estate		880		12
Construction and land development		—		—
Commercial and industrial		—		—
Leases		—		—
Consumer and other		—		—
		1,405		23
Total impaired loans and leases	$	4,309	$	95

	Nine Months Ended September 30, 2022
	Average		Interest
	Recorded		Income
	Investment		Recognized
Impaired loans and leases without a valuation allowance:
Commercial real estate	$	152	$	—
Consumer real estate		1,839		92
Construction and land development		—		—
Commercial and industrial		—		—
Leases		—		—
Consumer and other		—		—
		1,991		92
Impaired loans and leases with a valuation allowance:
Commercial real estate		429		—
Consumer real estate		87		—
Construction and land development		429		—
Commercial and industrial		32		—
Leases		—		—
Consumer and other		—		—
		977		—
PCI loans and leases:
Commercial real estate		765		46
Consumer real estate		879		40
Construction and land development		—		—
Commercial and industrial		—		—
Leases		—		—
Consumer and other		2		—
		1,646		86
Total impaired loans and leases	$	4,614	$	178

Loan Modifications to Borrowers Experiencing Financial Difficulty:

The Company adopted ASU 2022-02, “Financial Instruments – Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures” (“ASU 2022-02”) effective January 1, 2023. The amendments in ASU 2022-02 eliminated the recognition and measure of troubled debt restructurings and enhanced disclosures for loan modifications to borrowers experiencing financial difficulty.

The table below shows the amortized cost of loans and leases made to borrowers experiencing financial difficulty that were modified during the three and nine months ended September 30, 2023 (dollars in thousands):

					Payment Delay				Total Class
	Payment		Term		and Term				of Financing
Three months ended September 30, 2023	Delay		Extension		Extension		Total		Receivable
Commercial real estate	$	—	$	528	$	—	$	528	0.03	%
Consumer real estate		—		514		—		514	0.08
Construction and land development		—		748		—		748	0.20
Commercial and industrial		—		—		—		—	-
Leases		—		—		—		—	-
Consumer and other		—		—		—		—	-
Total	$	—	$	1,790	$	—	$	1,790	0.05	%
Nine months ended September 30, 2023
Commercial real estate	$	403	$	566	$	—	$	969	0.06	%
Consumer real estate		—		514		—		514	0.08
Construction and land development		—		748		—		748	0.20
Commercial and industrial		63		—		153		216	0.04
Leases		—		—		—		—	-
Consumer and other		—		—		—		—	-
Total	$	466	$	1,828	$	153	$	2,447	0.07	%

The following table summarizes the financial impacts of loan modifications made to borrowers experiencing financial difficulty during the three and nine months ended September 30, 2023 (dollars in thousands):

	Weighted-Average
	Term		Weighted-Average
	Extension		Total Payment
Three months ended September 30, 2023	(in months)		Delay
Commercial real estate		12	$	—
Consumer real estate		20		—
Construction and land development		9		—
Commercial and industrial		—		—
Leases		—		—
Consumer and other		—		—
Nine months ended September 30, 2023
Commercial real estate		23	$	23
Consumer real estate		15		—
Construction and land development		9		—
Commercial and industrial		30		7
Leases		—		—
Consumer and other		—		—

No loan modifications made to borrowers experiencing financial difficulty, defaulted during the three and nine months ended September 30, 2023.

The table below shows an age analysis of loans and leases made to borrowers experiencing financial difficulty that were modified on or after January 1, 2023, that date the Company adopted ASU 2022-02 (in thousands):

	September 30, 2023
					90 Days
			30-89 Days		or More
	Current		Past Due		Past Due		Nonaccrual		Total
Commercial real estate	$	—	$	—	$	—	$	968	$	968
Consumer real estate		139		—		—		376		515
Construction and land development		288		—		—		460		748
Commercial and industrial		—		—		—		216		216
Leases		—		—		—		—		—
Consumer and other		—		—		—		—		—
Total	$	427	$	—	$	—	$	2,020	$	2,447

As of December 31, 2022, prior to the adoption ASU 2022-02, management had approximately $101 thousand that meet the criteria of trouble debt restructured (“TDR”), none of which were on nonaccrual.

There were no loans modified as a TDR during the nine months ended September 30, 2022.

Foreclosure Proceedings and Balances:

As of September 30, 2023, there were two residential real estate properties totaling $304 thousand secured by real estate included in other real estate owned and there were no residential real estate loans in the process of foreclosure.

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Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Note 6. Goodwill and Intangible Assets

In accordance with FASB ASC 350, Goodwill and Other, regarding testing goodwill for impairment provides an entity the option to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The Company performs its annual goodwill impairment test as of December 31 of each year.  Considering the recent economic conditions, the Company performed a Step 1 goodwill impairment test (which compares the fair value of a reporting unit with its carrying amount, including goodwill) at June 30, 2023, and the results indicated that there was no impairment. Management will continue to evaluate the economic conditions at future reporting periods for applicable changes.

The Company’s other intangible assets consist of core deposit, customer relationships and tradename.  They are initially recognized based on a valuation performed as of the consummation date. The core deposit intangible is amortized over the average remaining life of the acquired customer deposits, the customer relationships are amortized over a weighted average of 10.4 years and the tradename is amortized over five years.

The carrying amount of goodwill and other intangible assets as of the dates indicated is summarized below (in thousands):

	September 30,		December 31,
	2023		2022
Goodwill:
Balance, beginning of period	$	96,145	$	91,565
Acquisition of Sunbelt		—		4,580
Balance, end of the period	$	96,145	$	96,145

	Core Deposit		Customer Relationships		Tradename
Amortized other intangible assets:	Intangibles		Intangibles		Intangibles		Total
September 30, 2023:
Beginning balance January 1, 2023, gross	$	17,470	$	5,670	$	63	$	23,203
Less: accumulated amortization		(9,329)		(2,164)		(63)		(11,556)
Balance, September 30, 2023, other intangible assets, net	$	8,141	$	3,506	$	-	$	11,647
December 31, 2022:
Beginning balance January 1, 2022, gross	$	17,470	$	3,722	$	63	$	21,255
Acquisition of Sunbelt		-		1,948		-		1,948
Balance, December 31, 2022, other intangible assets, gross		17,470		5,670		63		23,203
Less: accumulated amortization		(8,021)		(1,519)		(36)		(9,576)
Balance, December 31, 2022, other intangible assets, net	$	9,449	$	4,151	$	27	$	13,627

The aggregate amortization expense for other intangible assets for the three and nine months ended September 30, 2023, was $647 thousand and $2.0 million, respectively, and for the three and nine months ended September 30, 2022, was $650 thousand and $1.9 million, respectively.

As of September 30, 2023, the estimated aggregate amortization expense for future periods for intangibles is as follows (in thousands):

Remainder of 2023	$	643
2024		2,425
2025		2,256
2026		2,086
2027		1,904
Thereafter		2,333
Total	$	11,647

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Borrowings, Line of Credit and Subordinated Debt

9 Months Ended

Sep. 30, 2023

Borrowings, Line of Credit and Subordinated Debt [Abstract]

Borrowings, Line of Credit and Subordinated Debt

Note 7. Borrowings, Line of Credit and Subordinated Debt

Borrowings:

At September 30, 2023, total borrowings were $14.1 million compared to $41.9 million at December 31, 2022.  Borrowings consist of the following (in thousands):

	September 30,		December 31,
	2023		2022
Securities sold under customer repurchase agreements	$	6,117	$	4,775
Loan participation agreements(1)		—		24,585
Other borrowings		8,000		12,500
Total	$	14,117	$	41,860

(1) During the first quarter of 2023, the loan participation agreements were amended to permit sales accounting treatment and removed from other borrowings.

Securities Sold Under Agreements to Repurchase:

Securities sold under repurchase agreements, which are secured borrowings, generally mature within one to four days from the transaction date. Securities sold under repurchase agreements are reflected at the amount of cash received in connection with the transaction. The Company may be required to provide additional collateral based on the fair value of the underlying securities. The Company monitors the fair value of the underlying securities on a daily basis.

The Company had securities sold under agreements to repurchase with commercial checking customers which were secured by government agency securities.  The carrying value of investment securities pledged as collateral under repurchase agreements was $7.6 million and $9.2 million at September 30, 2023 and December 31, 2022, respectively. The average balance of repurchase agreements during the nine-month period ended September 30, 2023, and 2022 was $5.0 million and $5.2 million, respectively.  The maximum month-end outstanding balance for the nine-month period ended September 30, 2023, and 2022 was $6.1 million and $5.9 million, respectively.

Other Borrowings:

The Company has a revolving line of credit for an aggregate amount of $35 million.  The maturity of the line of credit is February 1, 2025. At September 30, 2023, $8.0 million was outstanding under the line of credit, and $27.0 million of the line of credit remained available to the Company.

Subordinated Debt:

On September 28, 2018, the Company issued $40 million of 5.625% fixed-to-floating rate subordinated notes (the "Notes"), which was outstanding as of September 30, 2023 and December 31, 2022. Unamortized debt issuance cost was $422 thousand and $485 thousand at September 30, 2023 and December 31, 2022, respectively.

The Notes initially bears interest at a rate of 5.625% per annum from and including September 28, 2018, to but excluding October 2, 2023, with interest during this period payable semi-annually in arrears. From and including October 2, 2023, to but excluding the maturity date or early redemption date, the interest rate will, with the sunset of LIBOR, reset quarterly to an annual floating rate equal to three-month CME Term SOFR, plus 281.161 basis points, with interest during this period payable quarterly in arrears.  The Notes are redeemable by the Company, in whole or in part, on or after October 2, 2023, and at any time, in whole but not in part, upon the occurrence of certain events. The Notes have been structured to qualify initially as Tier 2 capital for the Company for regulatory capital purposes.

The Notes’ unamortized debt issuance costs totaled $422 thousand at September 30, 2023, and will be amortized through the Notes’ maturity date. Amortization expense totaled $21 thousand and $63 thousand for the three and nine months ended September 30, 2023, and 2022, respectively.

On September 1, 2021, the Company acquired $2.5 million of subordinated notes (“sub-debt”) from the acquisition of SCB. The sub-debt bears interest at a rate of 6.75% per annum until August 14, 2024, with the interest during this period payable semi-annually in arrears. From and including August 14, 2024, to but excluding the maturity date or early redemption date, the interest rate will reset quarterly to an annual floating rate equal to three-month LIBOR, or an alternative rate determined in accordance with the terms of the sub-debt if three-month LIBOR cannot be determined, plus 530.25 basis points, with interest during this period payable quarterly in arrears.  In relation to the three-month LIBOR rate being no longer available in the future, the Company anticipates using the three-month term SOFR rate in future repricing.  The sub-debt is redeemable by the Company, in whole or in part, on or after August 14, 2024, and at any time, in whole but not in part, upon the occurrence of certain events. The sub-debt has been structured to qualify initially as Tier 2 capital for the Company for regulatory capital purposes.

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Employee Benefit Plans

9 Months Ended

Sep. 30, 2023

Defined Benefit Plan [Abstract]

Employee Benefit Plans

Note 8. Employee Benefit Plans

401(k) Plan:

The Company provides a deferred salary reduction plan (“Plan”) under Section 401(k) of the Internal Revenue Code covering substantially all employees. After 90 days of service, the Company matches 100% of employee contributions up to 3% of compensation and 50% of employee contributions on the next 2% of compensation. The Company’s contribution to the Plan for the three- and nine-month periods ending September 30, 2023, was $475 thousand and $1.4 million, respectively.  The Company’s contribution to the Plan for the three and nine months ended September 30, 2022, was $419 thousand and $1.3 million, respectively.    

Equity Incentive Plans:

The Compensation Committee of the Company’s Board of Directors may grant or award eligible participants stock options, restricted stock, restricted stock units, stock appreciation rights, and other stock-based awards or any combination of awards (collectively referred to herein as "Rights"). At September 30, 2023, the Company had one active equity incentive plan available for future grants, the 2015 Stock Incentive Plan, which has 1,676,663 Rights available for future grants or awards.

The Company’s 2015 Stock Incentive Plan has 11,840 Rights issued. In addition, the Company has 4,500 Rights issued from the Cornerstone Non-Qualified Plan Options, which does not have any Rights available for future grants or awards.

Stock Options:

A summary of the status of stock option plans is presented in the following table:

		Weighted
		Average
		Exercisable
	Number	Price
Outstanding at December 31, 2022	32,045	$	12.04
Granted	—		—
Exercised	(15,705)		10.47
Forfeited	—		—
Outstanding at September 30, 2023	16,340	$	13.55

Information pertaining to stock options outstanding at September 30, 2023, is as follows:

		Options Outstanding				Options Exercisable
			Weighted-
			Average	Weighted-			Weighted-
			Remaining	Average			Average
Exercise		Number	Contractual	Exercise		Number	Exercise
Prices		Outstanding	Life	Price		Exercisable	Price
$	9.60	4,500	0.42 years	$	9.60	4,500	$	9.60
	15.05	11,840	2.00 years		15.05	11,840		15.05
Outstanding, end of period		16,340	1.57 years	$	13.55	16,340	$	13.55

The Company did not recognize any stock option-based compensation expense during the three and nine months ended September 30, 2023 and 2022, respectively, as all stock options issued are fully vested, and no future compensation cost will be recognized related to nonvested stock-based compensation arrangements granted under the Plans.

No stock options were exercised during the three months ended September 30, 2023.  Stock options of 15,705 shares were exercised during the nine-month period ended September 30, 2023.  Stock options of 603 and 32,003 shares were exercised during the three- and nine-month periods ended September 30, 2022, respectively. The income tax benefit recognized for the exercise of options during the nine months ended September 30, 2023, was a benefit of $60 thousand, and for the three and nine months ended September 30, 2022, was a benefit of $64 thousand and a benefit of $147 thousand, respectively.

No stock options were exercised during the three months ended September 30, 2023. The intrinsic value of options exercised during the nine months ended September 30, 2023, was $242 thousand, and $9 thousand and $565 thousand, during the three and nine months ended September 30, 2022, respectively. The aggregate intrinsic value of total options outstanding and exercisable options at September 30, 2023, was $128 thousand. Cash received from options exercised under all share-based payment arrangements for the nine months ended September 30, 2023, was $165 thousand.

Restricted Stock Awards:

A summary of the activity of the Company’s unvested restricted stock awards for the period ended September 30, 2023, is presented below:

		Weighted
		Average
		Grant-Date
	Number	Fair Value
Balance at December 31, 2022	129,836	$	19.61
Granted	89,582		26.23
Vested	(27,172)		23.39
Forfeited/expired	(9,912)		22.45
Balance at September 30, 2023	182,334	$	22.15

The Company measures the fair value of restricted stock awards based on the price of the Company’s common stock on the grant date, and compensation expense is recorded over the vesting period. The compensation expense for restricted stock awards during the three and nine months ended September 30, 2023, was $271 thousand and $1.2 million, respectively, and was $281 thousand and $991 thousand, during the three and nine months ended September 30, 2022, respectively.  As of September 30, 2023, there was $1.8 million of unrecognized compensation cost related to non-vested restricted stock awards granted under the plan. The cost is expected to be recognized over a weighted average period of 1.97 years. The grant-date fair value of restricted stock awards vested was $636 thousand for the nine months ended September 30, 2023.

Stock Appreciation Rights (“SARs”):

A summary of the status of SARs plans is presented in the following table:

		Weighted
		Average
	Number	Exercisable Price
Outstanding at December 31, 2022	36,000	$	18.25
Granted	—		—
Exercised	(8,000)		15.19
Forfeited	—		—
Outstanding at September 30, 2023	28,000	$	19.13

Information pertaining to SARs outstanding at September 30, 2023, is as follows:

		SARs Outstanding				SARs Exercisable
			Weighted-
			Average	Weighted-
			Remaining	Average			Weighted- Average
Exercise		Number	Contractual	Exercise		Number	Exercise
Prices		Outstanding	Life		Price	Exercisable	Price
$	15.19	8,000	0.25 years	$	15.19	8,000	$	15.19
	20.70	20,000	1.25 years		20.70	—		—
	Outstanding, end of period	28,000	0.97 years	$	19.13	8,000	$	15.19

SARs compensation expense of $5 thousand and ($118) thousand was recognized for the three and nine months ended September 30, 2023, respectively, and $31 thousand and ($12) thousand for the three and nine months ended September 30, 2022.  The credit adjustment for the nine-month periods ended September 30, 2023, and September 30, 2022, respectively, is related to the fair value evaluation of SARs.  

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 9. Commitments and Contingent Liabilities

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing and depository needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Such commitments involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amount recognized on the balance sheet. The majority of all commitments to extend credit are variable rate instruments while the standby letters of credit are primarily fixed rate instruments. The Company’s exposure to credit loss is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments as it does for on-balance sheet instruments.

A summary of the Company’s total contractual amount for all off-balance sheet commitments are as follows (in thousands):

	September 30,		December 31,
	2023		2022
Commitments to extend credit	$	746,921	$	911,998
Standby letters of credit		15,567		6,897

At September 30, 2023, and December 31, 2022, the allowance for these off-balance sheet commitments was $2.3 million and $85 thousand, respectively. With the adoption of ASU 2016-13, effective January 1, 2023, there was an increase in the allowance of $3.0 million on these off-balance sheet commitments. The expense (credit) related to the allowance for off-balance sheet commitments during the three and nine months ended September 30, 2023, was ($489) thousand and ($795) thousand, respectively, and was $0 thousand and $15 thousand, during the three and nine months ended September 30, 2022, respectively.  

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the customer. Collateral held varies, but may include accounts receivable, inventory, property and equipment, residential real estate, and income-producing commercial properties.

Standby letters of credit issued by the Company are conditional commitments to guarantee the performance of a customer to a third party. Those letters of credit are primarily issued to support public and private borrowing arrangements. The

credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. Collateral held varies and is required in instances which the Company deems necessary. At September 30, 2023 and December 31, 2022, the carrying amount of liabilities related to the Company’s obligation to perform under standby letters of credit was insignificant.

The Company is subject in the normal course of business to various pending and threatened legal proceedings in which claims for monetary damages are asserted. Management, after consultation with legal counsel, does not anticipate that the aggregate ultimate liability arising out of litigation pending or threatened against the Company will be material to the Company’s consolidated financial position. On an on-going basis, the Company assesses any potential liabilities or contingencies in connection with such legal proceedings. For those matters where it is deemed probable that the Company will incur losses and the amount of the losses can be reasonably estimated, the Company would record an expense and corresponding liability in its consolidated financial statements.

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Fair Value of Assets and Liabilities

9 Months Ended

Sep. 30, 2023

Fair Value of Assets and Liabilities [Abstract]

Fair Value of Assets and Liabilities

Note 10. Fair Value Disclosures

Determination of Fair Value:

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. In accordance with the “Fair Value Measurements and Disclosures” ASC Topic 820, the fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.

ASC Topic 820 provides a consistent definition of fair value, which focuses on exit price in an orderly transaction between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact business at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is most representative of fair value under current market conditions.

Fair Value Hierarchy:

In accordance with this guidance, the Company groups its financial assets and financial liabilities generally measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

Level 1 – Valuation is based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 assets and liabilities generally include debt and equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2 – Valuation is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The valuation may be based on quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

Level 3 – Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which determination of fair value requires significant management judgment or estimation.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The following methodologies were used by the Company in estimating fair value disclosures for financial instruments:

Securities available-for-sale – The fair value of U.S. Treasury, U.S. Government-sponsored enterprises, municipal securities, other debt securities and mortgage-backed securities, is estimated using a third party pricing service. The third party provider evaluates securities based on comparable investments with trades and market data and will utilize pricing models that use a variety of inputs, such as benchmark yields, reported trades, broker-dealer quotes, issuer spreads, benchmark securities, bids and offers as needed. These securities are generally classified as Level 2.

Derivative financial instruments and interest rate swap agreements – The fair value for derivative financial instruments and interest rate swap agreements is determined based on market prices, broker-dealer quotations on similar products, or other related input parameters. The derivative financial instruments are generally classified Level 2.

Recurring Measurements of Fair Value:

The tables below present the recorded amount of assets and liabilities measured at fair value on a recurring basis (in thousands):

			Quoted Prices in		Significant		Significant
			Active Markets		Other		Other
			for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
Description	Fair Value		(Level 1)		(Level 2)		(Level 3)
September 30, 2023:
Assets:
Securities available-for-sale:
U.S. Treasury	$	73,733	$	—	$	73,733	$	—
U.S. Government-sponsored enterprises (GSEs)		60,953		—		60,953		—
Municipal securities		17,505		—		17,505		—
Other debt securities		30,626		—		30,626		—
Mortgage-backed securities (GSEs)		202,314		—		202,314		—
Total securities available-for-sale		385,131		—		385,131		—
Derivative financial instruments and interest rate swap agreements		16,191		—		16,191		—
Total assets at fair value	$	401,322	$	—	$	401,322	$	—
Liabilities:
Derivative financial instruments and interest rate swap agreements	$	17,647	$	—	$	17,647	$	—
December 31, 2022:
Assets:
Securities available-for-sale:
U.S. Treasury	$	223,653	$	—	$	223,653	$	—
U.S. Government-sponsored enterprises (GSEs)		1,575		—		1,575		—
Municipal securities		18,611		—		18,611		—
Other debt securities		30,551		—		30,551		—
Mortgage-backed securities (GSEs)		209,503		—		209,503		—
Total securities available-for-sale		483,893		—		483,893		—
Derivative financial instruments and interest rate swap agreements		11,834		—		11,834		—
Total assets at fair value	$	495,727	$	—	$	495,727	$	—
Liabilities:
Derivative financial instruments and interest rate swap agreements	$	13,110	$	—	$	13,110	$	—

During the nine months ending September 30, 2023 and twelve months ended December 31, 2022, there were no transfers between Level 1 and Level 2 in the fair value hierarchy.

Assets Measured at Fair Value on a Nonrecurring Basis:

Under certain circumstances management adjusts fair value for assets and liabilities although they are not measured at fair value on an ongoing basis. The following tables present the financial instruments carried on the consolidated balance sheets by caption and by level in the fair value hierarchy, for which a nonrecurring change in fair value has been recorded (in thousands):

			Quoted Prices in		Significant		Significant
			Active Markets		Other		Other
			for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
September 30, 2023:
Collateral dependent loans	$	4,315	$	—	$	—	$	4,315
Other real estate owned		271		—		—		271
December 31, 2022:
Collateral dependent loans	$	1,536	$	—	$	—	$	1,536
Other real estate owned		915		—		—		915

For Level 3 assets measured at fair value on a non-recurring basis, the significant unobservable inputs used in the fair value measurements are presented below (dollars in thousands):

					Weighted
			Valuation	Significant Other	Average of
	Fair Value		Technique	Unobservable Input	Input
September 30, 2023:
Collateral dependent loans	$	4,315	Appraisal	Appraisal discounts	39	%
Other real estate owned		271	Appraisal	Appraisal discounts	26	%
December 31, 2022:
Collateral dependent loans	$	1,536	Appraisal	Appraisal discounts	25	%
Other real estate owned		915	Appraisal	Appraisal discounts	29	%

Collateral dependent loans: A collateral dependent loan is measured based on the fair value of the collateral securing these loans, less selling costs. Collateral dependent loans are classified within Level 3 of the fair value hierarchy. Collateral may be real estate and/or business assets including equipment, inventory, and/or accounts receivable. The Company determines the value of the collateral based on independent appraisals performed by qualified licensed appraisers. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Appraised values are discounted for costs to sell and may be discounted further based on management’s historical knowledge, changes in market conditions from the date of the most recent appraisal, and/or management’s expertise and knowledge of the customer and the customer’s business. Such discounts by management are subjective and are typically significant unobservable inputs for determining fair value. Collateral dependent loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on the same factors discussed above.  The amount of valuation allowance on collateral dependent loans was $2.8 million and $506 thousand as of September 30, 2023, and December 31, 2022, respectively.

Other real estate owned: Other real estate owned, consisting of properties obtained through foreclosure or in satisfaction of loans, are initially recorded at fair value less estimated costs to sell upon transfer of the loans to other real estate. Subsequently, other real estate is carried at the lower of carrying value or fair value less costs to sell. Fair values are generally based on third party appraisals of the property and are classified within Level 3 of the fair value hierarchy. The

appraisals are sometimes further discounted based on management’s historical knowledge, and/or changes in market conditions from the date of the most recent appraisal, and/or management’s expertise and knowledge of the customer and the customer’s business. Such discounts are typically significant unobservable inputs for determining fair value. In cases where the carrying amount exceeds the fair value, less estimated costs to sell, the difference is recognized in noninterest expense.

Carrying value and estimated fair value:

The carrying amount and estimated fair value of the Company’s financial instruments are as follows (in thousands):

	Fair Value Measurements Using
	Carrying								Estimated
	Amount		Level 1		Level 2		Level 3		Fair Value
September 30, 2023:
Assets:
Cash and cash equivalents	$	400,258	$	400,258	$	—	$	—	$	400,258
Securities available-for-sale		385,131		—		385,131		—		385,131
Securities held-to-maturity		282,313		—		256,325		—		256,325
Other investments		13,805		N/A		N/A		N/A		N/A
Loans and leases, net and loans held for sale		3,348,046		—		—		3,210,772		3,210,772
Derivative financial instruments and interest rate swap agreements		16,191		—		16,191		—		16,191
Liabilities:
Noninterest-bearing demand deposits		923,763		—		923,763		—		923,763
Interest-bearing demand deposits		993,717		—		993,717		—		993,717
Money market and savings deposits		1,766,409		—		1,766,409		—		1,766,409
Time deposits		562,620		—		558,744		—		558,744
Borrowings		14,117		—		14,117		—		14,117
Subordinated debt		42,078		—		—		39,650		39,650
Derivative financial instruments and interest rate swap agreements		17,647		—		17,647		—		17,647
December 31, 2022:
Assets:
Cash and cash equivalents	$	266,424	$	266,424	$	—	$	—	$	266,424
Securities available-for-sale		483,893		—		483,893		—		483,893
Securities held-to-maturity		285,949		—		260,613				260,613
Other investments		15,530		N/A		N/A		N/A		N/A
Loans and leases, net and loans held for sale		3,232,045		—		—		3,143,921		3,143,921
Derivative financial instruments and interest rate swap agreements		11,834		—		11,834		—		11,834
Liabilities:
Noninterest-bearing demand deposits		1,072,449		—		1,072,449		—		1,072,449
Interest-bearing demand deposits		965,911		—		965,911		—		965,911
Money market and savings deposits		1,583,481		—		1,583,481		—		1,583,481
Time deposits		455,259		—		451,899		—		451,899
Borrowings		41,860		—		41,860		—		41,860
Subordinated debt		42,015		—		—		40,439		40,439
Derivative financial instruments and interest rate swap agreements		13,110		—		13,110		—		13,110

Limitations:

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

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Derivatives Financial Instruments

9 Months Ended

Sep. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives Financial Instruments

Note 11.Derivatives Financial Instruments

Derivatives designated as fair value hedges:

Financial derivatives are reported at fair value in other assets or other liabilities. The accounting for changes in the fair value of a derivative depends on whether it has been designated and qualifies as part of a hedging relationship. For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative net investment hedge instrument, as well as the offsetting gain or loss on the hedged asset or liability attributable to the hedged risk, are recognized in current earnings. The gain or loss on the derivative instrument is presented on the same income statement line item as the earnings effect of the hedged item. The Company utilizes interest rate swaps designated as fair value hedges to mitigate the effect of changing interest rates on the fair values of fixed rate tax-exempt callable securities available-for-sale. The hedging strategy on securities converts the fixed interest rates to LIBOR-based variable interest rates. These derivatives are designated as partial term hedges of selected cash flows covering specified periods of time prior to the call dates of the hedged securities. The Company has adopted ASU 2017-12, Derivatives and Hedging (Topic 815) – Targeted Improvements to Accounting for Hedging Activities, which allows such partial term hedge designations.

During the fourth quarter of 2022 the Company dissolved this hedging relationship.  The effects of the Company’s fair value hedge relationships reported in interest income in 2022 on tax-exempt available-for-sale securities on the consolidated income statement were as follows (in thousands):

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2022		2022
Interest income on tax-exempt securities	$	403	$	1,183
Effects of fair value hedge relationships		(83)		(527)
Reported interest income on tax-exempt securities	$	320	$	656

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
Gain (loss) on fair value hedging relationship	2022		2022
Interest rate swap agreements - securities:
Hedged items	$	1,808	$	5,319
Derivative designated as hedging instruments		(1,808)		(5,319)
Carry amount of hedged assets - securities available-for-sale		36,165		36,165

Derivatives Designated as Cash Flow Hedges:

The Company enters into interest rate derivative contracts on assets and liabilities that are designated as qualifying cash flow hedges.  The Company hedges the exposure to variability in expected future cash flows attributable to changes in contractual specified interest rates.  To qualify for hedge accounting, a formal assessment is prepared to determine whether the hedging relationship, both at inception and on an ongoing basis, is expected to be highly effective in offsetting cash flows attributable to the hedged risk. At inception, a statistical regression analysis is prepared to determine hedge effectiveness. At each reporting period thereafter, a statistical regression or qualitative analysis is performed. If it is determined that hedge effectiveness has not been or will not continue to be highly effective, then hedge accounting ceases and any gain or loss in accumulated other comprehensive income (“AOCI”) is recognized in earnings immediately. The cash flow hedges are recorded at fair value in other assets and liabilities on the consolidated balance sheets with changes in fair value recorded in AOCI, net of tax, see – Consolidated Statements of Comprehensive Income (Loss). Amounts recorded to AOCI are reclassified into earnings in the same period in which the hedged asset or liability affects earnings and are presented in the same income statement line item as the earnings effect of the hedged asset or liability, as future interest payments are made on the underlying assets.  At September 30, 2023, the Company estimates that in the next 12 months an additional $797 thousand will be reclassified as a decrease in interest income and $969 thousand will be reclassified as a decrease in interest expense.

At September 30, 2023 and December 31, 2022, cash flow hedges are as follows (in thousands):

		September 30, 2023				December 31, 2022
	Balance Sheet	Notional		Estimated		Notional		Estimated
	Location	Amount		Fair Value		Amount		Fair Value
Cash flow hedges:
Assets	Other assets	$	150,000	$	698	$	-	$	-
Liabilities	Other liabilities		100,000		(2,165)		100,000		(1,304)

The following table presents the effect of fair value and cash flow hedge accounting on AOCI (in thousands):

Derivatives in cash flow hedging relationships:		Amount of Gain (Loss) Recognized on OCI on Derivative	Location of Gain or (Loss) Recognized from AOCI into Income		Amount of Gain or (Loss) Reclassified from AOCI into Income
Three months ended September 30, 2023
Interest rate swaps - Assets	$	(432)	Interest income	$	(173)
Interest rate swaps - Liabilities		585	Interest expense		(157)
Three months ended September 30, 2022
Interest rate swaps - Assets	$	(1,775)	—	$	—
Interest rate swaps - Liabilities		—	—		—
Nine months ended September 30, 2023
Interest rate swaps - Assets	$	(2,165)	Interest income	$	(275)
Interest rate swaps - Liabilities		698	Interest expense		(165)
Nine months ended September 30, 2022
Interest rate swaps - Assets	$	(1,775)	—	$	—
Interest rate swaps - Liabilities		—	—		—

The following table presents the effect of fair value and cash flow hedge accounting on the income statement (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Total interest income	$	55,448	$	—	$	160,823	$	—
Effects of cash flow hedge relationships		(173)		—		(275)		—
Reported total interest income	$	55,275	$	—	$	160,548	$	—
Total interest expense	$	24,426	$	—	$	62,150	$	—
Effects of cash flow hedge relationships		(157)		—		(165)		—
Reported total interest expense	$	24,269	$	—	$	61,985	$	—

Non-hedged derivatives:

The Company provides a loan hedging program to certain loan customers. Through this program, the Company originates a variable rate loan with the customer. The Company and the customer will then enter into a fixed interest rate swap. Lastly, an identical offsetting swap is entered into by the Company with a dealer bank. These “back-to-back” swap arrangements are intended to offset each other and allow the Company to book a variable rate loan, while providing the customer with a contract for fixed interest payments. In these arrangements, the Company’s net cash flow is equal to the interest income received from the variable rate loan originated with the customer. These customer swaps are not designated as hedging instruments and are recorded at fair value in other assets and other liabilities. Since the income statement impact of the offsetting positions is limited, any changes in fair value are recognized as other noninterest income in the current period.

At September 30, 2023 and December 31, 2022, interest rate swaps related to the Company’s loan hedging program that were outstanding are presented in the following table (in thousands):

	September 30, 2023				December 31, 2022
		Notional		Estimated		Notional		Estimated
		Amount		Fair Value		Amount		Fair Value
Interest rate swap agreements:
Assets	$	243,239	$	15,482	$	216,656	$	11,834
Liabilities		243,239		(15,482)		216,656		(11,834)

The Company establishes limits and monitors exposures for customer swap positions.  Any fees received to enter the swap agreements at inception are recognized in earnings when received and is included in noninterest income.  Such fees were as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Interest rate swap agreements	$	326	$	53	$	823	$	1,449

Collateral requirements:

These derivative rate contracts have collateral requirements, both at inception of the trade and as the value of each derivative position changes.  At September 30, 2023, collateral totaling $910 thousand and $1.4 million at December 31, 2022, was pledged to the derivative counterparties to comply with collateral requirements.

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Leases

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

Leases

Note 12. Leases

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. The Company follows the guidance of ASU No. 2016-02 and all subsequent ASUs that modified this topic (collectively referred to as “Topic 842”).

Substantially all of the leases in which the Company is the lessee are comprised of real estate for branches and office space with terms extending through 2034. All of our leases are classified as operating leases. Operating lease agreements are required to be recognized on the consolidated balance sheet as a right-of-use (“ROU”) asset and a corresponding lease liability.

The following table represents the consolidated balance sheet classification of the Company’s ROU assets and lease liabilities. The Company elected not to include short-term leases (i.e., leases with initial terms of twelve months or less), or equipment leases (deemed immaterial) on the consolidated balance sheet (in thousands):

		September 30,		December 31,
	Classification	2023		2022
Assets:
Operating lease right-of-use assets	Other assets	$	10,097	$	9,314
Liabilities:
Operating lease liabilities	Other liabilities	$	10,345	$	9,457

The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If, at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability. Regarding the discount rate, Topic 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term.

As of September 30, 2023, the weighted average remaining lease term was 9.18 years and the weighted average discount rate was 2.86%.

The following table represents lease costs and other lease information. As the Company elected, for all classes of underlying assets, not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as common area maintenance (in thousands).

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Lease costs:
Operating lease costs	$	438	$	403	$	1,247	$	1,220
Variable lease costs		30		26		87		76
Total	$	468	$	429	$	1,334	$	1,296
Other information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	393	$	385	$	1,142	$	1,163

Future minimum payments for operating leases with initial or remaining terms of one year or more as of September 30, 2023, were as follows (in thousands):

	Amounts
Remainder of 2023	$	276
2024		1,455
2025		1,359
2026		1,291
2027		1,107
Thereafter		6,476
Total future minimum lease payments		11,964
Amounts representing interest		(1,619)
Present value of net future minimum lease payments	$	10,345

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Regulatory Matters

9 Months Ended

Sep. 30, 2023

Banking and Thrift [Abstract]

Regulatory Matters

Note 13. Regulatory Matters

Regulatory Capital Requirements:

The final rules implementing the Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (Basel III rules) became effective January 1, 2015. In order to avoid restrictions on capital distributions and discretionary bonus payments to executives, under the new rules a covered banking organization is also required to maintain a “capital conservation buffer” in addition to its minimum risk-based capital requirements. This buffer is required to consist solely of common equity Tier 1, and the buffer applies to all three risk-based measurements (CET1, Tier 1 capital and total capital).  As of January 1, 2019, an additional amount of Tier 1 common equity equal to 2.5% of risk-weighted assets is required for compliance with the capital conservation buffer. The ratios for the Company and the Bank are currently sufficient to satisfy the fully phased-in conservation buffer. At September 30, 2023, the Company and the Bank exceeded the minimum regulatory requirements and exceeded the threshold for the “well capitalized” regulatory classification.

In December 2018, the Federal Reserve, Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation (“FDIC”) (collectively, the “agencies”) issued a final rule revising regulatory capital rules in anticipation of the adoption of ASU 2016-13 that provided an option to phase in over a three-year period on a straight line basis the day-one impact of the adoption on earnings and tier one capital. The Company adopted ASU 2016-13 on January 1, 2023, and has chosen the three year phase in option.  

Regulatory Restrictions on Dividends:

Pursuant to Tennessee banking law, the Bank may not, without the prior consent of the Commissioner of the Tennessee Department of Financial Institutions (the “TDFI”), pay any dividends to the Company in a calendar year in excess of the total of the Bank’s retained net income for that year plus the retained net income for the preceding two years.  Because this test involves a measure of net income, any charge on the Bank’s income statement, such as an impairment of goodwill, could impair the Bank’s ability to pay dividends to the Company. Under Tennessee corporate law, the Company is not permitted to pay dividends if, after giving effect to such payment, it would not be able to pay its debts as they become due in the usual course of business, or its total assets would be less than the sum of its total liabilities plus any amounts needed to satisfy any preferential rights if it were dissolving. In addition, in deciding whether to declare a dividend of any particular size, the Company’s board of directors must consider its and the Bank’s current and prospective capital, liquidity, and other needs. In addition to state law limitations on the Company’s ability to pay dividends, the Federal Reserve imposes limitations on the Company’s ability to pay dividends. Federal Reserve regulations limit dividends, stock repurchases and discretionary bonuses to executive officers if the Company’s regulatory capital is below the level of regulatory minimums plus the applicable capital conservation buffer.

During the nine months ended September 30, 2023, the Bank paid $10 million in dividends to the Company, and since the first quarter of 2023, the Company has paid a quarterly common stock dividend of $0.08 per share.    The amount and

timing of all future dividend payments by the Company, if any, is subject to discretion of the Company’s board of directors and will depend on the Company’s earnings, capital position, financial condition and other factors, including new regulatory capital requirements, as they become known to the Company.

Regulatory Capital Levels:

Actual and required capital levels at September 30, 2023, and December 31, 2022 are presented below (dollars in thousands):

									Minimum to be
									well
									capitalized under
					Minimum for				prompt
					capital				corrective action
		Actual			adequacy purposes				provisions1
	Amount		Ratio		Amount		Ratio		Amount		Ratio
September 30, 2023
SmartFinancial:
Total Capital (to Risk Weighted Assets)	$	449,546	11.90	%	$	302,100	8.00	%		N/A	N/A
Tier 1 Capital (to Risk Weighted Assets)		380,272	10.07	%		226,575	6.00	%		N/A	N/A
Common Equity Tier 1 Capital (to Risk Weighted Assets)		380,272	10.07	%		169,931	4.50	%		N/A	N/A
Tier 1 Capital (to Average Assets)2		380,272	8.13	%		187,074	4.00	%		N/A	N/A
SmartBank:
Total Capital (to Risk Weighted Assets)	$	447,326	11.87	%	$	301,538	8.00	%	$	376,922	10.00	%
Tier 1 Capital (to Risk Weighted Assets)		420,130	11.15	%		226,153	6.00	%		301,538	8.00	%
Common Equity Tier 1 Capital (to Risk Weighted Assets)		420,130	11.15	%		169,615	4.50	%		244,999	6.50	%
Tier 1 Capital (to Average Assets)2		420,130	9.00	%		186,792	4.00	%		233,490	5.00	%
December 31, 2022
SmartFinancial:
Total Capital (to Risk Weighted Assets)	$	425,957	11.40	%	$	298,966	8.00	%		N/A	N/A
Tier 1 Capital (to Risk Weighted Assets)		360,608	9.65	%		224,224	6.00	%		N/A	N/A
Common Equity Tier 1 Capital (to Risk Weighted Assets)		360,608	9.65	%		168,168	4.50	%		N/A	N/A
Tier 1 Capital (to Average Assets)		360,608	7.95	%		181,387	4.00	%		N/A	N/A
SmartBank:
Total Capital (to Risk Weighted Assets)	$	426,947	11.44	%	$	298,476	8.00	%	$	373,094	10.00	%
Tier 1 Capital (to Risk Weighted Assets)		403,613	10.82	%		223,857	6.00	%		298,476	8.00	%
Common Equity Tier 1 Capital (to Risk Weighted Assets)		403,613	10.82	%		167,892	4.50	%		242,511	6.50	%
Tier 1 Capital (to Average Assets)		403,613	8.90	%		181,383	4.00	%		226,729	5.00	%

¹The prompt corrective action provisions are applicable at the Bank level only.

²Average assets for the above calculations were based on the most recent quarter.

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Other comprehensive income (loss)

9 Months Ended

Sep. 30, 2023

Equity [Abstract]

Other comprehensive income (loss)

Note 14. Other Comprehensive Income (Loss)

The changes in each component of accumulated other comprehensive income (loss), presented net of tax, were as follows (in thousands):

	Three Months Ended September 30, 2023
									Accumulated
	Securities		Securities		Fair Value				Other
	Available-for-		Transferred to		Municipal		Cash Flow		Comprehensive
	Sale		Held-to-Maturity		Security Hedges		Hedges		Income (Loss)
Beginning balance, June 30, 2023	$	(33,132)	$	(684)	$	—	$	(1,201)	$	(35,017)
Other comprehensive income (loss)		(4,325)		—		—		115		(4,210)
Reclassification of amounts included in net income		5,044		27		—		—		5,071
Net other comprehensive income (loss) during period		719		27		—		115		861
Ending balance, September 30, 2023	$	(32,413)	$	(657)	$	—	$	(1,086)	$	(34,156)
	Three Months Ended September 30, 2022
									Accumulated
	Securities		Securities		Fair Value				Other
	Available-for-		Transferred to		Municipal		Cash Flow		Comprehensive
	Sale		Held-to-Maturity		Security Hedges		Hedges		Income (Loss)
Beginning balance, June 30, 2022	$	(23,526)	$	(804)	$	(318)	$	—	$	(24,648)
Other comprehensive income (loss)		(14,942)		—		69		(1,317)		(16,190)
Reclassification of amounts included in net income		—		31		—		—		31
Net other comprehensive income (loss) during period		(14,942)		31		69		(1,317)		(16,159)
Ending balance, September 30, 2022	$	(38,468)	$	(773)	$	(249)	$	(1,317)	$	(40,807)

	Nine Months Ended September 30, 2023
									Accumulated
	Securities		Securities		Fair Value				Other
	Available-for-		Transferred to		Municipal		Cash Flow		Comprehensive
	Sale		Held-to-Maturity		Security Hedges		Hedges		Income (Loss)
Beginning balance, December 31, 2022	$	(33,616)	$	(742)	$	—	$	(966)	$	(35,324)
Other comprehensive income (loss)		(3,841)		—		—		(120)		(3,961)
Reclassification of amounts included in net income		5,044		85		—		—		5,129
Net other comprehensive income (loss) during period		1,203		85		—		(120)		1,168
Ending balance, September 30, 2023	$	(32,413)	$	(657)	$	—	$	(1,086)	$	(34,156)
	Nine Months Ended September 30, 2022
									Accumulated
	Securities		Securities		Fair Value				Other
	Available-for-		Transferred to		Municipal		Cash Flow		Comprehensive
	Sale		Held-to-Maturity		Security Hedges		Hedges		Income (Loss)
Beginning balance, December 31, 2021	$	25	$	665	$	753	$	—	$	1,443
Other comprehensive income (loss)		(38,493)		(1,490)		(1,002)		(1,317)		(42,302)
Reclassification of amounts included in net income		—		52		—		—		52
Net other comprehensive income (loss) during period		(38,493)		(1,438)		(1,002)		(1,317)		(42,250)
Ending balance, September 30, 2022	$	(38,468)	$	(773)	$	(249)	$	(1,317)	$	(40,807)

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Presentation of Financial Information (Policies)

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Business

Nature of Business:

SmartFinancial, Inc. (the "Company," “SmartFinancial,” “we,” “our” or “us”) is a bank holding company whose principal activity is the ownership and management of its wholly owned subsidiary, SmartBank (the "Bank"). The Company provides a variety of financial services to individuals and corporate customers through its offices in East and Middle Tennessee, Alabama, and Florida. The Bank’s primary deposit products are noninterest-bearing and interest-bearing demand deposits, savings and money market deposits, and time deposits. Its primary lending products are commercial, residential, and consumer loans.

Basis of Presentation and Accounting Estimates

Basis of Presentation and Accounting Estimates:

The accounting and financial reporting policies of the Company and its wholly owned subsidiary conform to U.S. generally accepted accounting principles (“GAAP”) and reporting guidelines of banking regulatory authorities and regulators. The accompanying interim consolidated financial statements for the Company and its wholly owned subsidiary have not been audited. All material intercompany balances and transactions have been eliminated.

In management’s opinion, all accounting adjustments necessary to accurately reflect the financial position and results of operations on the accompanying financial statements have been made. These adjustments are normal and recurring accruals considered necessary for a fair and accurate presentation. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for credit losses, the valuation of foreclosed assets and deferred taxes, the fair value of financial instruments, goodwill, and the fair value of assets acquired, and liabilities assumed in acquisitions. The results for interim periods are not necessarily indicative of results for the full year or any other interim periods. The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes appearing in the Company’s annual report on Form 10-K for the year ended December 31, 2022.

Allowance for Credit Losses ("ACL")

Allowance for Credit Losses (“ACL”):

As described below under Recently Issued and Adopted Accounting Pronouncements, the Company adopted ASU 2016-13 effective January 1, 2023, which requires the estimation of an allowance for credit losses in accordance with the Current Expected Credit Losses (“CECL”) methodology. This standard applies to all financial assets measured at amortized cost and off-balance sheet credit exposures, including loans, investment securities and unfunded commitments.  We applied the standard’s provisions using the modified retrospective method as a cumulative-effect adjustment to retained earnings as of January 1, 2023.  With this transition method, we did not have to restate comparative prior periods presented in the financial statements related to Topic 326, but will present comparative prior periods disclosures using the previous accounting guidance for the allowance for loan losses.  This adoption method is considered a change in accounting principle requiring additional disclosure of the nature of and reason for the change, which is solely a result of the adoption of the required standard.

In connection with the adoption of ASU 2016-13, the Company revised certain accounting policies and implemented certain accounting policy elections. The revised accounting policies are described below:

ACL - Held-to-Maturity (“HTM”) Securities - The Company measures expected credit losses on HTM securities on a collective basis by major security type with each type sharing similar risk characteristics. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The Company has made the election to exclude accrued interest receivable on HTM securities from the estimate of credit losses and report accrued interest separately on the consolidated balance sheets. See Note 4 - Securities, for additional information related to the Company’s allowance for credit losses on HTM securities.

ACL - Available-for-Sale (“AFS”) Securities - For AFS securities in an unrealized loss position, the Company first evaluates whether it intends to sell, or whether it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either of these criteria regarding intent or requirement to sell is met, the AFS security amortized cost basis is written down to fair value through income. If the criteria is not met, the Company is required to assess whether the decline in fair value has resulted from credit losses or noncredit-related factors. If the assessment indicates a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists, and an allowance for credit loss is recorded through income as a component of provision for credit loss expense. If the assessment indicates that a credit loss does not exist, the Company records the decline in fair value through other comprehensive income, net of related income tax effects. The Company has made the election to exclude accrued interest receivable on AFS securities from the estimate of credit losses and report accrued interest separately on the consolidated balance sheets. Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit loss expense. Losses are charged against the allowance when management believes the uncollectibility of an AFS security is confirmed or when either of the criteria regarding intent or requirement to sell is met. See Note 4 - Securities, for additional information related to the Company’s allowance for credit losses on AFS securities.

ACL – Loans and Leases – The ACL reflects management’s estimate of expected losses that will result from the inability of our clients to make required loan and lease payments.  Loans and leases deemed to be uncollectible are charged against the ACL, while recoveries of previously charged-off amounts are credited to the ACL.  Management uses systematic methodologies to determine its ACL for loans and leases held for investment and certain off-balance-sheet exposures.  The ACL is a valuation account that is subtracted from the amortized cost basis to present the net amount expected to be collected on the loan and lease portfolio.  Management considers the effects of past events, current conditions, and reasonable and supportable forecasts on the collectability of the loan and lease portfolio.  The ACL recorded on the balance sheet reflects management’s best estimate of expected credit losses.  The Company’s ACL is calculated using collectively assessed and individually assessed loans and leases.

The ACL is measured on a collective pool basis when similar risk characteristics exist. Loans with similar risk characteristics are grouped into homogenous segments.  The Company segmented the loan and lease portfolio by call code and risk rating.  The loan portfolio reserve estimate is calculated using a non-discounted cash flow method for probability of default and loss given default values.  This method utilizes the Company’s data along with peer data that is regressed against the national unemployment rate.  The lease portfolio’s reserve estimate is based on the open pool methodology which is a simplified process of capturing losses by quarter over the life of a lease divided by the balance of all leases originated.

Management considers forward-looking information in estimating expected credit losses.  The Company uses an average of Fannie Mae and Federal Open Market Committee projections of the national unemployment rate to determine the best estimate of expected credit losses.  For the contractual term that extends beyond the reasonable and supportable forecast period, the Company reverts to the long term mean of historical factors using a straight-line approach.  The Company uses an eight-quarter forecast and a four-quarter reversion period.

Management considers the need to qualitatively adjust expected credit losses for information not already captured in the loss estimation.  The qualitative factors considered by management include: (1) effectiveness of the Company’s loan and lease policies and procedures; (2) the experience, ability and depth of lending management and other relevant staff; and (3) the quality of external and internal loan review and internal controls.  

Loans that do not share risk characteristics are evaluated on an individual basis. The Company maintains a net book balance threshold of $500,000 for individually evaluated loans unless further analysis in the future suggests a change is needed to this threshold based on the credit environment at that time.  For collateral dependent financial assets where the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the financial asset to be provided substantially through the operation or sale of the collateral, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the asset as of the measurement date. When repayment is expected to be from the operation of the collateral,

expected credit losses are calculated as the amount by which the amortized cost basis of the financial asset exceeds the present value of expected cash flows from the operation of the collateral. When repayment is expected to be from the sale of the collateral, expected credit losses are calculated as the amount by which the amortized costs basis of the financial asset exceeds the fair value of the underlying collateral less estimated cost to sell. The allowance for credit losses may be zero if the fair value of the collateral at the measurement date exceeds the amortized cost basis of the financial asset.  If the loan is not collateral dependent, the measurement of loss is based on the difference between the expected and contractual future cash flows of the loan.

Management measures expected credit losses over the contractual term of a loan. When determining the contractual term, the Company considers expected prepayments but is precluded from considering expected extensions, renewals, or modifications, unless the Company reasonably expects it will execute a loan modification (“LM”) with a borrower.  In the event of a reasonably expected LM, the Company factors the reasonably-expected LM into the current expected credit losses estimate.  

Purchased credit-deteriorated, otherwise referred to herein as (“PCD”), assets are defined as acquired individual financial assets (or acquired groups of financial assets with similar risk characteristics) that, as of the date of acquisition, have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by the Company’s assessment. The Company records acquired PCD loans by adding the expected credit losses (i.e. allowance for credit losses) to the purchase price of the financial assets rather than recording through the provision for credit losses in the income statement.  The expected credit loss, as of the acquisition day, of a PCD loan is added to the allowance for credit losses.  The non-credit discount or premium is the difference between the unpaid principal balance and the amortized cost basis as of the acquisition date.  Subsequent to the acquisition date, the change in the ACL on PCD loans is recognized through the provision for credit losses.  The non-credit discount or premium is accreted or amortized, respectively, into interest income over the remaining life of the PCD loan on a level-yield basis.  In accordance with the transition requirements within the standard, the Company’s purchased credit-impaired loans (“PCI”) were treated as PCD loans.

The Company follows its nonaccrual policy by reversing contractual interest income in the income statement when the Company places a loan on nonaccrual status.  Therefore, management excludes the accrued interest receivable balance from the amortized cost basis in measuring expected credit losses on the portfolio and does not record an allowance for credit losses on accrued interest receivable.  As of September 30, 2023, and December 31, 2022, the accrued interest receivables for loans recorded in other assets were $11.5 million and $9.8 million, respectively.

ACL – Off Balance Sheet Credit Exposures – The Company has a variety of assets that have a component that qualifies as an off-balance sheet exposure.  These primarily include undrawn portions of revolving lines of credit and standby letters of credit.  The expected losses associated with these exposures within the unfunded portion of the expected credit loss will be recorded as a liability on the balance sheet with an offsetting income statement expense.  Management has determined that all of the Company’s off-balance-sheet credit exposures are not unconditionally cancellable.  As of September 30, 2023, the liability recorded for expected credit losses on unfunded commitments in Other Liabilities was $2.3 million.  The current adjustment to the ACL for unfunded commitments is recognized through the provision for credit losses in the Consolidated Statement of Income.

Recently Issued and Adopted Accounting Pronouncements And Recently Issued Not Yet Effective Accounting Pronouncements

Recently Issued and Adopted Accounting Pronouncements:

In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326) (“ASU 2016-13”), and has issued subsequent amendments thereto, which introduces the current expected credit losses (“CECL”) methodology. Among other things, ASU 2016-13 requires the measurement of all expected credit losses for financial assets, including loans and held-to-maturity debt securities, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The new model requires institutions to calculate and estimate losses that are expected to be incurred through the financial asset's contractual life through a provision for credit losses, including loans obtained as a result of any acquisition not deemed to be PCD. ASU 2016-13 also requires the allowance for credit losses for PCD loans to be determined in a manner similar to that of other financial assets measured

at amortized cost; however, the initial allowance determined at acquisition is added to the purchase price rather than recorded as provision expense. In accordance with ASU 2016-13, the disclosure of credit quality indicators related to the amortized cost of financing receivables is further disaggregated by year of origination (or vintage). The Company adopted ASU 2016-13 and all subsequent amendments thereto effective January 1, 2023, using the modified retrospective method for all financial assets measured at amortized cost and off balance sheet credit exposures. Amounts for periods beginning on or after January 1, 2023, are presented under ASU 2016-13 and all prior period information is presented in accordance with previously applicable GAAP. At January 1, 2023, the Company recognized a cumulative adjustment to retained earnings of $6.6 million, net of tax, attributable to an increase in the allowance for credit losses (“ACL”) of $8.7 million, an increase in the allowance for off balance sheet credit exposures of $3.0 million, and an increase in deferred tax assets of $2.3 million. Included in the $8.7 million increase in the allowance for credit losses is $2.9 million that was recognized on PCD loans previously classified as purchased credit impaired (“PCI”) with a corresponding adjustment to the gross carrying amount of the loans. The Company adopted ASU 2016-13 using the prospective transition approach for PCD loans, which did not require re-evaluation of whether loans previously classified as PCI loans met the criteria of PCD assets at the date of adoption. The remaining noncredit discount will be accreted into interest income over the life of the individual loans beginning January 1, 2023.

The following table illustrates the impact of ASU 2016-13 (in thousands):

		December 31, 2022		Adoption impact of ASU 2016-13		Impact of PCD Gross Up		January 1, 2023
Allowance for credit losses:
Commercial real estate	$	10,821	$	879		2,652	$	14,352
Consumer real estate		4,028		1,952		166		6,146
Construction and land development		3,059		2,145		25		5,229
Commercial and industrial		3,997		1,451		27		5,475
Leases		1,293		(683)		28		638
Consumer and other		136		13		-		149
Total allowance for credit losses	$	23,334	$	5,757	$	2,898	$	31,989
Unfunded lending commitments(1)	$	-	$	3,029	$	-	$	3,029

⁽¹⁾ The unfunded lending commitments is recorded within other liabilities on the Consolidated Statements of Financial Condition. The related expense for unfunded lending commitments is recorded within provision for credit losses on the Consolidated Statements of Income.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which removes the accounting guidance for troubled debt restructurings and requires entities to evaluate whether a modification provided to a borrower result in a new loan or continuation of an existing loan. The amendments enhance existing disclosures and require new disclosures for receivables when there has been a modification in contractual cash flows due to a borrower experiencing financial difficulties. Additionally, the amendments require public business entities to disclose gross charge-off information by year of origination in the vintage disclosures. The guidance is effective for entities that have adopted ASU 2016-13 for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. The Company adopted ASU 2022-02 when it adopted ASU 2016-13 in January 2023.  The adoption did not have a material impact on the Company’s Consolidated Financial Statements.

Recently Issued Not Yet Effective Accounting Pronouncements:

During interim periods, the Company follows the accounting policies set forth in its annual audited financial statements for the year ended December 31, 2022, as filed in its Annual Report on Form 10-K with the Securities and Exchange

Commission ("SEC"). The following is a summary of recent authoritative pronouncements issued but not yet effective that could impact the accounting, reporting, and/or disclosure of financial information by the Company.

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarifies that a contractual sale restriction should not be considered in measuring fair value. It also requires entities with investments in equity securities subject to contractual sale restrictions to disclose certain qualitative and quantitative information about such securities.  The guidance is effective for public companies for fiscal years beginning after December 15, 2023. All other entities have an extra year to adopt; early adoption is permitted.  The Company is assessing ASU 2022-03 and its impact on its accounting and disclosures.

In March 2023, the FASB issued ASU 2023-02, Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method. ASU 2023-02 permits reporting entities to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. ASU 2023-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2023.  The Company is assessing ASU 2023-02 and its impact on its accounting and disclosures.

Earnings Per Share

Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding. Diluted earnings per common share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding and dilutive common share equivalents using the treasury stock method. Dilutive common share equivalents include common shares issuable upon exercise of outstanding stock options and restricted stock.

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Presentation of Financial Information (Tables)

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Impact of ASU 2016-13

The following table illustrates the impact of ASU 2016-13 (in thousands):

		December 31, 2022		Adoption impact of ASU 2016-13		Impact of PCD Gross Up		January 1, 2023
Allowance for credit losses:
Commercial real estate	$	10,821	$	879		2,652	$	14,352
Consumer real estate		4,028		1,952		166		6,146
Construction and land development		3,059		2,145		25		5,229
Commercial and industrial		3,997		1,451		27		5,475
Leases		1,293		(683)		28		638
Consumer and other		136		13		-		149
Total allowance for credit losses	$	23,334	$	5,757	$	2,898	$	31,989
Unfunded lending commitments(1)	$	-	$	3,029	$	-	$	3,029

⁽¹⁾ The unfunded lending commitments is recorded within other liabilities on the Consolidated Statements of Financial Condition. The related expense for unfunded lending commitments is recorded within provision for credit losses on the Consolidated Statements of Income.

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Business Combinations (Tables)

9 Months Ended

Sep. 30, 2023

Sunbelt Group LLC [Member]

Business Acquisition [Line Items]

Schedule of Business Acquisitions

The purchased assets and assumed liabilities were recorded at their acquisition date fair values and are summarized in the table below (in thousands).

			Initial
	As recorded		Fair value		Subsequent		As recorded
	by Sunbelt		adjustments		Adjustments		by the Company
Assets:
Cash & cash equivalents	$	319	$	—	$	—	$	319
Customer list intangible		—		1,948		—		1,948
Equipment, net		13		(13)		—		—
Other assets		17		—		—		17
Total assets acquired	$	349	$	1,935	$	—	$	2,284
Liabilities:
Payables and other liabilities	$	364	$	—	$	—	$	364
Total liabilities assumed		364		—		—		364
Excess of liabilities acquired over assets assumed	$	(15)
Aggregate fair value adjustments			$	1,935	$	—
Total identifiable net assets								1,920
Consideration transferred:
Purchase price								6,500
Total fair value of consideration transferred								6,500
Goodwill							$	4,580

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2023

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Basic earnings per share computation:
Net income available to common shareholders	$	2,067	$	11,543	$	22,403	$	30,018
Average common shares outstanding – basic		16,807,548		16,749,255		16,801,840		16,734,298
Basic earnings per share	$	0.12	$	0.69	$	1.33	$	1.79
Diluted earnings per share computation:
Net income available to common shareholders	$	2,067	$	11,543	$	22,403	$	30,018
Average common shares outstanding – basic		16,807,548		16,749,255		16,801,840		16,734,298
Incremental shares from assumed conversions:
Stock options and restricted stock		111,087		122,767		105,485		133,672
Average common shares outstanding - diluted		16,918,635		16,872,022		16,907,325		16,867,970
Diluted earnings per common share	$	0.12	$	0.68	$	1.33	$	1.78

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Securities (Tables)

9 Months Ended

Sep. 30, 2023

Securities [Abstract]

Schedule of Available-for-sale Securities Reconciliation

	September 30, 2023
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Available-for-sale:	Cost		Gains		Losses		Value
U.S. Treasury	$	84,550	$	—	$	(10,817)	$	73,733
U.S. Government-sponsored enterprises (GSEs)		59,683		1,430		(160)		60,953
Municipal securities		18,661		2		(1,158)		17,505
Other debt securities		34,784		67		(4,225)		30,626
Mortgage-backed securities (GSEs)		231,153		—		(28,839)		202,314
Total	$	428,831	$	1,499	$	(45,199)	$	385,131

	December 31, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Available-for-sale:	Cost		Gains		Losses		Value
U.S. Treasury	$	241,506	$	—	$	(17,853)	$	223,653
U.S. Government-sponsored enterprises (GSEs)		1,593		—		(18)		1,575
Municipal securities		19,210		17		(616)		18,611
Other debt securities		32,959		—		(2,408)		30,551
Mortgage-backed securities (GSEs)		233,948		6		(24,451)		209,503
Total	$	529,216	$	23	$	(45,346)	$	483,893

Schedule of Held-to-maturity Securities Reconciliation

	September 30, 2023
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Held-to-maturity:	Cost		Gains		Losses		Value
U.S. Treasury	$	150,126	$	—	$	(2,925)	$	147,201
U.S. Government-sponsored enterprises (GSEs)		49,642		—		(9,013)		40,629
Municipal securities		52,947		—		(8,872)		44,075
Mortgage-backed securities (GSEs)		29,598		—		(5,178)		24,420
Total	$	282,313	$	—	$	(25,988)	$	256,325

	December 31, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Held-to-maturity:	Cost		Gains		Losses		Value
U.S. Treasury	$	150,295	$	—	$	(5,613)	$	144,682
U.S. Government-sponsored enterprises (GSEs)		50,539		—		(8,037)		42,502
Municipal securities		53,694		—		(7,550)		46,144
Mortgage-backed securities (GSEs)		31,421		—		(4,136)		27,285
Total	$	285,949	$	—	$	(25,336)	$	260,613

Investments Classified by Contractual Maturity Date

The amortized cost and estimated fair value of securities at September 30, 2023 by contractual maturity for non-mortgage backed securities are shown below (in thousands). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2023
	Amortized		Fair
Available-for-sale:	Cost		Value
Due in one year or less	$	11,410	$	11,386
Due from one year to five years		56,074		49,911
Due from five years to ten years		119,939		112,003
Due after ten years		10,255		9,517
		197,678		182,817
Mortgage-backed securities		231,153		202,314
Total	$	428,831	$	385,131
Held-to-maturity:
Due in one year or less	$	150,126	$	147,201
Due from one year to five years		—		—
Due from five years to ten years		47,513		39,301
Due after ten years		55,076		45,403
		252,715		231,905
Mortgage-backed securities		29,598		24,420
Total	$	282,313	$	256,325

Schedule of Unrealized Loss on Investments

The following tables present the gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities AFS and HTM have been in a continuous unrealized loss position (in thousands):

	September 30, 2023
	Less than 12 Months					12 Months or Greater					Total
			Gross		Number			Gross		Number			Gross		Number
	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized		of
Available-for-sale:	Value		Losses		Securities	Value		Losses		Securities	Value		Losses		Securities
U.S. Treasury	$	—	$	—	—	$	73,733	$	(10,817)	9	$	73,733	$	(10,817)	9
U.S. Government-sponsored enterprises (GSEs)		20,181		(143)	4		1,488		(17)	3		21,669		(160)	7
Municipal securities		7,729		(283)	10		9,475		(875)	17		17,204		(1,158)	27
Other debt securities		2,654		(270)	2		26,980		(3,955)	25		29,634		(4,225)	27
Mortgage-backed securities (GSEs)		29,670		(547)	15		172,645		(28,292)	89		202,315		(28,839)	104
Total	$	60,234	$	(1,243)	31	$	284,321	$	(43,956)	143	$	344,555	$	(45,199)	174
	September 30, 2023
	Less than 12 Months					12 Months or Greater					Total
			Gross		Number			Gross		Number			Gross		Number
	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized		of
Held-to-maturity:	Value		Losses		Securities	Value		Losses		Securities	Value		Losses		Securities
U.S. Treasury	$	—	$	—	—	$	147,201	$	(2,925)	4	$	147,201	$	(2,925)	4
U.S. Government-sponsored enterprises (GSEs)		—		—	—		40,629		(9,013)	13		40,629		(9,013)	13
Municipal securities		—		—	—		44,076		(8,872)	35		44,076		(8,872)	35
Mortgage-backed securities (GSEs)		—		—	—		24,419		(5,178)	5		24,419		(5,178)	5
Total	$	—	$	—	—	$	256,325	$	(25,988)	57	$	256,325	$	(25,988)	57

	December 31, 2022
	Less than 12 Months					12 Months or Greater					Total
			Gross		Number			Gross		Number			Gross		Number
	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized		of
Available-for-sale:	Value		Losses		Securities	Value		Losses		Securities	Value		Losses		Securities
U.S. Treasury	$	134,414	$	(7,610)	9	$	89,239	$	(10,243)	11	$	223,653	$	(17,853)	20
U.S. Government-sponsored enterprises (GSEs)		1,266		(14)	1		309		(4)	2		1,575		(18)	3
Municipal securities		13,146		(616)	20		—		—	—		13,146		(616)	20
Other debt securities		25,044		(1,866)	20		5,506		(542)	6		30,550		(2,408)	26
Mortgage-backed securities (GSEs)		111,598		(8,968)	86		96,285		(15,483)	28		207,883		(24,451)	114
Total	$	285,468	$	(19,074)	136	$	191,339	$	(26,272)	47	$	476,807	$	(45,346)	183
	December 31, 2022
	Less than 12 Months					12 Months or Greater					Total
			Gross		Number			Gross		Number			Gross		Number
	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized		of
Held-to-maturity:	Value		Losses		Securities	Value		Losses		Securities	Value		Losses		Securities
U.S. Treasury	$	144,683	$	(5,613)	4	$	—	$	—	—	$	144,683	$	(5,613)	4
U.S. Government-sponsored enterprises (GSEs)	$	13,048	$	(2,503)	3	$	29,451	$	(5,534)	10	$	42,499	$	(8,037)	13
Municipal securities		40,770		(6,387)	28		5,375		(1,163)	7		46,145		(7,550)	35
Mortgage-backed securities (GSEs)		—		—	—		27,285		(4,136)	5		27,285		(4,136)	5
Total	$	198,501	$	(14,503)	35	$	62,111	$	(10,833)	22	$	260,612	$	(25,336)	57

Schedule of Other Investments

The following is the amortized cost and carrying value of other investments (in thousands):

	September 30,		December 31,
	2023		2022
Federal Reserve Bank stock	$	9,669	$	9,783
Federal Home Loan Bank stock		3,786		5,397
First National Bankers Bank stock		350		350
Total	$	13,805	$	15,530

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Loans and Leases and Allowance for Credit Losses (Tables)

9 Months Ended

Sep. 30, 2023

Receivables [Abstract]

Schedule of Loans

Major categories of loans and leases are summarized as follows (in thousands):

	September 30,		December 31,
	2023		2022
Commercial real estate	$	1,667,176	$	1,627,761
Consumer real estate		638,518		587,977
Construction and land development		373,068		402,501
Commercial and industrial		617,115		551,867
Leases		68,538		67,427
Consumer and other		14,584		16,094
Total loans and leases		3,378,999		3,253,627
Less: Allowance for credit losses		(33,687)		(23,334)
Loans and leases, net	$	3,345,312	$	3,230,293

Schedule of Allowance for Loan Losses

The following tables detail the changes in the allowance for credit losses by loan and lease classification (in thousands):

	Three Months Ended September 30, 2023
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and				Consumer
	Real Estate		Estate		Development		Industrial		Leases		and Other		Total
Beginning balance	$	14,314	$	6,748	$	5,446	$	5,504	$	586	$	149	$	32,747
Charged-off loans and leases		—		(9)		—		(179)		(143)		(86)		(417)
Recoveries of charge-offs		2		4		—		48		—		19		73
Provision charged to expense (1)		691		413		(369)		307		201		41		1,284
Ending balance	$	15,007	$	7,156	$	5,077	$	5,680	$	644	$	123	$	33,687

	Three Months Ended September 30, 2022
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and				Consumer
	Real Estate		Estate		Development		Industrial		Leases		and Other		Total
Beginning balance	$	10,600	$	3,835	$	2,904	$	3,659	$	807	$	133	$	21,938
Charged-off loans and leases		—		—		—		(51)		—		(180)		(231)
Recoveries of charge-offs		—		7		—		19		29		33		88
Provision charged to expense		(21)		166		272		208		198		151		974
Ending balance	$	10,579	$	4,008	$	3,176	$	3,835	$	1,034	$	137	$	22,769

	Nine Months Ended September 30, 2023
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and				Consumer
	Real Estate		Estate		Development		Industrial		Leases		and Other		Total
Beginning balance	$	10,821	$	4,028	$	3,059	$	3,997	$	1,293	$	136	$	23,334
Impact of adopting ASU 2016-13		879		1,952		2,145		1,451		(683)		13		5,757
PCD gross up		2,652		166		25		27		28		—		2,898
Charged-off loans and leases		—		(9)		—		(387)		(211)		(332)		(939)
Recoveries of charge-offs		5		13		25		153		—		187		383
Provision charged to expense (1)		650		1,006		(177)		439		217		119		2,254
Ending balance	$	15,007	$	7,156	$	5,077	$	5,680	$	644	$	123	$	33,687

	Nine Months Ended September 30, 2022
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and				Consumer
	Real Estate		Estate		Development		Industrial		Leases		and Other		Total
Beginning balance	$	9,781	$	3,454	$	1,882	$	3,781	$	330	$	124	$	19,352
Charged-off loans and leases		—		(33)		—		(240)		(108)		(482)		(863)
Recoveries of charge-offs		4		561		—		162		192		131		1,050
Provision charged to expense		794		26		1,294		132		620		364		3,230
Ending balance	$	10,579	$	4,008	$	3,176	$	3,835	$	1,034	$	137	$	22,769

(1) In the provision charged to expense there was a release of $489 thousand and $796 thousand for unfunded commitments through the provision for credit losses not reflected in the three and nine months ended September 30, 2023.

Schedule of Allowance for Loan Losses for Impaired and Performing Loans Receivable

The following tables detail the allowance for credit losses and recorded investment in loans by loan classification and by impairment evaluation method as of December 31, 2022, as determined in accordance with ASC 310 prior to the adoption of ASU 2016-13 (in thousands):

					Construction		Commercial				Consumer
	Commercial		Consumer		and Land		and				and
	Real Estate		Real Estate		Development		Industrial		Leases		Other		Total
December 31, 2022:
Performing loans and leases	$	10,815	$	3,913	$	2,674	$	3,997	$	1,293	$	136	$	22,828
Impaired loans and leases		—		—		385		—		—		—		385
		10,815		3,913		3,059		3,997		1,293		136		23,213
PCI loans and leases		6		115		—		—		—		—		121
Total allowance for loans and leases	$	10,821	$	4,028	$	3,059	$	3,997	$	1,293	$	136	$	23,334

					Construction		Commercial
	Commercial		Consumer		and Land		and				Consumer
	Real Estate		Real Estate		Development		Industrial		Leases		and Other		Total
December 31, 2022:
Performing loans and leases	$	1,611,815	$	578,342	$	400,114	$	549,974	$	66,459	$	16,091	$	3,222,795
Impaired loans and leases		—		1,283		858		—		—		—		2,141
		1,611,815		579,625		400,972		549,974		66,459		16,091		3,224,936
PCI loans and leases		15,946		8,352		1,529		1,893		968		3		28,691
Total loans and leases	$	1,627,761	$	587,977	$	402,501	$	551,867	$	67,427	$	16,094	$	3,253,627

Loan Credit Quality Indicators

The following tables outline the amount of each loan and lease classification and the amount categorized into each risk rating based on year of origination (in thousands):

	September 30, 2023
	Loans Amortized Cost Basis by Origination Year
															Revolving
															Loans
													Revolving		Converted
	2023		2022		2021		2020		2019		Prior		Loans		to Term		Total
Commercial real estate
Pass	$	168,217	$	553,613	$	436,468	$	187,188	$	141,248	$	118,422	$	14,878	$	8,163	$	1,628,197
Watch		20,665		1,269		2,418		2,652		3,848		267		-		-		31,119
Special mention		-		3,234		-		-		-		-		-		-		3,234
Substandard		968		-		3,145		51		-		462		-		-		4,626
Doubtful		-		-		-		-		-		-		-		-		-
Total commercial real estate		189,850		558,116		442,031		189,891		145,096		119,151		14,878		8,163		1,667,176
YTD gross charge-offs		-		-		-		-		-		-		-		-		-
Consumer real estate
Pass		94,979		179,838		100,852		55,222		34,531		53,597		109,227		3,032		631,278
Watch		171		71		319		289		-		108		1,714		-		2,672
Special mention		-		-		-		-		-		54		-		-		54
Substandard		198		905		-		-		164		2,908		339		-		4,514
Doubtful		-		-		-		-		-		-		-		-		-
Total consumer real estate		95,348		180,814		101,171		55,511		34,695		56,667		111,280		3,032		638,518
YTD gross charge-offs		-		-		-		-		-		(9)		-		-		(9)
Construction and land development
Pass		95,692		166,355		50,591		4,188		5,162		7,265		35,908		1,797		366,958
Watch		4,194		399		451		-		-		2		-		-		5,046
Special mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		36		620		-		408		-		-		1,064
Doubtful		-		-		-		-		-		-		-		-		-
Total construction and land development		99,886		166,754		51,078		4,808		5,162		7,675		35,908		1,797		373,068
YTD gross charge-offs		-		-		-		-		-		-		-		-		-
Commercial and industrial
Pass		137,793		174,721		67,809		24,379		11,313		26,674		164,939		8,006		615,634
Watch		-		631		214		129		75		75		138		-		1,262
Special mention		-		-		-		-		-		-		-		13		13
Substandard		206		-		-		-		-		-		-		-		206
Doubtful		-		-		-		-		-		-		-		-		-
Total commercial and industrial		137,999		175,352		68,023		24,508		11,388		26,749		165,077		8,019		617,115
YTD gross charge-offs		-		(154)		(50)		(183)		-		-		-		-		(387)
Leases
Pass		23,304		29,453		10,074		4,459		933		315		-		-		68,538
Watch		-		-		-		-		-		-		-		-		-
Special mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total leases		23,304		29,453		10,074		4,459		933		315		-		-		68,538
YTD gross charge-offs		(27)		(163)		(9)		-		(12)		-		-		-		(211)
Consumer and other
Pass		5,539		2,314		1,060		671		148		229		4,538		73		14,572
Watch		-		-		-		-		12		-		-		-		12
Special mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total consumer and other		5,539		2,314		1,060		671		160		229		4,538		73		14,584
YTD gross charge-offs		(22)		(115)		(62)		(48)		(26)		(59)		-		-		(332)
Total loans
Pass		525,524		1,106,294		666,854		276,107		193,335		206,502		329,490		21,071		3,325,177
Watch		25,030		2,370		3,402		3,070		3,935		452		1,852		-		40,111
Special mention		-		3,234		-		-		-		54		-		13		3,301
Substandard		1,372		905		3,181		671		164		3,778		339		-		10,410
Doubtful		-		-		-		-		-		-		-		-		-
Total loans	$	551,926	$	1,112,803	$	673,437	$	279,848	$	197,434	$	210,786	$	331,681	$	21,084	$	3,378,999
Total YTD gross charge-offs	$	(49)	$	(432)	$	(121)	$	(231)	$	(38)	$	(68)	$	-	$	-	$	(939)

The following tables outline the amount of each loan and lease classification and the amount categorized into each risk rating as of December 31, 2022, prior to the adoption of ASU 2016-13 (in thousands):

	December 31, 2022
					Construction		Commercial
	Commercial		Consumer		and Land		and				Consumer
Non PCI Loans and Leases:	Real Estate		Real Estate		Development		Industrial		Leases		and Other		Total
Pass	$	1,579,387	$	576,428	$	399,846	$	545,210	$	66,459	$	16,057	$	3,183,387
Watch		29,810		1,496		224		4,523		—		19		36,072
Special mention		2,539		35		—		61		—		—		2,635
Substandard		79		1,666		902		180		—		15		2,842
Doubtful		—		—		—		—		—		—		—
Total		1,611,815		579,625		400,972		549,974		66,459		16,091		3,224,936
PCI Loans and Leases:
Pass		11,924		6,927		1,054		1,893		968		3		22,769
Watch		1,439		188		46		—		—		—		1,673
Special mention		11		54		—		—		—		—		65
Substandard		2,572		1,183		429		—		—		—		4,184
Doubtful		—		—		—		—		—		—		—
Total		15,946		8,352		1,529		1,893		968		3		28,691
Total loans and leases	$	1,627,761	$	587,977	$	402,501	$	551,867	$	67,427	$	16,094	$	3,253,627

Past Due Loans and Leases

The following tables present an aging analysis of our loan and lease portfolio (in thousands):

	September 30, 2023
					90 Days
	30-59 Days		60-89 Days		or More		Total		Loans Not		Total
	Past Due		Past Due		Past Due		Past Due		Past Due		Loans
Commercial real estate	$	862	$	—	$	—	$	862	$	1,666,314	$	1,667,176
Consumer real estate		706		401		34		1,141		637,377		638,518
Construction and land development		110		408		—		518		372,550		373,068
Commercial and industrial		1,384		945		98		2,427		614,688		617,115
Leases		118		—		—		118		68,420		68,538
Consumer and other		95		—		97		192		14,392		14,584
Total	$	3,275	$	1,754	$	229	$	5,258	$	3,373,741	$	3,378,999

	December 31, 2022
					90 Days
	30-59 Days		60-89 Days		or More		Total		Loans Not		Total
	Past Due		Past Due		Past Due		Past Due		Past Due		Loans
Commercial real estate	$	54	$	—	$	—	$	54	$	1,627,707		1,627,761
Consumer real estate		594		—		—		594		587,383		587,977
Construction and land development		—		—		—		—		402,501		402,501
Commercial and industrial		185		18		—		203		551,664		551,867
Leases		1,024		84		143		1,251		66,176		67,427
Consumer and other		103		4		—		107		15,987		16,094
Total	$	1,960	$	106	$	143	$	2,209	$	3,251,418	$	3,253,627

Summary of amortized cost basis of loans on nonaccrual status and loans past due 90 or more days and still accruing interest

The table below presents the amortized cost basis of loans on nonaccrual status and loans past due 90 or more days and still accruing interest at September 30, 2023 and December 31, 2022. Also presented is the balance of loans on nonaccrual status at September 30, 2023 for which there was no related allowance for credit losses recorded (in thousands):

	September 30, 2023						December 31, 2022
	Total		Nonaccrual		Loans Past Due		Total		Loans Past Due
	Nonaccrual		With No Allowance		Over 90 Days		Nonaccrual		Over 90 Days
	Loans		for Credit Losses		Still Accruing		Loans		Still Accruing
Commercial real estate	$	741	$	—	$	—	$	—	$	—
Consumer real estate		2,064		1,154		34		1,665		—
Construction and land development		620		—		—		920		—
Commercial and industrial		314		—		98		180		—
Leases		195		—		—		28		143
Consumer and other		—		—		97		15		—
Total	$	3,934	$	1,154	$	229	$	2,808	$	143

Summary of amortized cost basis of collateral dependent loans, which are individually evaluated to determine expected credit losses

The following table presents the amortized cost basis of collateral dependent loans, which are individually evaluated to determine expected credit losses (in thousands):

	September 30, 2023
	Real Estate		Other		Total
Commercial real estate	$	3,836	$	—	$	3,836
Consumer real estate		2,434		—		2,434
Construction and land development		1,411		—		1,411
Commercial and industrial		—		—		—
Leases		—		—		—
Consumer and other		—		—		—
Total	$	7,681	$	—	$	7,681

Impaired Loans

The following table presents impaired loans at December 31, 2022, as determined under ASC 310 prior to the adoption of ASU 2016-13. A loan or lease held for investment is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due (both principal and interest) according to the terms of the loan or lease agreement.  Presented are the recorded investment, unpaid principal balance and related allowance of impaired loans at December 31, 2022, by loan classification (in thousands):

	December 31, 2022
			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
Impaired loans and leases without a valuation allowance:
Commercial real estate	$	—	$	—	$	—
Consumer real estate		1,283		1,282		—
Construction and land development		—		—		—
Commercial and industrial		—		—		—
Leases		—		—		—
Consumer and other		—		—		—
		1,283		1,282		—
Impaired loans and leases with a valuation allowance:
Commercial real estate		—		—		—
Consumer real estate		—		—		—
Construction and land development		858		858		385
Commercial and industrial		—		—		—
Leases		—		—		—
Consumer and other		—		—		—
		858		858		385
PCI loans and leases:
Commercial real estate		500		580		6
Consumer real estate		684		646		115
Construction and land development		—		—		—
Commercial and industrial		—		—		—
Leases		—		—		—
Consumer and other		—		—		—
		1,184		1,226		121
Total impaired loans and leases	$	3,325	$	3,366	$	506

The following table details the average recorded investment and the amount of interest income recognized on a cash basis for the three and nine months ended September 30, 2022, respectively, of impaired loans by loan classification as determined under ASC 310 prior to the adoption of ASU 2016-13 (in thousands):

	Three Months Ended September 30, 2022
	Average		Interest
	Recorded		Income
	Investment		Recognized
Impaired loans and leases without a valuation allowance:
Commercial real estate	$	304	$	—
Consumer real estate		1,742		72
Construction and land development		—		—
Commercial and industrial		—		—
Leases		—		—
Consumer and other		—		—
		2,046		72
Impaired loans and leases with a valuation allowance:
Commercial real estate		—		—
Consumer real estate		—		—
Construction and land development		858		—
Commercial and industrial		—		—
Leases		—		—
Consumer and other		—		—
		858		—
PCI loans and leases:
Commercial real estate		525		11
Consumer real estate		880		12
Construction and land development		—		—
Commercial and industrial		—		—
Leases		—		—
Consumer and other		—		—
		1,405		23
Total impaired loans and leases	$	4,309	$	95

	Nine Months Ended September 30, 2022
	Average		Interest
	Recorded		Income
	Investment		Recognized
Impaired loans and leases without a valuation allowance:
Commercial real estate	$	152	$	—
Consumer real estate		1,839		92
Construction and land development		—		—
Commercial and industrial		—		—
Leases		—		—
Consumer and other		—		—
		1,991		92
Impaired loans and leases with a valuation allowance:
Commercial real estate		429		—
Consumer real estate		87		—
Construction and land development		429		—
Commercial and industrial		32		—
Leases		—		—
Consumer and other		—		—
		977		—
PCI loans and leases:
Commercial real estate		765		46
Consumer real estate		879		40
Construction and land development		—		—
Commercial and industrial		—		—
Leases		—		—
Consumer and other		2		—
		1,646		86
Total impaired loans and leases	$	4,614	$	178

Summary of loans and leases made to borrowers experiencing financial difficulty that were modified

					Payment Delay				Total Class
	Payment		Term		and Term				of Financing
Three months ended September 30, 2023	Delay		Extension		Extension		Total		Receivable
Commercial real estate	$	—	$	528	$	—	$	528	0.03	%
Consumer real estate		—		514		—		514	0.08
Construction and land development		—		748		—		748	0.20
Commercial and industrial		—		—		—		—	-
Leases		—		—		—		—	-
Consumer and other		—		—		—		—	-
Total	$	—	$	1,790	$	—	$	1,790	0.05	%
Nine months ended September 30, 2023
Commercial real estate	$	403	$	566	$	—	$	969	0.06	%
Consumer real estate		—		514		—		514	0.08
Construction and land development		—		748		—		748	0.20
Commercial and industrial		63		—		153		216	0.04
Leases		—		—		—		—	-
Consumer and other		—		—		—		—	-
Total	$	466	$	1,828	$	153	$	2,447	0.07	%

The following table summarizes the financial impacts of loan modifications made to borrowers experiencing financial difficulty during the three and nine months ended September 30, 2023 (dollars in thousands):

	Weighted-Average
	Term		Weighted-Average
	Extension		Total Payment
Three months ended September 30, 2023	(in months)		Delay
Commercial real estate		12	$	—
Consumer real estate		20		—
Construction and land development		9		—
Commercial and industrial		—		—
Leases		—		—
Consumer and other		—		—
Nine months ended September 30, 2023
Commercial real estate		23	$	23
Consumer real estate		15		—
Construction and land development		9		—
Commercial and industrial		30		7
Leases		—		—
Consumer and other		—		—

The table below shows an age analysis of loans and leases made to borrowers experiencing financial difficulty that were modified on or after January 1, 2023, that date the Company adopted ASU 2022-02 (in thousands):

	September 30, 2023
					90 Days
			30-89 Days		or More
	Current		Past Due		Past Due		Nonaccrual		Total
Commercial real estate	$	—	$	—	$	—	$	968	$	968
Consumer real estate		139		—		—		376		515
Construction and land development		288		—		—		460		748
Commercial and industrial		—		—		—		216		216
Leases		—		—		—		—		—
Consumer and other		—		—		—		—		—
Total	$	427	$	—	$	—	$	2,020	$	2,447

XML

Goodwill and Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

The carrying amount of goodwill and other intangible assets as of the dates indicated is summarized below (in thousands):

	September 30,		December 31,
	2023		2022
Goodwill:
Balance, beginning of period	$	96,145	$	91,565
Acquisition of Sunbelt		—		4,580
Balance, end of the period	$	96,145	$	96,145

Finite-lived Intangible Assets Amortization Expense

	Core Deposit		Customer Relationships		Tradename
Amortized other intangible assets:	Intangibles		Intangibles		Intangibles		Total
September 30, 2023:
Beginning balance January 1, 2023, gross	$	17,470	$	5,670	$	63	$	23,203
Less: accumulated amortization		(9,329)		(2,164)		(63)		(11,556)
Balance, September 30, 2023, other intangible assets, net	$	8,141	$	3,506	$	-	$	11,647
December 31, 2022:
Beginning balance January 1, 2022, gross	$	17,470	$	3,722	$	63	$	21,255
Acquisition of Sunbelt		-		1,948		-		1,948
Balance, December 31, 2022, other intangible assets, gross		17,470		5,670		63		23,203
Less: accumulated amortization		(8,021)		(1,519)		(36)		(9,576)
Balance, December 31, 2022, other intangible assets, net	$	9,449	$	4,151	$	27	$	13,627

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

As of September 30, 2023, the estimated aggregate amortization expense for future periods for intangibles is as follows (in thousands):

Remainder of 2023	$	643
2024		2,425
2025		2,256
2026		2,086
2027		1,904
Thereafter		2,333
Total	$	11,647

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Borrowings, Line of Credit and Subordinated Debt (Tables)

9 Months Ended

Sep. 30, 2023

Borrowings, Line of Credit and Subordinated Debt [Abstract]

Schedule of debt

	September 30,		December 31,
	2023		2022
Securities sold under customer repurchase agreements	$	6,117	$	4,775
Loan participation agreements(1)		—		24,585
Other borrowings		8,000		12,500
Total	$	14,117	$	41,860

(1) During the first quarter of 2023, the loan participation agreements were amended to permit sales accounting treatment and removed from other borrowings.

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Employee Benefit Plans (Tables)

9 Months Ended

Sep. 30, 2023

Defined Benefit Plan [Abstract]

Schedule of Option Activity

A summary of the status of stock option plans is presented in the following table:

		Weighted
		Average
		Exercisable
	Number	Price
Outstanding at December 31, 2022	32,045	$	12.04
Granted	—		—
Exercised	(15,705)		10.47
Forfeited	—		—
Outstanding at September 30, 2023	16,340	$	13.55

Schedule of Options Outstanding by Exercise Price Range

		Options Outstanding				Options Exercisable
			Weighted-
			Average	Weighted-			Weighted-
			Remaining	Average			Average
Exercise		Number	Contractual	Exercise		Number	Exercise
Prices		Outstanding	Life	Price		Exercisable	Price
$	9.60	4,500	0.42 years	$	9.60	4,500	$	9.60
	15.05	11,840	2.00 years		15.05	11,840		15.05
Outstanding, end of period		16,340	1.57 years	$	13.55	16,340	$	13.55

Schedule of Non-vested Restricted Stock Awards

		Weighted
		Average
		Grant-Date
	Number	Fair Value
Balance at December 31, 2022	129,836	$	19.61
Granted	89,582		26.23
Vested	(27,172)		23.39
Forfeited/expired	(9,912)		22.45
Balance at September 30, 2023	182,334	$	22.15

Share-based Payment Arrangement, Stock Appreciation Right, Activity

		Weighted
		Average
	Number	Exercisable Price
Outstanding at December 31, 2022	36,000	$	18.25
Granted	—		—
Exercised	(8,000)		15.19
Forfeited	—		—
Outstanding at September 30, 2023	28,000	$	19.13

		SARs Outstanding				SARs Exercisable
			Weighted-
			Average	Weighted-
			Remaining	Average			Weighted- Average
Exercise		Number	Contractual	Exercise		Number	Exercise
Prices		Outstanding	Life		Price	Exercisable	Price
$	15.19	8,000	0.25 years	$	15.19	8,000	$	15.19
	20.70	20,000	1.25 years		20.70	—		—
	Outstanding, end of period	28,000	0.97 years	$	19.13	8,000	$	15.19

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Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Other Commitments

A summary of the Company’s total contractual amount for all off-balance sheet commitments are as follows (in thousands):

	September 30,		December 31,
	2023		2022
Commitments to extend credit	$	746,921	$	911,998
Standby letters of credit		15,567		6,897

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Fair Value of Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2023

Fair Value of Assets and Liabilities [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The tables below present the recorded amount of assets and liabilities measured at fair value on a recurring basis (in thousands):

			Quoted Prices in		Significant		Significant
			Active Markets		Other		Other
			for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
Description	Fair Value		(Level 1)		(Level 2)		(Level 3)
September 30, 2023:
Assets:
Securities available-for-sale:
U.S. Treasury	$	73,733	$	—	$	73,733	$	—
U.S. Government-sponsored enterprises (GSEs)		60,953		—		60,953		—
Municipal securities		17,505		—		17,505		—
Other debt securities		30,626		—		30,626		—
Mortgage-backed securities (GSEs)		202,314		—		202,314		—
Total securities available-for-sale		385,131		—		385,131		—
Derivative financial instruments and interest rate swap agreements		16,191		—		16,191		—
Total assets at fair value	$	401,322	$	—	$	401,322	$	—
Liabilities:
Derivative financial instruments and interest rate swap agreements	$	17,647	$	—	$	17,647	$	—
December 31, 2022:
Assets:
Securities available-for-sale:
U.S. Treasury	$	223,653	$	—	$	223,653	$	—
U.S. Government-sponsored enterprises (GSEs)		1,575		—		1,575		—
Municipal securities		18,611		—		18,611		—
Other debt securities		30,551		—		30,551		—
Mortgage-backed securities (GSEs)		209,503		—		209,503		—
Total securities available-for-sale		483,893		—		483,893		—
Derivative financial instruments and interest rate swap agreements		11,834		—		11,834		—
Total assets at fair value	$	495,727	$	—	$	495,727	$	—
Liabilities:
Derivative financial instruments and interest rate swap agreements	$	13,110	$	—	$	13,110	$	—

Fair Value, Assets and Liabilities Measured on Nonrecurring Basis

			Quoted Prices in		Significant		Significant
			Active Markets		Other		Other
			for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
September 30, 2023:
Collateral dependent loans	$	4,315	$	—	$	—	$	4,315
Other real estate owned		271		—		—		271
December 31, 2022:
Collateral dependent loans	$	1,536	$	—	$	—	$	1,536
Other real estate owned		915		—		—		915

Fair Value Measurement Inputs and Valuation Techniques

For Level 3 assets measured at fair value on a non-recurring basis, the significant unobservable inputs used in the fair value measurements are presented below (dollars in thousands):

					Weighted
			Valuation	Significant Other	Average of
	Fair Value		Technique	Unobservable Input	Input
September 30, 2023:
Collateral dependent loans	$	4,315	Appraisal	Appraisal discounts	39	%
Other real estate owned		271	Appraisal	Appraisal discounts	26	%
December 31, 2022:
Collateral dependent loans	$	1,536	Appraisal	Appraisal discounts	25	%
Other real estate owned		915	Appraisal	Appraisal discounts	29	%

Fair Value, by Balance Sheet Grouping

The carrying amount and estimated fair value of the Company’s financial instruments are as follows (in thousands):

	Fair Value Measurements Using
	Carrying								Estimated
	Amount		Level 1		Level 2		Level 3		Fair Value
September 30, 2023:
Assets:
Cash and cash equivalents	$	400,258	$	400,258	$	—	$	—	$	400,258
Securities available-for-sale		385,131		—		385,131		—		385,131
Securities held-to-maturity		282,313		—		256,325		—		256,325
Other investments		13,805		N/A		N/A		N/A		N/A
Loans and leases, net and loans held for sale		3,348,046		—		—		3,210,772		3,210,772
Derivative financial instruments and interest rate swap agreements		16,191		—		16,191		—		16,191
Liabilities:
Noninterest-bearing demand deposits		923,763		—		923,763		—		923,763
Interest-bearing demand deposits		993,717		—		993,717		—		993,717
Money market and savings deposits		1,766,409		—		1,766,409		—		1,766,409
Time deposits		562,620		—		558,744		—		558,744
Borrowings		14,117		—		14,117		—		14,117
Subordinated debt		42,078		—		—		39,650		39,650
Derivative financial instruments and interest rate swap agreements		17,647		—		17,647		—		17,647
December 31, 2022:
Assets:
Cash and cash equivalents	$	266,424	$	266,424	$	—	$	—	$	266,424
Securities available-for-sale		483,893		—		483,893		—		483,893
Securities held-to-maturity		285,949		—		260,613				260,613
Other investments		15,530		N/A		N/A		N/A		N/A
Loans and leases, net and loans held for sale		3,232,045		—		—		3,143,921		3,143,921
Derivative financial instruments and interest rate swap agreements		11,834		—		11,834		—		11,834
Liabilities:
Noninterest-bearing demand deposits		1,072,449		—		1,072,449		—		1,072,449
Interest-bearing demand deposits		965,911		—		965,911		—		965,911
Money market and savings deposits		1,583,481		—		1,583,481		—		1,583,481
Time deposits		455,259		—		451,899		—		451,899
Borrowings		41,860		—		41,860		—		41,860
Subordinated debt		42,015		—		—		40,439		40,439
Derivative financial instruments and interest rate swap agreements		13,110		—		13,110		—		13,110

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Derivatives Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2023

Derivative [Line Items]

Schedule of Hedge Relationships on Income Statement

The following table presents the effect of fair value and cash flow hedge accounting on the income statement (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Total interest income	$	55,448	$	—	$	160,823	$	—
Effects of cash flow hedge relationships		(173)		—		(275)		—
Reported total interest income	$	55,275	$	—	$	160,548	$	—
Total interest expense	$	24,426	$	—	$	62,150	$	—
Effects of cash flow hedge relationships		(157)		—		(165)		—
Reported total interest expense	$	24,269	$	—	$	61,985	$	—

Schedule of interest rate swaps related to loan hedging program

At September 30, 2023 and December 31, 2022, interest rate swaps related to the Company’s loan hedging program that were outstanding are presented in the following table (in thousands):

	September 30, 2023				December 31, 2022
		Notional		Estimated		Notional		Estimated
		Amount		Fair Value		Amount		Fair Value
Interest rate swap agreements:
Assets	$	243,239	$	15,482	$	216,656	$	11,834
Liabilities		243,239		(15,482)		216,656		(11,834)

Schedule of interest rate swap to facilitate customer's transactions

The Company establishes limits and monitors exposures for customer swap positions.  Any fees received to enter the swap agreements at inception are recognized in earnings when received and is included in noninterest income.  Such fees were as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Interest rate swap agreements	$	326	$	53	$	823	$	1,449

Designated as Hedging Instrument [Member] | Fair Value Hedging [Member]

Derivative [Line Items]

Schedule of Hedge Relationships on Income Statement

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2022		2022
Interest income on tax-exempt securities	$	403	$	1,183
Effects of fair value hedge relationships		(83)		(527)
Reported interest income on tax-exempt securities	$	320	$	656

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
Gain (loss) on fair value hedging relationship	2022		2022
Interest rate swap agreements - securities:
Hedged items	$	1,808	$	5,319
Derivative designated as hedging instruments		(1,808)		(5,319)
Carry amount of hedged assets - securities available-for-sale		36,165		36,165

Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member]

Derivative [Line Items]

Schedule of Fair Value Hedge Relationships in Balance Sheet

At September 30, 2023 and December 31, 2022, cash flow hedges are as follows (in thousands):

		September 30, 2023				December 31, 2022
	Balance Sheet	Notional		Estimated		Notional		Estimated
	Location	Amount		Fair Value		Amount		Fair Value
Cash flow hedges:
Assets	Other assets	$	150,000	$	698	$	-	$	-
Liabilities	Other liabilities		100,000		(2,165)		100,000		(1,304)

Schedule of Hedge Relationships on AOCI

The following table presents the effect of fair value and cash flow hedge accounting on AOCI (in thousands):

Derivatives in cash flow hedging relationships:		Amount of Gain (Loss) Recognized on OCI on Derivative	Location of Gain or (Loss) Recognized from AOCI into Income		Amount of Gain or (Loss) Reclassified from AOCI into Income
Three months ended September 30, 2023
Interest rate swaps - Assets	$	(432)	Interest income	$	(173)
Interest rate swaps - Liabilities		585	Interest expense		(157)
Three months ended September 30, 2022
Interest rate swaps - Assets	$	(1,775)	—	$	—
Interest rate swaps - Liabilities		—	—		—
Nine months ended September 30, 2023
Interest rate swaps - Assets	$	(2,165)	Interest income	$	(275)
Interest rate swaps - Liabilities		698	Interest expense		(165)
Nine months ended September 30, 2022
Interest rate swaps - Assets	$	(1,775)	—	$	—
Interest rate swaps - Liabilities		—	—		—

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Leases (Tables)

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

Summary of Lease Assets and Liabilities

The following table represents the consolidated balance sheet classification of the Company’s ROU assets and lease liabilities. The Company elected not to include short-term leases (i.e., leases with initial terms of twelve months or less), or equipment leases (deemed immaterial) on the consolidated balance sheet (in thousands):

		September 30,		December 31,
	Classification	2023		2022
Assets:
Operating lease right-of-use assets	Other assets	$	10,097	$	9,314
Liabilities:
Operating lease liabilities	Other liabilities	$	10,345	$	9,457

Summary of Lease Costs and Other Information

The following table represents lease costs and other lease information. As the Company elected, for all classes of underlying assets, not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as common area maintenance (in thousands).

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Lease costs:
Operating lease costs	$	438	$	403	$	1,247	$	1,220
Variable lease costs		30		26		87		76
Total	$	468	$	429	$	1,334	$	1,296
Other information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	393	$	385	$	1,142	$	1,163

Schedule of Remaining Minimum Lease Payments

Future minimum payments for operating leases with initial or remaining terms of one year or more as of September 30, 2023, were as follows (in thousands):

	Amounts
Remainder of 2023	$	276
2024		1,455
2025		1,359
2026		1,291
2027		1,107
Thereafter		6,476
Total future minimum lease payments		11,964
Amounts representing interest		(1,619)
Present value of net future minimum lease payments	$	10,345

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Regulatory Matters (Tables)

9 Months Ended

Sep. 30, 2023

Banking and Thrift [Abstract]

Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations

Actual and required capital levels at September 30, 2023, and December 31, 2022 are presented below (dollars in thousands):

									Minimum to be
									well
									capitalized under
					Minimum for				prompt
					capital				corrective action
		Actual			adequacy purposes				provisions1
	Amount		Ratio		Amount		Ratio		Amount		Ratio
September 30, 2023
SmartFinancial:
Total Capital (to Risk Weighted Assets)	$	449,546	11.90	%	$	302,100	8.00	%		N/A	N/A
Tier 1 Capital (to Risk Weighted Assets)		380,272	10.07	%		226,575	6.00	%		N/A	N/A
Common Equity Tier 1 Capital (to Risk Weighted Assets)		380,272	10.07	%		169,931	4.50	%		N/A	N/A
Tier 1 Capital (to Average Assets)2		380,272	8.13	%		187,074	4.00	%		N/A	N/A
SmartBank:
Total Capital (to Risk Weighted Assets)	$	447,326	11.87	%	$	301,538	8.00	%	$	376,922	10.00	%
Tier 1 Capital (to Risk Weighted Assets)		420,130	11.15	%		226,153	6.00	%		301,538	8.00	%
Common Equity Tier 1 Capital (to Risk Weighted Assets)		420,130	11.15	%		169,615	4.50	%		244,999	6.50	%
Tier 1 Capital (to Average Assets)2		420,130	9.00	%		186,792	4.00	%		233,490	5.00	%
December 31, 2022
SmartFinancial:
Total Capital (to Risk Weighted Assets)	$	425,957	11.40	%	$	298,966	8.00	%		N/A	N/A
Tier 1 Capital (to Risk Weighted Assets)		360,608	9.65	%		224,224	6.00	%		N/A	N/A
Common Equity Tier 1 Capital (to Risk Weighted Assets)		360,608	9.65	%		168,168	4.50	%		N/A	N/A
Tier 1 Capital (to Average Assets)		360,608	7.95	%		181,387	4.00	%		N/A	N/A
SmartBank:
Total Capital (to Risk Weighted Assets)	$	426,947	11.44	%	$	298,476	8.00	%	$	373,094	10.00	%
Tier 1 Capital (to Risk Weighted Assets)		403,613	10.82	%		223,857	6.00	%		298,476	8.00	%
Common Equity Tier 1 Capital (to Risk Weighted Assets)		403,613	10.82	%		167,892	4.50	%		242,511	6.50	%
Tier 1 Capital (to Average Assets)		403,613	8.90	%		181,383	4.00	%		226,729	5.00	%

¹The prompt corrective action provisions are applicable at the Bank level only.

²Average assets for the above calculations were based on the most recent quarter.

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Other comprehensive income (loss) (Tables)

9 Months Ended

Sep. 30, 2023

Equity [Abstract]

Summary of Accumulated Other Comprehensive Income (Loss)

	Three Months Ended September 30, 2023
									Accumulated
	Securities		Securities		Fair Value				Other
	Available-for-		Transferred to		Municipal		Cash Flow		Comprehensive
	Sale		Held-to-Maturity		Security Hedges		Hedges		Income (Loss)
Beginning balance, June 30, 2023	$	(33,132)	$	(684)	$	—	$	(1,201)	$	(35,017)
Other comprehensive income (loss)		(4,325)		—		—		115		(4,210)
Reclassification of amounts included in net income		5,044		27		—		—		5,071
Net other comprehensive income (loss) during period		719		27		—		115		861
Ending balance, September 30, 2023	$	(32,413)	$	(657)	$	—	$	(1,086)	$	(34,156)
	Three Months Ended September 30, 2022
									Accumulated
	Securities		Securities		Fair Value				Other
	Available-for-		Transferred to		Municipal		Cash Flow		Comprehensive
	Sale		Held-to-Maturity		Security Hedges		Hedges		Income (Loss)
Beginning balance, June 30, 2022	$	(23,526)	$	(804)	$	(318)	$	—	$	(24,648)
Other comprehensive income (loss)		(14,942)		—		69		(1,317)		(16,190)
Reclassification of amounts included in net income		—		31		—		—		31
Net other comprehensive income (loss) during period		(14,942)		31		69		(1,317)		(16,159)
Ending balance, September 30, 2022	$	(38,468)	$	(773)	$	(249)	$	(1,317)	$	(40,807)

	Nine Months Ended September 30, 2023
									Accumulated
	Securities		Securities		Fair Value				Other
	Available-for-		Transferred to		Municipal		Cash Flow		Comprehensive
	Sale		Held-to-Maturity		Security Hedges		Hedges		Income (Loss)
Beginning balance, December 31, 2022	$	(33,616)	$	(742)	$	—	$	(966)	$	(35,324)
Other comprehensive income (loss)		(3,841)		—		—		(120)		(3,961)
Reclassification of amounts included in net income		5,044		85		—		—		5,129
Net other comprehensive income (loss) during period		1,203		85		—		(120)		1,168
Ending balance, September 30, 2023	$	(32,413)	$	(657)	$	—	$	(1,086)	$	(34,156)
	Nine Months Ended September 30, 2022
									Accumulated
	Securities		Securities		Fair Value				Other
	Available-for-		Transferred to		Municipal		Cash Flow		Comprehensive
	Sale		Held-to-Maturity		Security Hedges		Hedges		Income (Loss)
Beginning balance, December 31, 2021	$	25	$	665	$	753	$	—	$	1,443
Other comprehensive income (loss)		(38,493)		(1,490)		(1,002)		(1,317)		(42,302)
Reclassification of amounts included in net income		—		52		—		—		52
Net other comprehensive income (loss) during period		(38,493)		(1,438)		(1,002)		(1,317)		(42,250)
Ending balance, September 30, 2022	$	(38,468)	$	(773)	$	(249)	$	(1,317)	$	(40,807)

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Presentation of Financial Information (Details) - USD ($)		3 Months Ended	9 Months Ended
	Jan. 01, 2023	Sep. 30, 2023	Sep. 30, 2023	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Dec. 31, 2021
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accrued interest receivables for loans		$ 11,500,000	$ 11,500,000	$ 9,800,000
Financing Receivable, Accrued Interest, after Allowance for Credit Loss, Statement of Financial Position [Extensible Enumeration]		Other Assets	Other Assets	Other Assets
Retained earnings		$ 168,271,000	$ 168,271,000	$ 156,545,000
Allowance for loan losses	$ 31,989,000			23,334,000	$ 22,769,000	$ 21,938,000	$ 19,352,000
Allowance for off balance sheet credit		2,300,000	2,300,000	85,000
Allowance recognized on loans purchased with credit deterioration	2,898,000
Entities minimum amount of financing receivable to evaluate individually		500,000	500,000
Provision for credit losses, HTM		0	0
Other Liabilities [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for off balance sheet credit		$ 2,300,000	$ 2,300,000
Cumulative Effect, Period of Adoption, Adjustment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for off balance sheet credit	3,000,000.0
Cumulative Effect, Period of Adoption, Adjustment [Member] | Accounting Standards Update 2016-13 [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Retained earnings	6,600,000
Allowance for loan losses	5,757,000			$ 5,757,000
Aggregate allowance adjustment	8,700,000
Allowance for off balance sheet credit	3,000,000.0
Increase in deferred tax assets	2,300,000
Allowance recognized on loans purchased with credit deterioration	$ 2,900,000

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Presentation of Financial Information - Impact of ASU 2016-13 (Details) - USD ($) $ in Thousands	Jan. 01, 2023	Sep. 30, 2023	Jun. 30, 2023	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Dec. 31, 2021
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses, post ASU 2019-04		$ 33,687	$ 32,747
Allowance for loan losses	$ 31,989			$ 23,334	$ 22,769	$ 21,938	$ 19,352
Allowance recognized on loans purchased with credit deterioration	2,898
Unfunded Loan Commitment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	3,029
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses, post ASU 2019-04		15,007	14,314
Allowance for loan losses	14,352			10,821	10,579	10,600	9,781
Allowance recognized on loans purchased with credit deterioration	2,652
Consumer Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses, post ASU 2019-04		7,156	6,748
Allowance for loan losses	6,146			4,028	4,008	3,835	3,454
Allowance recognized on loans purchased with credit deterioration	166
Construction and Land Development [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses, post ASU 2019-04		5,077	5,446
Allowance for loan losses	5,229			3,059	3,176	2,904	1,882
Allowance recognized on loans purchased with credit deterioration	25
Commercial and Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses, post ASU 2019-04		5,680	5,504
Allowance for loan losses	5,475			3,997	3,835	3,659	3,781
Allowance recognized on loans purchased with credit deterioration	27
Leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses, post ASU 2019-04		644	586
Allowance for loan losses	638			1,293	1,034	807	330
Allowance recognized on loans purchased with credit deterioration	28
Consumer and Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses, post ASU 2019-04		$ 123	$ 149
Allowance for loan losses	149			136	$ 137	$ 133	$ 124
Cumulative Effect, Period of Adoption, Adjustment [Member] | Accounting Standards Update 2016-13 [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	5,757			5,757
Allowance recognized on loans purchased with credit deterioration	2,900
Cumulative Effect, Period of Adoption, Adjustment [Member] | Accounting Standards Update 2016-13 [Member] | Unfunded Loan Commitment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	3,029
Cumulative Effect, Period of Adoption, Adjustment [Member] | Accounting Standards Update 2016-13 [Member] | Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	879			879
Cumulative Effect, Period of Adoption, Adjustment [Member] | Accounting Standards Update 2016-13 [Member] | Consumer Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	1,952			1,952
Cumulative Effect, Period of Adoption, Adjustment [Member] | Accounting Standards Update 2016-13 [Member] | Construction and Land Development [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	2,145			2,145
Cumulative Effect, Period of Adoption, Adjustment [Member] | Accounting Standards Update 2016-13 [Member] | Commercial and Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	1,451			1,451
Cumulative Effect, Period of Adoption, Adjustment [Member] | Accounting Standards Update 2016-13 [Member] | Leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	(683)			(683)
Cumulative Effect, Period of Adoption, Adjustment [Member] | Accounting Standards Update 2016-13 [Member] | Consumer and Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	$ 13			$ 13

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Business Combinations (Narrative) (Details) - USD ($) $ in Thousands		1 Months Ended
	Sep. 01, 2022	Sep. 30, 2022	Sep. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Business Acquisition [Line Items]
Goodwill			$ 96,145	$ 96,145	$ 91,565
Sunbelt Group LLC [Member]
Business Acquisition [Line Items]
Assets acquired	$ 349	$ 2,284
Liabilities assumed	364	364
Total consideration	6,500	6,500
Purchase consideration paid in cash	5,200
Goodwill	4,600	$ 4,580
Sunbelt Group LLC [Member] | Customer Relationships [Member]
Business Acquisition [Line Items]
Intangible assets acquired	$ 1,900
Useful life	14 years

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Business Combinations (Allocation of Purchase Price) (Details) - USD ($) $ in Thousands		1 Months Ended
	Sep. 01, 2022	Sep. 30, 2022	Sep. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Consideration transferred:
Goodwill			$ 96,145	$ 96,145	$ 91,565
Sunbelt Group LLC [Member]
Assets:
Cash and cash equivalents	$ 319	$ 319
Customer list intangible		1,948
Equipment, net	13
Other assets	17	17
Total assets acquired	349	2,284
Liabilities:
Payables and other liabilities	364	364
Total liabilities assumed	364	364
Excess of assets acquired over (less than) liabilities assumed	(15)	1,920
Purchase price/Cash		6,500
Total fair value of consideration transferred	6,500	6,500
Assets:
Premises and equipment, net	(13)
Intangibles	1,948
Total assets acquired	1,935
Consideration transferred:
Aggregate fair value adjustments	1,935
Goodwill	$ 4,600	$ 4,580

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Earnings per Share (Narrative) (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Earnings Per Share [Abstract]
Anti-dilutive securities excluded from computation of earnings per share (in shares)	0	0	0	0

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Earnings per Share (Schedule of Earnings Per Share, Basic and Diluted) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Basic earnings per share computation:
Net income available to common shareholders	$ 2,067	$ 11,543	$ 22,403	$ 30,018
Average common shares outstanding - basic (in shares)	16,807,548	16,749,255	16,801,840	16,734,298
Basic earnings per share (in dollars per share)	$ 0.12	$ 0.69	$ 1.33	$ 1.79
Diluted earnings per share computation:
Net income available to common shareholders	$ 2,067	$ 11,543	$ 22,403	$ 30,018
Average common shares outstanding - basic (in shares)	16,807,548	16,749,255	16,801,840	16,734,298
Incremental shares from assumed conversions:
Stock options and restricted stock (in shares)	111,087,000	122,767,000	105,485,000	133,672,000
Average common shares outstanding - diluted	16,918,635	16,872,022	16,907,325	16,867,970
Diluted earnings per share (in dollars per share)	$ 0.12	$ 0.68	$ 1.33	$ 1.78

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Securities (Narrative) (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Debt Securities, Available-for-sale					$ 483,893,000
Securities available-for-sale, at fair value, post ASU 2019-04	$ 385,131,000		$ 385,131,000
Reclassification of unrealized gain on securities transferred from available-for-sale to held-to-maturity				$ 2,009,000
Impairment on other investments			0
Securities held-to-maturity, at amortized cost, post ASU 2019-04	282,313,000		282,313,000
Allowance for off balance sheet credit	2,300,000		2,300,000		85,000
Gross gains	0	$ 0	0	0
Realized losses	6,800,000	$ 0	6,800,000	$ 0
Asset Pledged as Collateral [Member] | Secure Public Funds and Securities Sold under Agreements to Repurchase [Member]
Debt Securities, Available-for-sale					$ 304,800,000
Securities available-for-sale, at fair value, post ASU 2019-04	$ 347,900,000		$ 347,900,000

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Securities (Schedule of Available-for-sale Securities Reconciliation) (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Debt Securities, Available-for-sale [Line Items]
Total		$ 529,216
Total, post ASU 2019-04	$ 428,831
Gross Unrealized Gains	1,499	23
Gross Unrealized Losses	(45,199)	(45,346)
Fair Value		483,893
Fair Value, post ASU 2019-04	385,131
US Treasury Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Total		241,506
Total, post ASU 2019-04	84,550
Gross Unrealized Losses	(10,817)	(17,853)
Fair Value		223,653
Fair Value, post ASU 2019-04	73,733
US Government-sponsored Enterprises Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Total		1,593
Total, post ASU 2019-04	59,683
Gross Unrealized Gains	1,430
Gross Unrealized Losses	(160)	(18)
Fair Value		1,575
Fair Value, post ASU 2019-04	60,953
Municipal securities [Member]
Debt Securities, Available-for-sale [Line Items]
Total		19,210
Total, post ASU 2019-04	18,661
Gross Unrealized Gains	2	17
Gross Unrealized Losses	(1,158)	(616)
Fair Value		18,611
Fair Value, post ASU 2019-04	17,505
Other Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Total		32,959
Total, post ASU 2019-04	34,784
Gross Unrealized Gains	67
Gross Unrealized Losses	(4,225)	(2,408)
Fair Value		30,551
Fair Value, post ASU 2019-04	30,626
Mortgage-backed securities (GSEs) [Member]
Debt Securities, Available-for-sale [Line Items]
Total		233,948
Total, post ASU 2019-04	231,153
Gross Unrealized Gains		6
Gross Unrealized Losses	(28,839)	(24,451)
Fair Value		$ 209,503
Fair Value, post ASU 2019-04	$ 202,314

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Securities (Schedule of Held-to-maturity Securities Reconciliation) (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Held-to-maturity
Amortized Cost		$ 285,949
Amortized cost, post ASU 2019-04	$ 282,313
Gross Unrealized Losses	(25,988)	(25,336)
Fair Value	256,325	260,613
US Treasury Securities [Member]
Held-to-maturity
Amortized Cost		150,295
Amortized cost, post ASU 2019-04	150,126
Gross Unrealized Losses	(2,925)	(5,613)
Fair Value	147,201	144,682
US Government-sponsored Enterprises Debt Securities [Member]
Held-to-maturity
Amortized Cost		50,539
Amortized cost, post ASU 2019-04	49,642
Gross Unrealized Losses	(9,013)	(8,037)
Fair Value	40,629	42,502
Municipal securities [Member]
Held-to-maturity
Amortized Cost		53,694
Amortized cost, post ASU 2019-04	52,947
Gross Unrealized Losses	(8,872)	(7,550)
Fair Value	44,075	46,144
Mortgage-backed securities (GSEs) [Member]
Held-to-maturity
Amortized Cost		31,421
Amortized cost, post ASU 2019-04	29,598
Gross Unrealized Losses	(5,178)	(4,136)
Fair Value	$ 24,420	$ 27,285

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Securities (Available-for-sale by Contractual Maturity Date) (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Amortized Cost
Due in one year or less	$ 11,410
Due from one year to five years	56,074
Due from five years to ten years	119,939
Due after ten years	10,255
Securities available for sale, amortized cost	197,678
Mortgage-backed securities	231,153
Total, post ASU 2019-04	428,831
Fair Value
Due in one year or less	11,386
Due from one year to five years	49,911
Due from five years to ten years	112,003
Due after ten years	9,517
Securities available for sale, fair value	182,817
Mortgage-backed securities	202,314
Total, post ASU 2019-04	$ 385,131

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Securities (Held-to-maturity by Contractual Maturity Date) (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Amortized Cost
Due in one year or less	$ 150,126
Due from five years to ten years	47,513
Due after ten years	55,076
Securities held to maturity, amortized cost	252,715
Mortgage-backed securities	29,598
Amortized cost, post ASU 2019-04	282,313
Fair Value
Due in one year or less	147,201
Due from five years to ten years	39,301
Due after ten years	45,403
Securities held to maturity, fair value	231,905
Mortgage-backed securities	24,420
Total	$ 256,325	$ 260,613

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Securities (Schedule of Available-for-sale, Unrealized Loss on Investments) (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Debt Securities, Available-for-sale [Line Items]
Less than 12 Months, Fair Value	$ 60,234	$ 285,468
Less than 12 Months, Gross Unrealized Losses	$ (1,243)	$ (19,074)
Less than 12 Months, Number of Securities	31	136
12 Months or Greater, Fair Value	$ 284,321	$ 191,339
12 Months or Greater, Gross Unrealized Losses	$ (43,956)	$ (26,272)
12 Months or Greater, Number of Securities	143	47
Total, Fair Value	$ 344,555	$ 476,807
Total, Gross Unrealized Losses	$ (45,199)	$ (45,346)
Total, Number of Securities	174	183
US Treasury Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Less than 12 Months, Fair Value		$ 134,414
Less than 12 Months, Gross Unrealized Losses		$ (7,610)
Less than 12 Months, Number of Securities		9
12 Months or Greater, Fair Value	$ 73,733	$ 89,239
12 Months or Greater, Gross Unrealized Losses	$ (10,817)	$ (10,243)
12 Months or Greater, Number of Securities	9	11
Total, Fair Value	$ 73,733	$ 223,653
Total, Gross Unrealized Losses	$ (10,817)	$ (17,853)
Total, Number of Securities	9	20
US Government-sponsored Enterprises Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Less than 12 Months, Fair Value	$ 20,181	$ 1,266
Less than 12 Months, Gross Unrealized Losses	$ (143)	$ (14)
Less than 12 Months, Number of Securities	4	1
12 Months or Greater, Fair Value	$ 1,488	$ 309
12 Months or Greater, Gross Unrealized Losses	$ (17)	$ (4)
12 Months or Greater, Number of Securities	3	2
Total, Fair Value	$ 21,669	$ 1,575
Total, Gross Unrealized Losses	$ (160)	$ (18)
Total, Number of Securities	7	3
Municipal securities [Member]
Debt Securities, Available-for-sale [Line Items]
Less than 12 Months, Fair Value	$ 7,729	$ 13,146
Less than 12 Months, Gross Unrealized Losses	$ (283)	$ (616)
Less than 12 Months, Number of Securities	10	20
12 Months or Greater, Fair Value	$ 9,475
12 Months or Greater, Gross Unrealized Losses	$ (875)
12 Months or Greater, Number of Securities	17
Total, Fair Value	$ 17,204	$ 13,146
Total, Gross Unrealized Losses	$ (1,158)	$ (616)
Total, Number of Securities	27	20
Other Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Less than 12 Months, Fair Value	$ 2,654	$ 25,044
Less than 12 Months, Gross Unrealized Losses	$ (270)	$ (1,866)
Less than 12 Months, Number of Securities	2	20
12 Months or Greater, Fair Value	$ 26,980	$ 5,506
12 Months or Greater, Gross Unrealized Losses	$ (3,955)	$ (542)
12 Months or Greater, Number of Securities	25	6
Total, Fair Value	$ 29,634	$ 30,550
Total, Gross Unrealized Losses	$ (4,225)	$ (2,408)
Total, Number of Securities	27	26
Mortgage-backed securities (GSEs) [Member]
Debt Securities, Available-for-sale [Line Items]
Less than 12 Months, Fair Value	$ 29,670	$ 111,598
Less than 12 Months, Gross Unrealized Losses	$ (547)	$ (8,968)
Less than 12 Months, Number of Securities	15	86
12 Months or Greater, Fair Value	$ 172,645	$ 96,285
12 Months or Greater, Gross Unrealized Losses	$ (28,292)	$ (15,483)
12 Months or Greater, Number of Securities	89	28
Total, Fair Value	$ 202,315	$ 207,883
Total, Gross Unrealized Losses	$ (28,839)	$ (24,451)
Total, Number of Securities	104	114

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Securities (Schedule of Held-to-maturity, Unrealized Loss on Investments) (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Held-to-maturity:
Less than 12 Months, Fair Value		$ 198,501
Less than 12 Months, Gross Unrealized Losses		$ (14,503)
Less than 12 Months, Number of Securities		35
12 Months or Greater, Fair Value	$ 256,325	$ 62,111
12 Months or Greater, Gross Unrealized Losses	$ (25,988)	$ (10,833)
12 Months or Greater, Number of Securities	57	22
Total, Fair Value	$ 256,325	$ 260,612
Total, Gross Unrealized Losses	$ (25,988)	$ (25,336)
Total, Number of Securities	57	57
US Treasury Securities [Member]
Held-to-maturity:
Less than 12 Months, Fair Value		$ 144,683
Less than 12 Months, Gross Unrealized Losses		$ (5,613)
Less than 12 Months, Number of Securities		4
12 Months or Greater, Fair Value	$ 147,201
12 Months or Greater, Gross Unrealized Losses	$ (2,925)
12 Months or Greater, Number of Securities	4
Total, Fair Value	$ 147,201	$ 144,683
Total, Gross Unrealized Losses	$ (2,925)	$ (5,613)
Total, Number of Securities	4	4
US Government-sponsored Enterprises Debt Securities [Member]
Held-to-maturity:
Less than 12 Months, Fair Value		$ 13,048
Less than 12 Months, Gross Unrealized Losses		$ (2,503)
Less than 12 Months, Number of Securities		3
12 Months or Greater, Fair Value	$ 40,629	$ 29,451
12 Months or Greater, Gross Unrealized Losses	$ (9,013)	$ (5,534)
12 Months or Greater, Number of Securities	13	10
Total, Fair Value	$ 40,629	$ 42,499
Total, Gross Unrealized Losses	$ (9,013)	$ (8,037)
Total, Number of Securities	13	13
Municipal securities [Member]
Held-to-maturity:
Less than 12 Months, Fair Value		$ 40,770
Less than 12 Months, Gross Unrealized Losses		$ (6,387)
Less than 12 Months, Number of Securities		28
12 Months or Greater, Fair Value	$ 44,076	$ 5,375
12 Months or Greater, Gross Unrealized Losses	$ (8,872)	$ (1,163)
12 Months or Greater, Number of Securities	35	7
Total, Fair Value	$ 44,076	$ 46,145
Total, Gross Unrealized Losses	$ (8,872)	$ (7,550)
Total, Number of Securities	35	35
Mortgage-backed securities (GSEs) [Member]
Held-to-maturity:
12 Months or Greater, Fair Value	$ 24,419	$ 27,285
12 Months or Greater, Gross Unrealized Losses	$ (5,178)	$ (4,136)
12 Months or Greater, Number of Securities	5	5
Total, Fair Value	$ 24,419	$ 27,285
Total, Gross Unrealized Losses	$ (5,178)	$ (4,136)
Total, Number of Securities	5	5

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Securities (Other Investments) (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Debt Securities, Available-for-sale [Line Items]
Other investments	$ 13,805	$ 15,530
Federal Reserve Bank Stock [Member]
Debt Securities, Available-for-sale [Line Items]
Other investments	9,669	9,783
Federal Home Loan Bank stock [Member]
Debt Securities, Available-for-sale [Line Items]
Other investments	3,786	5,397
First National Bankers Bank Stock [Member]
Debt Securities, Available-for-sale [Line Items]
Other investments	$ 350	$ 350

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Loans and Leases and Allowance for Credit Losses (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Jun. 30, 2023	Jan. 01, 2023	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Dec. 31, 2021
Major categories of loans and leases
Loans and leases, post ASU 2019-04	$ 3,378,999
Less: Allowance for credit losses	(33,687)	$ (32,747)
Loans and leases, net	3,345,312
Loans and leases				$ 3,253,627
Less: Allowance for loan and lease losses			$ (31,989)	(23,334)	$ (22,769)	$ (21,938)	$ (19,352)
Loans and leases, net				3,230,293
Purchased Credit Impaired Loans [Member]
Major categories of loans and leases
Loans and leases				28,691
Less: Allowance for loan and lease losses				(121)
All Other Loans and leases [Member]
Major categories of loans and leases
Loans and leases				3,224,936
Less: Allowance for loan and lease losses				(23,213)
Commercial Real Estate [Member]
Major categories of loans and leases
Loans and leases, post ASU 2019-04	1,667,176
Less: Allowance for credit losses	(15,007)	(14,314)
Loans and leases				1,627,761
Less: Allowance for loan and lease losses			(14,352)	(10,821)	(10,579)	(10,600)	(9,781)
Commercial Real Estate [Member] | Purchased Credit Impaired Loans [Member]
Major categories of loans and leases
Loans and leases				15,946
Less: Allowance for loan and lease losses				(6)
Commercial Real Estate [Member] | All Other Loans and leases [Member]
Major categories of loans and leases
Loans and leases				1,611,815
Less: Allowance for loan and lease losses				(10,815)
Consumer Real Estate [Member]
Major categories of loans and leases
Loans and leases, post ASU 2019-04	638,518
Less: Allowance for credit losses	(7,156)	(6,748)
Loans and leases				587,977
Less: Allowance for loan and lease losses			(6,146)	(4,028)	(4,008)	(3,835)	(3,454)
Consumer Real Estate [Member] | Purchased Credit Impaired Loans [Member]
Major categories of loans and leases
Loans and leases				8,352
Less: Allowance for loan and lease losses				(115)
Consumer Real Estate [Member] | All Other Loans and leases [Member]
Major categories of loans and leases
Loans and leases				579,625
Less: Allowance for loan and lease losses				(3,913)
Construction and Land Development [Member]
Major categories of loans and leases
Loans and leases, post ASU 2019-04	373,068
Less: Allowance for credit losses	(5,077)	(5,446)
Loans and leases				402,501
Less: Allowance for loan and lease losses			(5,229)	(3,059)	(3,176)	(2,904)	(1,882)
Construction and Land Development [Member] | Purchased Credit Impaired Loans [Member]
Major categories of loans and leases
Loans and leases				1,529
Construction and Land Development [Member] | All Other Loans and leases [Member]
Major categories of loans and leases
Loans and leases				400,972
Less: Allowance for loan and lease losses				(3,059)
Commercial and Industrial [Member]
Major categories of loans and leases
Loans and leases, post ASU 2019-04	617,115
Less: Allowance for credit losses	(5,680)	(5,504)
Loans and leases				551,867
Less: Allowance for loan and lease losses			(5,475)	(3,997)	(3,835)	(3,659)	(3,781)
Commercial and Industrial [Member] | Purchased Credit Impaired Loans [Member]
Major categories of loans and leases
Loans and leases				1,893
Commercial and Industrial [Member] | All Other Loans and leases [Member]
Major categories of loans and leases
Loans and leases				549,974
Less: Allowance for loan and lease losses				(3,997)
Consumer and Other [Member]
Major categories of loans and leases
Loans and leases, post ASU 2019-04	14,584
Less: Allowance for credit losses	(123)	(149)
Loans and leases				16,094
Less: Allowance for loan and lease losses			(149)	(136)	(137)	(133)	(124)
Consumer and Other [Member] | Purchased Credit Impaired Loans [Member]
Major categories of loans and leases
Loans and leases				3
Consumer and Other [Member] | All Other Loans and leases [Member]
Major categories of loans and leases
Loans and leases				16,091
Less: Allowance for loan and lease losses				(136)
Leases [Member]
Major categories of loans and leases
Loans and leases, post ASU 2019-04	68,538
Less: Allowance for credit losses	$ (644)	$ (586)
Loans and leases				67,427
Less: Allowance for loan and lease losses			$ (638)	(1,293)	$ (1,034)	$ (807)	$ (330)
Leases [Member] | Purchased Credit Impaired Loans [Member]
Major categories of loans and leases
Loans and leases				968
Leases [Member] | All Other Loans and leases [Member]
Major categories of loans and leases
Loans and leases				66,459
Less: Allowance for loan and lease losses				$ (1,293)

XML

Loans and Leases and Allowance for Credit Losses - Narrative (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2023 USD ($) property	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($) segment property	Sep. 30, 2022 USD ($)	Jun. 30, 2023 USD ($)	Jan. 01, 2023 USD ($)	Dec. 31, 2022 USD ($)	Jun. 30, 2022 USD ($)	Dec. 31, 2021 USD ($)
Financing Receivable, Modifications [Line Items]
Loan portfolio segments | segment			6
Loan participation agreements	$ 0		$ 0				$ 24,585,000
Provision for loan losses		$ 974,000		$ 3,230,000
Provision for credit losses, post ASU 2019-04	795,000		1,458,000
Allowance for credit losses, post ASU 2019-04	$ 33,687,000		$ 33,687,000		$ 32,747,000
Allowance for loan losses		22,769,000		22,769,000		$ 31,989,000	$ 23,334,000	$ 21,938,000	$ 19,352,000
Percentage of allowance for credit losses to aggregate loans	1.00%		1.00%				0.72%
Nonaccrual restructured loans	$ 0		$ 0				$ 2,808,000
Nonaccrual restructuring loans, post ASU 2019-04	3,934,000		3,934,000
Troubled debt restructuring		0		0
Other real estate owned	1,370,000		1,370,000				1,436,000
Provision (recovery) charged to expense	$ 1,300,000	974,000	$ 2,300,000	3,230,000
Residential Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Number of properties in other real estate owned | property	2		2
Other real estate owned	$ 304,000		$ 304,000
Consumer Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Allowance for credit losses, post ASU 2019-04	7,156,000		7,156,000		6,748,000
Allowance for loan losses		4,008,000		4,008,000		6,146,000	4,028,000	3,835,000	3,454,000
Nonaccrual restructured loans							1,665,000
Nonaccrual restructuring loans, post ASU 2019-04	2,064,000		2,064,000
Mortgage loans in process of foreclosure	0		0
Provision (recovery) charged to expense		166,000		26,000
Consumer and Other [Member]
Financing Receivable, Modifications [Line Items]
Allowance for credit losses, post ASU 2019-04	$ 123,000		$ 123,000		$ 149,000
Allowance for loan losses		137,000		137,000		$ 149,000	136,000	$ 133,000	$ 124,000
Nonaccrual restructured loans							15,000
Provision (recovery) charged to expense		$ 151,000		$ 364,000
Trouble Debt Restructuring [Member]
Financing Receivable, Modifications [Line Items]
Troubled debt restructuring							$ 101,000

XML

Loans and Leases and Allowance for Credit Losses - ALL Roll Forward (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
	Jan. 01, 2023	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Allowance recognized on loans purchased with credit deterioration	$ 2,898
Beginning balance		$ 32,747
PCD gross up				$ 2,898
Charged-off loans and leases		(417)		(939)
Recoveries of charge-offs		73		383
Provision for credit losses, post ASU 2019-04		795		1,458
Provision for credit losses, unfunded commitments not included		1,284		2,254
Ending balance		33,687		33,687
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	23,334		$ 21,938	23,334	$ 19,352
Charged-off loans and leases			(231)		(863)
Recoveries of charge-offs			88		1,050
Provision charged to expense		1,300	974	2,300	3,230
Ending balance	31,989		22,769		22,769
Release for unfunded commitments through provision for credit losses		489		796
Accounting Standards Update 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Allowance recognized on loans purchased with credit deterioration	2,900
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	5,757			5,757
Ending balance	5,757
Commercial Real Estate [Member]
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Allowance recognized on loans purchased with credit deterioration	2,652
Beginning balance		14,314
PCD gross up				2,652
Recoveries of charge-offs		2		5
Provision for credit losses, unfunded commitments not included		691		650
Ending balance		15,007		15,007
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	10,821		10,600	10,821	9,781
Recoveries of charge-offs					4
Provision charged to expense			(21)		794
Ending balance	14,352		10,579		10,579
Commercial Real Estate [Member] | Accounting Standards Update 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	879			879
Ending balance	879
Consumer Real Estate [Member]
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Allowance recognized on loans purchased with credit deterioration	166
Beginning balance		6,748
PCD gross up				166
Charged-off loans and leases		(9)		(9)
Recoveries of charge-offs		4		13
Provision for credit losses, unfunded commitments not included		413		1,006
Ending balance		7,156		7,156
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	4,028		3,835	4,028	3,454
Charged-off loans and leases					(33)
Recoveries of charge-offs			7		561
Provision charged to expense			166		26
Ending balance	6,146		4,008		4,008
Consumer Real Estate [Member] | Accounting Standards Update 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	1,952			1,952
Ending balance	1,952
Construction and Land Development [Member]
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Allowance recognized on loans purchased with credit deterioration	25
Beginning balance		5,446
PCD gross up				25
Recoveries of charge-offs				25
Provision for credit losses, unfunded commitments not included		(369)		(177)
Ending balance		5,077		5,077
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	3,059		2,904	3,059	1,882
Provision charged to expense			272		1,294
Ending balance	5,229		3,176		3,176
Construction and Land Development [Member] | Accounting Standards Update 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	2,145			2,145
Ending balance	2,145
Commercial and Industrial [Member]
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Allowance recognized on loans purchased with credit deterioration	27
Beginning balance		5,504
PCD gross up				27
Charged-off loans and leases		(179)		(387)
Recoveries of charge-offs		48		153
Provision for credit losses, unfunded commitments not included		307		439
Ending balance		5,680		5,680
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	3,997		3,659	3,997	3,781
Charged-off loans and leases			(51)		(240)
Recoveries of charge-offs			19		162
Provision charged to expense			208		132
Ending balance	5,475		3,835		3,835
Commercial and Industrial [Member] | Accounting Standards Update 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	1,451			1,451
Ending balance	1,451
Leases [Member]
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Allowance recognized on loans purchased with credit deterioration	28
Beginning balance		586
PCD gross up				28
Charged-off loans and leases		(143)		(211)
Provision for credit losses, unfunded commitments not included		201		217
Ending balance		644		644
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	1,293		807	1,293	330
Charged-off loans and leases					(108)
Recoveries of charge-offs			29		192
Provision charged to expense			198		620
Ending balance	638		1,034		1,034
Leases [Member] | Accounting Standards Update 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	(683)			(683)
Ending balance	(683)
Consumer and Other [Member]
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance		149
Charged-off loans and leases		(86)		(332)
Recoveries of charge-offs		19		187
Provision for credit losses, unfunded commitments not included		41		119
Ending balance		$ 123		123
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	136		133	136	124
Charged-off loans and leases			(180)		(482)
Recoveries of charge-offs			33		131
Provision charged to expense			151		364
Ending balance	149		$ 137		$ 137
Consumer and Other [Member] | Accounting Standards Update 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	13			$ 13
Ending balance	$ 13

XML

Loans and Leases and Allowance for Credit Losses - ALL by Loan Classification (Details) - USD ($) $ in Thousands	Jan. 01, 2023	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Dec. 31, 2021
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	$ 31,989	$ 23,334	$ 22,769	$ 21,938	$ 19,352
All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses		23,213
Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses		121
Performing [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses		22,828
Impaired Loans [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses		385
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	14,352	10,821	10,579	10,600	9,781
Commercial Real Estate [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses		10,815
Commercial Real Estate [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses		6
Commercial Real Estate [Member] | Performing [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses		10,815
Consumer Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	6,146	4,028	4,008	3,835	3,454
Consumer Real Estate [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses		3,913
Consumer Real Estate [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses		115
Consumer Real Estate [Member] | Performing [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses		3,913
Construction and Land Development [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	5,229	3,059	3,176	2,904	1,882
Construction and Land Development [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses		3,059
Construction and Land Development [Member] | Performing [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses		2,674
Construction and Land Development [Member] | Impaired Loans [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses		385
Commercial and Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	5,475	3,997	3,835	3,659	3,781
Commercial and Industrial [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses		3,997
Commercial and Industrial [Member] | Performing [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses		3,997
Leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	638	1,293	1,034	807	330
Leases [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses		1,293
Leases [Member] | Performing [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses		1,293
Consumer and Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	$ 149	136	$ 137	$ 133	$ 124
Consumer and Other [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses		136
Consumer and Other [Member] | Performing [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses		$ 136

XML

Loans and Leases and Allowance for Credit Losses - Performing and Impaired Loans (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 3,253,627
All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	3,224,936
Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	28,691
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	1,627,761
Commercial Real Estate [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	1,611,815
Commercial Real Estate [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	15,946
Consumer Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	587,977
Consumer Real Estate [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	579,625
Consumer Real Estate [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	8,352
Construction and Land Development [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	402,501
Construction and Land Development [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	400,972
Construction and Land Development [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	1,529
Commercial and Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	551,867
Commercial and Industrial [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	549,974
Commercial and Industrial [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	1,893
Leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	67,427
Leases [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	66,459
Leases [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	968
Consumer and Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	16,094
Consumer and Other [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	16,091
Consumer and Other [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	3
Performing [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	3,222,795
Performing [Member] | Commercial Real Estate [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	1,611,815
Performing [Member] | Consumer Real Estate [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	578,342
Performing [Member] | Construction and Land Development [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	400,114
Performing [Member] | Commercial and Industrial [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	549,974
Performing [Member] | Leases [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	66,459
Performing [Member] | Consumer and Other [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	16,091
Impaired Loans [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	2,141
Impaired Loans [Member] | Consumer Real Estate [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	1,283
Impaired Loans [Member] | Construction and Land Development [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 858

XML

Loans and Leases and Allowance for Credit Losses - Risk Rating Based on Year of Origination (Details) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2023 USD ($)	Sep. 30, 2023 USD ($)
Loans Amortized Cost Basis by Origination Year
2023	$ 551,926	$ 551,926
2022	1,112,803	1,112,803
2021	673,437	673,437
2020	279,848	279,848
2019	197,434	197,434
Prior	210,786	210,786
Revolving Loans	331,681	331,681
Revolving Loans Converted to Term	21,084	21,084
Total, post ASU 2019-04	3,378,999	3,378,999
YTD gross charge-offs
2023		(49)
2022		(432)
2021		(121)
2020		(231)
2019		(38)
Prior		(68)
Total, post ASU 2019-04	(417)	(939)
Pass [Member]
Loans Amortized Cost Basis by Origination Year
2023	525,524	525,524
2022	1,106,294	1,106,294
2021	666,854	666,854
2020	276,107	276,107
2019	193,335	193,335
Prior	206,502	206,502
Revolving Loans	329,490	329,490
Revolving Loans Converted to Term	21,071	21,071
Total, post ASU 2019-04	3,325,177	3,325,177
Watch [Member]
Loans Amortized Cost Basis by Origination Year
2023	25,030	25,030
2022	2,370	2,370
2021	3,402	3,402
2020	3,070	3,070
2019	3,935	3,935
Prior	452	452
Revolving Loans	1,852	1,852
Total, post ASU 2019-04	40,111	40,111
Special Mention [Member]
Loans Amortized Cost Basis by Origination Year
2022	3,234	3,234
Prior	54	54
Revolving Loans Converted to Term	13	13
Total, post ASU 2019-04	3,301	3,301
Substandard [Member]
Loans Amortized Cost Basis by Origination Year
2023	1,372	1,372
2022	905	905
2021	3,181	3,181
2020	671	671
2019	164	164
Prior	3,778	3,778
Revolving Loans	339	339
Total, post ASU 2019-04	10,410	10,410
Commercial Real Estate [Member]
Loans Amortized Cost Basis by Origination Year
2023	189,850	189,850
2022	558,116	558,116
2021	442,031	442,031
2020	189,891	189,891
2019	145,096	145,096
Prior	119,151	119,151
Revolving Loans	14,878	14,878
Revolving Loans Converted to Term	8,163	8,163
Total, post ASU 2019-04	1,667,176	1,667,176
Commercial Real Estate [Member] | Pass [Member]
Loans Amortized Cost Basis by Origination Year
2023	168,217	168,217
2022	553,613	553,613
2021	436,468	436,468
2020	187,188	187,188
2019	141,248	141,248
Prior	118,422	118,422
Revolving Loans	14,878	14,878
Revolving Loans Converted to Term	8,163	8,163
Total, post ASU 2019-04	1,628,197	1,628,197
Commercial Real Estate [Member] | Watch [Member]
Loans Amortized Cost Basis by Origination Year
2023	20,665	20,665
2022	1,269	1,269
2021	2,418	2,418
2020	2,652	2,652
2019	3,848	3,848
Prior	267	267
Total, post ASU 2019-04	31,119	31,119
Commercial Real Estate [Member] | Special Mention [Member]
Loans Amortized Cost Basis by Origination Year
2022	3,234	3,234
Total, post ASU 2019-04	3,234	3,234
Commercial Real Estate [Member] | Substandard [Member]
Loans Amortized Cost Basis by Origination Year
2023	968	968
2021	3,145	3,145
2020	51	51
Prior	462	462
Total, post ASU 2019-04	4,626	4,626
Consumer Real Estate [Member]
Loans Amortized Cost Basis by Origination Year
2023	95,348	95,348
2022	180,814	180,814
2021	101,171	101,171
2020	55,511	55,511
2019	34,695	34,695
Prior	56,667	56,667
Revolving Loans	111,280	111,280
Revolving Loans Converted to Term	3,032	3,032
Total, post ASU 2019-04	638,518	638,518
YTD gross charge-offs
Prior		(9)
Total, post ASU 2019-04	(9)	(9)
Consumer Real Estate [Member] | Pass [Member]
Loans Amortized Cost Basis by Origination Year
2023	94,979	94,979
2022	179,838	179,838
2021	100,852	100,852
2020	55,222	55,222
2019	34,531	34,531
Prior	53,597	53,597
Revolving Loans	109,227	109,227
Revolving Loans Converted to Term	3,032	3,032
Total, post ASU 2019-04	631,278	631,278
Consumer Real Estate [Member] | Watch [Member]
Loans Amortized Cost Basis by Origination Year
2023	171	171
2022	71	71
2021	319	319
2020	289	289
Prior	108	108
Revolving Loans	1,714	1,714
Total, post ASU 2019-04	2,672	2,672
Consumer Real Estate [Member] | Special Mention [Member]
Loans Amortized Cost Basis by Origination Year
Prior	54	54
Total, post ASU 2019-04	54	54
Consumer Real Estate [Member] | Substandard [Member]
Loans Amortized Cost Basis by Origination Year
2023	198	198
2022	905	905
2019	164	164
Prior	2,908	2,908
Revolving Loans	339	339
Total, post ASU 2019-04	4,514	4,514
Construction and Land Development [Member]
Loans Amortized Cost Basis by Origination Year
2023	99,886	99,886
2022	166,754	166,754
2021	51,078	51,078
2020	4,808	4,808
2019	5,162	5,162
Prior	7,675	7,675
Revolving Loans	35,908	35,908
Revolving Loans Converted to Term	1,797	1,797
Total, post ASU 2019-04	373,068	373,068
Construction and Land Development [Member] | Pass [Member]
Loans Amortized Cost Basis by Origination Year
2023	95,692	95,692
2022	166,355	166,355
2021	50,591	50,591
2020	4,188	4,188
2019	5,162	5,162
Prior	7,265	7,265
Revolving Loans	35,908	35,908
Revolving Loans Converted to Term	1,797	1,797
Total, post ASU 2019-04	366,958	366,958
Construction and Land Development [Member] | Watch [Member]
Loans Amortized Cost Basis by Origination Year
2023	4,194	4,194
2022	399	399
2021	451	451
Prior	2	2
Total, post ASU 2019-04	5,046	5,046
Construction and Land Development [Member] | Substandard [Member]
Loans Amortized Cost Basis by Origination Year
2021	36	36
2020	620	620
Prior	408	408
Total, post ASU 2019-04	1,064	1,064
Commercial and Industrial [Member]
Loans Amortized Cost Basis by Origination Year
2023	137,999	137,999
2022	175,352	175,352
2021	68,023	68,023
2020	24,508	24,508
2019	11,388	11,388
Prior	26,749	26,749
Revolving Loans	165,077	165,077
Revolving Loans Converted to Term	8,019	8,019
Total, post ASU 2019-04	617,115	617,115
YTD gross charge-offs
2022		(154)
2021		(50)
2020		(183)
Total, post ASU 2019-04	(179)	(387)
Commercial and Industrial [Member] | Pass [Member]
Loans Amortized Cost Basis by Origination Year
2023	137,793	137,793
2022	174,721	174,721
2021	67,809	67,809
2020	24,379	24,379
2019	11,313	11,313
Prior	26,674	26,674
Revolving Loans	164,939	164,939
Revolving Loans Converted to Term	8,006	8,006
Total, post ASU 2019-04	615,634	615,634
Commercial and Industrial [Member] | Watch [Member]
Loans Amortized Cost Basis by Origination Year
2022	631	631
2021	214	214
2020	129	129
2019	75	75
Prior	75	75
Revolving Loans	138	138
Total, post ASU 2019-04	1,262	1,262
Commercial and Industrial [Member] | Special Mention [Member]
Loans Amortized Cost Basis by Origination Year
Revolving Loans Converted to Term	13	13
Total, post ASU 2019-04	13	13
Commercial and Industrial [Member] | Substandard [Member]
Loans Amortized Cost Basis by Origination Year
2023	206	206
Total, post ASU 2019-04	206	206
Consumer and Other [Member]
Loans Amortized Cost Basis by Origination Year
2023	5,539	5,539
2022	2,314	2,314
2021	1,060	1,060
2020	671	671
2019	160	160
Prior	229	229
Revolving Loans	4,538	4,538
Revolving Loans Converted to Term	73	73
Total, post ASU 2019-04	14,584	14,584
YTD gross charge-offs
2023		(22)
2022		(115)
2021		(62)
2020		(48)
2019		(26)
Prior		(59)
Total, post ASU 2019-04	(86)	(332)
Consumer and Other [Member] | Pass [Member]
Loans Amortized Cost Basis by Origination Year
2023	5,539	5,539
2022	2,314	2,314
2021	1,060	1,060
2020	671	671
2019	148	148
Prior	229	229
Revolving Loans	4,538	4,538
Revolving Loans Converted to Term	73	73
Total, post ASU 2019-04	14,572	14,572
Consumer and Other [Member] | Watch [Member]
Loans Amortized Cost Basis by Origination Year
2019	12	12
Total, post ASU 2019-04	12	12
Leases [Member]
Loans Amortized Cost Basis by Origination Year
2023	23,304	23,304
2022	29,453	29,453
2021	10,074	10,074
2020	4,459	4,459
2019	933	933
Prior	315	315
Total, post ASU 2019-04	68,538	68,538
YTD gross charge-offs
2023		(27)
2022		(163)
2021		(9)
2019		(12)
Total, post ASU 2019-04	(143)	(211)
Leases [Member] | Pass [Member]
Loans Amortized Cost Basis by Origination Year
2023	23,304	23,304
2022	29,453	29,453
2021	10,074	10,074
2020	4,459	4,459
2019	933	933
Prior	315	315
Total, post ASU 2019-04	$ 68,538	$ 68,538

XML

Loans and Leases and Allowance for Credit Losses - Loan Risk Rating (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Financing Receivable, Recorded Investment [Line Items]
Total loans	$ 3,253,627
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,627,761
Consumer Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	587,977
Construction and Land Development [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	402,501
Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	551,867
Leases [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	67,427
Consumer and Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	16,094
All Other Loans and leases [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	3,224,936
All Other Loans and leases [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	3,183,387
All Other Loans and leases [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	36,072
All Other Loans and leases [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	2,635
All Other Loans and leases [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	2,842
All Other Loans and leases [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,611,815
All Other Loans and leases [Member] | Commercial Real Estate [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,579,387
All Other Loans and leases [Member] | Commercial Real Estate [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	29,810
All Other Loans and leases [Member] | Commercial Real Estate [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	2,539
All Other Loans and leases [Member] | Commercial Real Estate [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	79
All Other Loans and leases [Member] | Consumer Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	579,625
All Other Loans and leases [Member] | Consumer Real Estate [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	576,428
All Other Loans and leases [Member] | Consumer Real Estate [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,496
All Other Loans and leases [Member] | Consumer Real Estate [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	35
All Other Loans and leases [Member] | Consumer Real Estate [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,666
All Other Loans and leases [Member] | Construction and Land Development [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	400,972
All Other Loans and leases [Member] | Construction and Land Development [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	399,846
All Other Loans and leases [Member] | Construction and Land Development [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	224
All Other Loans and leases [Member] | Construction and Land Development [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	902
All Other Loans and leases [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	549,974
All Other Loans and leases [Member] | Commercial and Industrial [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	545,210
All Other Loans and leases [Member] | Commercial and Industrial [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	4,523
All Other Loans and leases [Member] | Commercial and Industrial [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	61
All Other Loans and leases [Member] | Commercial and Industrial [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	180
All Other Loans and leases [Member] | Leases [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	66,459
All Other Loans and leases [Member] | Leases [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	66,459
All Other Loans and leases [Member] | Consumer and Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	16,091
All Other Loans and leases [Member] | Consumer and Other [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	16,057
All Other Loans and leases [Member] | Consumer and Other [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	19
All Other Loans and leases [Member] | Consumer and Other [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	15
Purchased Credit Impaired Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	28,691
Purchased Credit Impaired Loans [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	22,769
Purchased Credit Impaired Loans [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,673
Purchased Credit Impaired Loans [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	65
Purchased Credit Impaired Loans [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	4,184
Purchased Credit Impaired Loans [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	15,946
Purchased Credit Impaired Loans [Member] | Commercial Real Estate [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	11,924
Purchased Credit Impaired Loans [Member] | Commercial Real Estate [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,439
Purchased Credit Impaired Loans [Member] | Commercial Real Estate [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	11
Purchased Credit Impaired Loans [Member] | Commercial Real Estate [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	2,572
Purchased Credit Impaired Loans [Member] | Consumer Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	8,352
Purchased Credit Impaired Loans [Member] | Consumer Real Estate [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	6,927
Purchased Credit Impaired Loans [Member] | Consumer Real Estate [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	188
Purchased Credit Impaired Loans [Member] | Consumer Real Estate [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	54
Purchased Credit Impaired Loans [Member] | Consumer Real Estate [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,183
Purchased Credit Impaired Loans [Member] | Construction and Land Development [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,529
Purchased Credit Impaired Loans [Member] | Construction and Land Development [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,054
Purchased Credit Impaired Loans [Member] | Construction and Land Development [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	46
Purchased Credit Impaired Loans [Member] | Construction and Land Development [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	429
Purchased Credit Impaired Loans [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,893
Purchased Credit Impaired Loans [Member] | Commercial and Industrial [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,893
Purchased Credit Impaired Loans [Member] | Leases [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	968
Purchased Credit Impaired Loans [Member] | Leases [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	968
Purchased Credit Impaired Loans [Member] | Consumer and Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	3
Purchased Credit Impaired Loans [Member] | Consumer and Other [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	$ 3

XML

Loans and Leases and Allowance for Credit Losses - Past Due Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Nonaccrual Loans	$ 3,934
Nonaccrual With No Allowance for Credit Losses, post ASU 2019-04	1,154
Loans Past Due Over 90 Days Still Accruing	229
Total loans		$ 3,253,627
Total loans, post ASU 2019-04	3,378,999
Financial Asset, Not Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		3,251,418
Total loans, post ASU 2019-04	3,373,741
Financial Asset, Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		2,209
Total loans, post ASU 2019-04	5,258
Financial Asset, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		1,960
Total loans, post ASU 2019-04	3,275
Financial Asset, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		106
Total loans, post ASU 2019-04	1,754
90 Days or More Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		143
Total loans, post ASU 2019-04	229
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Nonaccrual Loans	741
Total loans		1,627,761
Total loans, post ASU 2019-04	1,667,176
Commercial Real Estate [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		1,627,707
Total loans, post ASU 2019-04	1,666,314
Commercial Real Estate [Member] | Financial Asset, Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		54
Total loans, post ASU 2019-04	862
Commercial Real Estate [Member] | Financial Asset, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		54
Total loans, post ASU 2019-04	862
Consumer Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Nonaccrual Loans	2,064
Nonaccrual With No Allowance for Credit Losses, post ASU 2019-04	1,154
Loans Past Due Over 90 Days Still Accruing	34
Total loans		587,977
Total loans, post ASU 2019-04	638,518
Consumer Real Estate [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		587,383
Total loans, post ASU 2019-04	637,377
Consumer Real Estate [Member] | Financial Asset, Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		594
Total loans, post ASU 2019-04	1,141
Consumer Real Estate [Member] | Financial Asset, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		594
Total loans, post ASU 2019-04	706
Consumer Real Estate [Member] | Financial Asset, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans, post ASU 2019-04	401
Consumer Real Estate [Member] | 90 Days or More Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans, post ASU 2019-04	34
Construction and Land Development [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Nonaccrual Loans	620
Total loans		402,501
Total loans, post ASU 2019-04	373,068
Construction and Land Development [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		402,501
Total loans, post ASU 2019-04	372,550
Construction and Land Development [Member] | Financial Asset, Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans, post ASU 2019-04	518
Construction and Land Development [Member] | Financial Asset, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans, post ASU 2019-04	110
Construction and Land Development [Member] | Financial Asset, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans, post ASU 2019-04	408
Commercial and Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Nonaccrual Loans	314
Loans Past Due Over 90 Days Still Accruing	98
Total loans		551,867
Total loans, post ASU 2019-04	617,115
Commercial and Industrial [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		551,664
Total loans, post ASU 2019-04	614,688
Commercial and Industrial [Member] | Financial Asset, Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		203
Total loans, post ASU 2019-04	2,427
Commercial and Industrial [Member] | Financial Asset, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		185
Total loans, post ASU 2019-04	1,384
Commercial and Industrial [Member] | Financial Asset, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		18
Total loans, post ASU 2019-04	945
Commercial and Industrial [Member] | 90 Days or More Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans, post ASU 2019-04	98
Leases [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Nonaccrual Loans	195
Total loans		67,427
Total loans, post ASU 2019-04	68,538
Leases [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		66,176
Total loans, post ASU 2019-04	68,420
Leases [Member] | Financial Asset, Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		1,251
Total loans, post ASU 2019-04	118
Leases [Member] | Financial Asset, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		1,024
Total loans, post ASU 2019-04	118
Leases [Member] | Financial Asset, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		84
Leases [Member] | 90 Days or More Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		143
Consumer and Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due Over 90 Days Still Accruing	97
Total loans		16,094
Total loans, post ASU 2019-04	14,584
Consumer and Other [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		15,987
Total loans, post ASU 2019-04	14,392
Consumer and Other [Member] | Financial Asset, Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		107
Total loans, post ASU 2019-04	192
Consumer and Other [Member] | Financial Asset, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		103
Total loans, post ASU 2019-04	95
Consumer and Other [Member] | Financial Asset, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		4
Consumer and Other [Member] | 90 Days or More Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans, post ASU 2019-04	$ 97
Purchased Credit Impaired Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		28,691
Purchased Credit Impaired Loans [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		15,946
Purchased Credit Impaired Loans [Member] | Consumer Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		8,352
Purchased Credit Impaired Loans [Member] | Construction and Land Development [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		1,529
Purchased Credit Impaired Loans [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		1,893
Purchased Credit Impaired Loans [Member] | Leases [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		968
Purchased Credit Impaired Loans [Member] | Consumer and Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		$ 3

XML

Loans and Leases and Allowance for Credit Losses - Nonaccrual Status (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual	$ 0	$ 2,808
Loans Past Due Over 90 Days Still Accruing	229
Total loans		3,253,627
90 Days or More Past Due [Member]
Financing Receivable, Nonaccrual [Line Items]
Total loans		143
Commercial Real Estate [Member]
Financing Receivable, Nonaccrual [Line Items]
Total loans		1,627,761
Consumer Real Estate [Member]
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual		1,665
Loans Past Due Over 90 Days Still Accruing	34
Total loans		587,977
Construction and Land Development [Member]
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual		920
Total loans		402,501
Commercial and Industrial [Member]
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual		180
Loans Past Due Over 90 Days Still Accruing	98
Total loans		551,867
Consumer and Other [Member]
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual		15
Loans Past Due Over 90 Days Still Accruing	$ 97
Total loans		16,094
Leases [Member]
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual		28
Total loans		67,427
Leases [Member] | 90 Days or More Past Due [Member]
Financing Receivable, Nonaccrual [Line Items]
Total loans		$ 143

XML

Loans and Leases and Allowance for Credit Losses - Collateral Dependent Loans (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Financing Receivable, Allowance for Credit Loss [Line Items]
Total	$ 7,681
Real Estate
Financing Receivable, Allowance for Credit Loss [Line Items]
Total	7,681
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Loss [Line Items]
Total	3,836
Commercial Real Estate [Member] | Real Estate
Financing Receivable, Allowance for Credit Loss [Line Items]
Total	3,836
Consumer Real Estate [Member]
Financing Receivable, Allowance for Credit Loss [Line Items]
Total	2,434
Consumer Real Estate [Member] | Real Estate
Financing Receivable, Allowance for Credit Loss [Line Items]
Total	2,434
Construction and Land Development [Member]
Financing Receivable, Allowance for Credit Loss [Line Items]
Total	1,411
Construction and Land Development [Member] | Real Estate
Financing Receivable, Allowance for Credit Loss [Line Items]
Total	$ 1,411

XML

Loans and Leases and Allowance for Credit Losses - Impaired Loan Portfolio (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2022	Dec. 31, 2022
Financing Receivable, Impaired [Line Items]
Impaired loans with a valuation allowance, Related Allowance			$ 506
Total impaired loans, Recorded Investment			3,325
Total impaired loans, Unpaid Principal Balance			3,366
Total impaired loans, Average Recorded Investment	$ 4,309	$ 4,614
Total impaired loans, Interest Income Recognized	95	178
All Other Loans and leases [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans without a valuation allowance, Recorded Investment			1,283
Impaired loans without a valuation allowance, Unpaid Principal Balance			1,282
Impaired loans with a valuation allowance, Recorded Investment			858
Impaired loans with a valuation allowance, Unpaid Principal Balance			858
Impaired loans with a valuation allowance, Related Allowance			385
Impaired loans without a valuation allowance, Average Recorded Investment	2,046	1,991
Impaired loans without a valuation allowance, Interest Income Recognized	72	92
Impaired loans with a valuation allowance, Average Recorded Investment	858	977
All Other Loans and leases [Member] | Commercial Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans without a valuation allowance, Average Recorded Investment	304	152
Impaired loans with a valuation allowance, Average Recorded Investment		429
All Other Loans and leases [Member] | Consumer Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans without a valuation allowance, Recorded Investment			1,283
Impaired loans without a valuation allowance, Unpaid Principal Balance			1,282
Impaired loans without a valuation allowance, Average Recorded Investment	1,742	1,839
Impaired loans without a valuation allowance, Interest Income Recognized	72	92
Impaired loans with a valuation allowance, Average Recorded Investment		87
All Other Loans and leases [Member] | Construction and Land Development [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with a valuation allowance, Recorded Investment			858
Impaired loans with a valuation allowance, Unpaid Principal Balance			858
Impaired loans with a valuation allowance, Related Allowance			385
Impaired loans with a valuation allowance, Average Recorded Investment	858	429
All Other Loans and leases [Member] | Commercial and Industrial [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with a valuation allowance, Average Recorded Investment		32
Purchased Credit Impaired Loans [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans without a valuation allowance, Recorded Investment			1,184
Impaired loans with a valuation allowance, Unpaid Principal Balance			1,226
Impaired loans with a valuation allowance, Related Allowance			121
Impaired loans with a valuation allowance, Average Recorded Investment	1,405	1,646
Impaired loans with a valuation allowance, Interest Income Recognized	23	86
Purchased Credit Impaired Loans [Member] | Commercial Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans without a valuation allowance, Recorded Investment			500
Impaired loans with a valuation allowance, Unpaid Principal Balance			580
Impaired loans with a valuation allowance, Related Allowance			6
Impaired loans with a valuation allowance, Average Recorded Investment	525	765
Impaired loans with a valuation allowance, Interest Income Recognized	11	46
Purchased Credit Impaired Loans [Member] | Consumer Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans without a valuation allowance, Recorded Investment			684
Impaired loans with a valuation allowance, Unpaid Principal Balance			646
Impaired loans with a valuation allowance, Related Allowance			$ 115
Impaired loans with a valuation allowance, Average Recorded Investment	880	879
Impaired loans with a valuation allowance, Interest Income Recognized	$ 12	40
Purchased Credit Impaired Loans [Member] | Consumer and Other [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with a valuation allowance, Average Recorded Investment		$ 2

XML

Loans and Leases and Allowance for Credit Losses - Loan Modifications to Borrowers Experiencing Financial Difficulty (Details) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2023 USD ($)	Sep. 30, 2023 USD ($)
Financing Receivable, Troubled Debt Restructuring [Line Items]
Total Nonaccrual Loans	$ 3,934	$ 3,934
Total loans, post ASU 2019-04	3,378,999	3,378,999
90 Days or More Past Due [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Total loans, post ASU 2019-04	229	229
Loan modifications made to borrowers experiencing financial difficulty
Financing Receivable, Troubled Debt Restructuring [Line Items]
Total	$ 1,790	$ 2,447
Total Class of Financing Receivable (as a percent)	0.05%	0.07%
Loan modification, defaulted	$ 0	$ 0
Total Nonaccrual Loans	2,020	2,020
Total loans, post ASU 2019-04	2,447	2,447
Loan modifications made to borrowers experiencing financial difficulty | Current [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Total loans, post ASU 2019-04	427	427
Payment Delay | Loan modifications made to borrowers experiencing financial difficulty
Financing Receivable, Troubled Debt Restructuring [Line Items]
Total		466
Term Extension | Loan modifications made to borrowers experiencing financial difficulty
Financing Receivable, Troubled Debt Restructuring [Line Items]
Total	1,790	1,828
Payment Delay and Term Extension | Loan modifications made to borrowers experiencing financial difficulty
Financing Receivable, Troubled Debt Restructuring [Line Items]
Total		153
Commercial Real Estate [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Weighted-Average Total Payment Delay		23
Total Nonaccrual Loans	741	741
Total loans, post ASU 2019-04	1,667,176	1,667,176
Commercial Real Estate [Member] | Loan modifications made to borrowers experiencing financial difficulty
Financing Receivable, Troubled Debt Restructuring [Line Items]
Total	$ 528	$ 969
Total Class of Financing Receivable (as a percent)	0.03%	0.06%
Total Nonaccrual Loans	$ 968	$ 968
Total loans, post ASU 2019-04	$ 968	968
Commercial Real Estate [Member] | Payment Delay | Loan modifications made to borrowers experiencing financial difficulty
Financing Receivable, Troubled Debt Restructuring [Line Items]
Total		$ 403
Commercial Real Estate [Member] | Term Extension
Financing Receivable, Troubled Debt Restructuring [Line Items]
Weighted-Average (in months)	12 months	23 months
Commercial Real Estate [Member] | Term Extension | Loan modifications made to borrowers experiencing financial difficulty
Financing Receivable, Troubled Debt Restructuring [Line Items]
Total	$ 528	$ 566
Consumer Real Estate [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Total Nonaccrual Loans	2,064	2,064
Total loans, post ASU 2019-04	638,518	638,518
Consumer Real Estate [Member] | 90 Days or More Past Due [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Total loans, post ASU 2019-04	34	34
Consumer Real Estate [Member] | Loan modifications made to borrowers experiencing financial difficulty
Financing Receivable, Troubled Debt Restructuring [Line Items]
Total	$ 514	$ 514
Total Class of Financing Receivable (as a percent)	0.08%	0.08%
Total Nonaccrual Loans	$ 376	$ 376
Total loans, post ASU 2019-04	515	515
Consumer Real Estate [Member] | Loan modifications made to borrowers experiencing financial difficulty | Current [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Total loans, post ASU 2019-04	$ 139	$ 139
Consumer Real Estate [Member] | Term Extension
Financing Receivable, Troubled Debt Restructuring [Line Items]
Weighted-Average (in months)	20 months	15 months
Consumer Real Estate [Member] | Term Extension | Loan modifications made to borrowers experiencing financial difficulty
Financing Receivable, Troubled Debt Restructuring [Line Items]
Total	$ 514	$ 514
Construction and Land Development [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Total Nonaccrual Loans	620	620
Total loans, post ASU 2019-04	373,068	373,068
Construction and Land Development [Member] | Loan modifications made to borrowers experiencing financial difficulty
Financing Receivable, Troubled Debt Restructuring [Line Items]
Total	$ 748	$ 748
Total Class of Financing Receivable (as a percent)	0.20%	0.20%
Total Nonaccrual Loans	$ 460	$ 460
Total loans, post ASU 2019-04	748	748
Construction and Land Development [Member] | Loan modifications made to borrowers experiencing financial difficulty | Current [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Total loans, post ASU 2019-04	$ 288	$ 288
Construction and Land Development [Member] | Term Extension
Financing Receivable, Troubled Debt Restructuring [Line Items]
Weighted-Average (in months)	9 months	9 months
Construction and Land Development [Member] | Term Extension | Loan modifications made to borrowers experiencing financial difficulty
Financing Receivable, Troubled Debt Restructuring [Line Items]
Total	$ 748	$ 748
Commercial and Industrial [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Weighted-Average Total Payment Delay		7
Total Nonaccrual Loans	314	314
Total loans, post ASU 2019-04	617,115	617,115
Commercial and Industrial [Member] | 90 Days or More Past Due [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Total loans, post ASU 2019-04	98	98
Commercial and Industrial [Member] | Loan modifications made to borrowers experiencing financial difficulty
Financing Receivable, Troubled Debt Restructuring [Line Items]
Total		$ 216
Total Class of Financing Receivable (as a percent)		0.04%
Total Nonaccrual Loans	216	$ 216
Total loans, post ASU 2019-04	216	216
Commercial and Industrial [Member] | Payment Delay | Loan modifications made to borrowers experiencing financial difficulty
Financing Receivable, Troubled Debt Restructuring [Line Items]
Total		$ 63
Commercial and Industrial [Member] | Term Extension
Financing Receivable, Troubled Debt Restructuring [Line Items]
Weighted-Average (in months)		30 months
Commercial and Industrial [Member] | Payment Delay and Term Extension | Loan modifications made to borrowers experiencing financial difficulty
Financing Receivable, Troubled Debt Restructuring [Line Items]
Total		$ 153
Leases [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Total Nonaccrual Loans	195	195
Total loans, post ASU 2019-04	68,538	68,538
Consumer and Other [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Total loans, post ASU 2019-04	14,584	14,584
Consumer and Other [Member] | 90 Days or More Past Due [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Total loans, post ASU 2019-04	$ 97	$ 97

XML

Goodwill and Intangible Assets (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Amortization of intangibles	$ 647	$ 650	$ 1,981	$ 1,919
Goodwill	96,145		96,145		$ 96,145	$ 91,565
Other Intangible Assets [Member]
Amortization of intangibles	$ 647	$ 650	$ 2,000	$ 1,900
Customer Relationships [Member]
Intangible asset, useful life	10 years 4 months 24 days		10 years 4 months 24 days
Trade Names [Member]
Intangible asset, useful life	5 years		5 years

XML

Goodwill and Intangible Assets - Schedule of Goodwill (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($)
Goodwill [Roll Forward]
Goodwill, Beginning Balance	$ 91,565
Goodwill, Ending Balance	96,145
Sunbelt Group LLC [Member]
Goodwill [Roll Forward]
Acquisition of business	$ 4,580

XML

Goodwill and Intangible Assets - Schedule of Finite-Lived Intangible Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Sep. 30, 2023
Finite-lived Intangible Assets [Roll Forward]
Balance, beginning of period	$ 21,255
Balance, end of period	23,203
Less: accumulated amortization	(9,576)	$ (11,556)
Total	13,627	11,647
Sevier County Bancshares Inc [Member]
Finite-lived Intangible Assets [Roll Forward]
Acquisition of business	1,948
Core Deposits [Member]
Finite-lived Intangible Assets [Roll Forward]
Balance, beginning of period	17,470
Balance, end of period	17,470
Less: accumulated amortization	(8,021)	(9,329)
Total	9,449	8,141
Customer Relationships [Member]
Finite-lived Intangible Assets [Roll Forward]
Balance, beginning of period	3,722
Balance, end of period	5,670
Less: accumulated amortization	(1,519)	(2,164)
Total	4,151	3,506
Customer Relationships [Member] | Sevier County Bancshares Inc [Member]
Finite-lived Intangible Assets [Roll Forward]
Acquisition of business	1,948
Trade Names [Member]
Finite-lived Intangible Assets [Roll Forward]
Balance, beginning of period	63
Balance, end of period	63
Less: accumulated amortization	(36)	$ (63)
Total	$ 27

XML

Goodwill and Intangible Assets - Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Remainder of 2023	$ 643
2024	2,425
2025	2,256
2026	2,086
2027	1,904
Thereafter	2,333
Total	$ 11,647	$ 13,627

XML

Borrowings, Line of Credit and Subordinated Debt (Narrative) (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Securities sold under agreements to repurchase	$ 6,117		$ 4,775
Other borrowings	8,000		12,500
Repayment borrowings	30,500	$ 75,000
Securities sold under agreements to repurchase, average balance	5,000	5,200
Securities sold under agreements to repurchase, maximum month-end balance	6,100	$ 5,900
Securities available-for-sale, at fair value			483,893
Securities available-for-sale, at fair value, post ASU 2019-04	385,131
Borrowings	14,100		41,900
Loan participation agreements	0		24,585
Loan and Security Agreement and Revolving Line of Credit [Member]
Principal amount	35,000
US Government-sponsored Enterprises Debt Securities [Member]
Securities available-for-sale, at fair value			1,575
Securities available-for-sale, at fair value, post ASU 2019-04	60,953
US Government-sponsored Enterprises Debt Securities [Member] | Asset Pledged as Collateral [Member]
Securities available-for-sale, at fair value			$ 9,200
Securities available-for-sale, at fair value, post ASU 2019-04	7,600
Revolving Credit Facility [Member]
Outstanding borrowings	8,000
Remaining borrowing capacity	$ 27,000

XML

Borrowings, Line of Credit and Subordinated Debt - Schedule of debt (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Borrowings, Line of Credit and Subordinated Debt [Abstract]
Securities sold under agreements to repurchase	$ 6,117	$ 4,775
Loan participation agreements	0	24,585
Other Borrowings	8,000	12,500
Total	$ 14,117	$ 41,860

XML

Borrowings, Line of Credit and Subordinated Debt - Subordinated Debt (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
	Sep. 01, 2021	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022	Sep. 28, 2018
Sevier County Bancshares Inc [Member]
Debt Instrument [Line Items]
Subordinated debt	$ 2,500
Subordinated Debt [Member]
Debt Instrument [Line Items]
Principal amount							$ 40,000
Interest rate							5.625%
Debt issuance costs		$ 422		$ 422		$ 485
Amortization expense of debt issuance costs		$ 21	$ 21	$ 63	$ 63
Subordinated Debt [Member] | Sevier County Bancshares Inc [Member]
Debt Instrument [Line Items]
Interest rate	6.75%
Subordinated Debt [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)				2.81161%
Subordinated Debt [Member] | London Interbank Offered Rate (LIBOR) [Member] | Sevier County Bancshares Inc [Member]
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)	5.3025%

XML

Employee Benefit Plans (Narrative) (Details) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023 USD ($) shares	Sep. 30, 2022 USD ($) shares	Sep. 30, 2023 USD ($) plan $ / shares shares	Sep. 30, 2022 USD ($) shares
Defined Benefit Plan Disclosure [Line Items]
Contribution to the Plan	$ 475	$ 419	$ 1,400	$ 1,300
Number of stock option plans | plan			1
Deferred tax benefit from stock options exercised		64	$ 60	147
Options, exercises in period, intrinsic value		$ 9	$ 242	$ 565
Exercise of options | shares	0	603	15,705	32,003
Employee Stock Option [Member]
Defined Benefit Plan Disclosure [Line Items]
Share-based compensation expense	$ 0	$ 0	$ 0	$ 0
Options, outstanding, intrinsic value	128,000		128,000
Proceeds from options exercised			165
Stock Appreciation Rights (SARs) [Member]
Defined Benefit Plan Disclosure [Line Items]
Share-based compensation expense	(5)	(31)
Share-based compensation income			$ (118)	(12)
Exercise of options | shares			8,000
Restricted Stock [Member]
Defined Benefit Plan Disclosure [Line Items]
Share-based compensation expense	271	$ 281	$ 1,200	$ 991
Unrecognized compensation cost	$ 1,800		$ 1,800
Unrecognized compensation costs, period for recognition			1 year 11 months 19 days
Grant-date fair value			$ 636
Vested (in shares) | shares			27,172
Nonvested, beginning of period (in shares) | shares			129,836
Nonvested, beginning balance (in dollars per share) | $ / shares			$ 19.61
2015 Stock Incentive Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Rights issued (in shares) | shares			11,840
Rights available for grant (in shares) | shares	1,676,663		1,676,663
Cornerstone Non-Qualified Plan Options [Member]
Defined Benefit Plan Disclosure [Line Items]
Rights issued (in shares) | shares			4,500
401 (k) Matching Range One [Member] | Deferred Salary Reduction Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Employer matching contribution, percent of match			100.00%
Employer matching contribution, percent of employees gross pay			3.00%
401 (k) Matching Range Two [Member] | Deferred Salary Reduction Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Employer matching contribution, percent of match			50.00%
Employer matching contribution, percent of employees gross pay			2.00%

XML

Employee Benefit Plans - Stock Option Activity (Details) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Number
Exercised (in shares)	0	(603)	(15,705)	(32,003)
Officer and Employee Plans [Member]
Number
Outstanding (in shares)			32,045
Exercised (in shares)			(15,705)
Outstanding (in shares)	16,340		16,340
Weighted Average Exercisable Price
Weighted Average Exercisable Price, Outstanding (in dollars per share)			$ 12.04
Weighted Average Exercisable Price Exercised (in dollars per share)			10.47
Weighted Average Exercise Price, Outstanding (in dollars per share)	$ 13.55		$ 13.55

XML

Employee Benefit Plans (Options Outstanding by Exercise Price Range) (Details) - Officer and Employee Plans [Member] - $ / shares	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Prices (in dollars per share)	$ 13.55	$ 12.04
Number Outstanding (in shares)	16,340	32,045
Options Outstanding, Weighted Average Remaining Life	1 year 6 months 25 days
Options Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 13.55
Exercisable (in shares)	16,340
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 13.55
9.60 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Prices (in dollars per share)	$ 9.60
Number Outstanding (in shares)	4,500
Options Outstanding, Weighted Average Remaining Life	5 months 1 day
Options Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 9.60
Exercisable (in shares)	4,500
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 9.60
15.05 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Prices (in dollars per share)	$ 15.05
Number Outstanding (in shares)	11,840
Options Outstanding, Weighted Average Remaining Life	2 years
Options Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 15.05
Exercisable (in shares)	11,840
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 15.05

XML

Employee Benefit Plans (Schedule of Non-vested Restricted Stock) (Details) - Restricted Stock [Member]	9 Months Ended
	Sep. 30, 2023 $ / shares shares
Number
Nonvested, beginning of period (in shares) | shares	129,836
Granted (in shares) | shares	89,582
Vested (in shares) | shares	(27,172)
Forfeited/expired (in shares) | shares	(9,912)
Nonvested, end of period (in shares) | shares	182,334
Weighted Average Grant-Date Fair Value
Nonvested, beginning balance (in dollars per share) | $ / shares	$ 19.61
Granted (in dollars per share) | $ / shares	26.23
Vested (in dollars per share) | $ / shares	23.39
Forfeited/expired (in dollars per share) | $ / shares	22.45
Nonvested, ending balance (in dollars per share) | $ / shares	$ 22.15

XML

Employee Benefit Plans - Stock Appreciation Right Activity (Details) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Number
Exercised (in shares)	0	(603)	(15,705)	(32,003)
Stock Appreciation Rights (SARs) [Member]
Number
Outstanding (in shares)			36,000
Exercised (in shares)			(8,000)
Outstanding (in shares)	28,000		28,000
Weighted Average Exercisable Price
Weighted Average Exercisable Price, Outstanding (in dollars per share)			$ 18.25
Weighted Average Exercisable Price Exercised (in dollars per share)			15.19
Weighted Average Exercise Price, Outstanding (in dollars per share)	$ 19.13		$ 19.13

XML

Employee Benefit Plans - SARs Outstanding by Exercise Price Range (Details) - Stock Appreciation Rights (SARs) [Member] - $ / shares	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Prices (in dollars per share)	$ 19.13	$ 18.25
Number Outstanding (in shares)	28,000	36,000
SARs Outstanding, Weighted Average Remaining Life	11 months 19 days
SARs Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 19.13
SARs Exercisable, Number Exercisable (in shares)	8,000
SARs Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 15.19
15.19 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Prices (in dollars per share)	$ 15.19
Number Outstanding (in shares)	8,000
SARs Outstanding, Weighted Average Remaining Life	2 months 30 days
SARs Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 15.19
SARs Exercisable, Number Exercisable (in shares)	8,000
SARs Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 15.19
20.70 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Prices (in dollars per share)	$ 20.70
Number Outstanding (in shares)	20,000
SARs Outstanding, Weighted Average Remaining Life	1 year 2 months 30 days
SARs Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 20.70

XML

Commitments and Contingencies (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Jan. 01, 2023	Dec. 31, 2022
Commitments to extend credit	$ 746,921		$ 746,921			$ 911,998
Standby letters of credit	15,567		15,567			6,897
Allowance for off balance sheet credit	2,300		2,300			$ 85
Off-balance sheet credit loss expense (credit)	$ (489)	$ 0	$ (795)	$ 15
Cumulative Effect, Period of Adoption, Adjustment [Member]
Allowance for off balance sheet credit					$ 3,000

XML

Fair Value of Assets and Liabilities - Assets and Liabilities Measured on Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value		$ 483,893
Securities available-for-sale, at fair value, post ASU 2019-04	$ 385,131
Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value		483,893
Securities available-for-sale, at fair value, post ASU 2019-04	385,131
Derivative financial instruments and interest rate swap agreements, asset	16,191	11,834
Derivative financial instruments and interest rate swap agreements, liability	17,647	13,110
US Treasury Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value		223,653
Securities available-for-sale, at fair value, post ASU 2019-04	73,733
US Government-sponsored Enterprises Debt Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value		1,575
Securities available-for-sale, at fair value, post ASU 2019-04	60,953
Municipal securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value		18,611
Securities available-for-sale, at fair value, post ASU 2019-04	17,505
Other Debt Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value		30,551
Securities available-for-sale, at fair value, post ASU 2019-04	30,626
Mortgage-backed securities (GSEs) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value		$ 209,503
Securities available-for-sale, at fair value, post ASU 2019-04	$ 202,314
Interest Rate Swap [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Asset, Statement of Financial Position [Extensible Enumeration]	Other Assets	Other Assets
Interest Rate Swap Liability
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Liability, Statement of Financial Position [Extensible Enumeration]	Other Liabilities
Fair Value, Recurring [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value		$ 483,893
Securities available-for-sale, at fair value, post ASU 2019-04	$ 385,131
Total assets at fair value	401,322	495,727
Derivative financial instruments and interest rate swap agreements, liability		13,110
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value		483,893
Securities available-for-sale, at fair value, post ASU 2019-04	385,131
Total assets at fair value	401,322	495,727
Derivative financial instruments and interest rate swap agreements, liability		13,110
Fair Value, Recurring [Member] | US Treasury Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value		223,653
Securities available-for-sale, at fair value, post ASU 2019-04	73,733
Fair Value, Recurring [Member] | US Treasury Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value		223,653
Securities available-for-sale, at fair value, post ASU 2019-04	73,733
Fair Value, Recurring [Member] | US Government-sponsored Enterprises Debt Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value		1,575
Securities available-for-sale, at fair value, post ASU 2019-04	60,953
Fair Value, Recurring [Member] | US Government-sponsored Enterprises Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value		1,575
Securities available-for-sale, at fair value, post ASU 2019-04	60,953
Fair Value, Recurring [Member] | Municipal securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value		18,611
Securities available-for-sale, at fair value, post ASU 2019-04	17,505
Fair Value, Recurring [Member] | Municipal securities [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value		18,611
Securities available-for-sale, at fair value, post ASU 2019-04	17,505
Fair Value, Recurring [Member] | Other Debt Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value		30,551
Securities available-for-sale, at fair value, post ASU 2019-04	30,626
Fair Value, Recurring [Member] | Other Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value		30,551
Securities available-for-sale, at fair value, post ASU 2019-04	30,626
Fair Value, Recurring [Member] | Mortgage-backed securities (GSEs) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value		209,503
Securities available-for-sale, at fair value, post ASU 2019-04	202,314
Fair Value, Recurring [Member] | Mortgage-backed securities (GSEs) [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value		209,503
Securities available-for-sale, at fair value, post ASU 2019-04	202,314
Fair Value, Recurring [Member] | Interest Rate Swap [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative financial instruments and interest rate swap agreements, asset	16,191	11,834
Fair Value, Recurring [Member] | Interest Rate Swap [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative financial instruments and interest rate swap agreements, asset	16,191	$ 11,834
Fair Value, Recurring [Member] | Interest Rate Swap Liability
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative financial instruments and interest rate swap agreements, liability	17,647
Fair Value, Recurring [Member] | Interest Rate Swap Liability | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative financial instruments and interest rate swap agreements, liability	$ 17,647

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Fair Value of Assets and Liabilities - Assets and Liabilities Measured on Nonrecurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Jan. 01, 2023	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Dec. 31, 2021
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
OREO	$ 271		$ 915
Collateral dependent loans	4,315		1,536
Allowance for loan losses		$ 31,989	23,334	$ 22,769	$ 21,938	$ 19,352
Collateral Pledged [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Allowance for loan losses			506
Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
OREO	271		915
Collateral dependent loans	$ 4,315		$ 1,536

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Fair Value of Assets and Liabilities - Unobservable Inputs (Details) $ in Thousands	Sep. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Collateral dependent loans	$ 4,315	$ 1,536
OREO	271	915
Fair Value, Inputs, Level 3 [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Collateral dependent loans	4,315	1,536
OREO	271	915
Appraisal And Discounted Cash Flow [Member] | Fair Value, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Collateral dependent loans	4,315	1,536
OREO	$ 271	$ 915
Appraisal And Discounted Cash Flow [Member] | Measurement Input, Discount Rate [Member] | Weighted Average [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Collateral dependent, measurement input	39	25
OREO, measurement input	26	29

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Fair Value of Assets and Liabilities - Carrying Amount and Estimated Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Assets:
Securities available-for-sale, at fair value		$ 483,893
Securities available-for-sale, at fair value, post ASU 2019-04	$ 385,131
Securities held to maturity, fair value	256,325	260,613
Liabilities:
Noninterest-bearing demand deposits	923,763	1,072,449
Interest-bearing demand deposits	993,717	965,911
Time deposits	562,620	455,259
Carrying Amount [Member]
Assets:
Cash and cash equivalents	400,258	266,424
Securities available-for-sale, at fair value		483,893
Securities available-for-sale, at fair value, post ASU 2019-04	385,131
Securities held to maturity, fair value	282,313	285,949
Other investments	13,805	15,530
Loans, net and loans held for sale	3,348,046	3,232,045
Derivative financial instruments and interest rate swap agreements, asset	16,191	11,834
Liabilities:
Noninterest-bearing demand deposits	923,763	1,072,449
Interest-bearing demand deposits	993,717	965,911
Money market and savings deposits	1,766,409	1,583,481
Time deposits	562,620	455,259
Borrowings	14,117	41,860
Subordinated debt	42,078	42,015
Derivative financial instruments and interest rate swap agreements, liability	17,647	13,110
Estimated Fair Value [Member]
Assets:
Cash and cash equivalents	400,258	266,424
Securities available-for-sale, at fair value		483,893
Securities available-for-sale, at fair value, post ASU 2019-04	385,131
Securities held to maturity, fair value	256,325	260,613
Loans, net and loans held for sale	3,210,772	3,143,921
Derivative financial instruments and interest rate swap agreements, asset	16,191	11,834
Liabilities:
Noninterest-bearing demand deposits	923,763	1,072,449
Interest-bearing demand deposits	993,717	965,911
Money market and savings deposits	1,766,409	1,583,481
Time deposits	558,744	451,899
Borrowings	14,117	41,860
Subordinated debt	39,650	40,439
Derivative financial instruments and interest rate swap agreements, liability	17,647	13,110
Fair Value, Inputs, Level 1 [Member]
Assets:
Cash and cash equivalents	400,258	266,424
Fair Value, Inputs, Level 2 [Member]
Assets:
Securities available-for-sale, at fair value		483,893
Securities available-for-sale, at fair value, post ASU 2019-04	385,131
Securities held to maturity, fair value	256,325	260,613
Derivative financial instruments and interest rate swap agreements, asset	16,191	11,834
Liabilities:
Noninterest-bearing demand deposits	923,763	1,072,449
Interest-bearing demand deposits	993,717	965,911
Money market and savings deposits	1,766,409	1,583,481
Time deposits	558,744	451,899
Borrowings	14,117	41,860
Derivative financial instruments and interest rate swap agreements, liability	17,647	13,110
Fair Value, Inputs, Level 3 [Member]
Assets:
Loans, net and loans held for sale	3,210,772	3,143,921
Liabilities:
Subordinated debt	$ 39,650	$ 40,439

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Fair Value of Assets and Liabilities - Additional (Detail) - USD ($) $ in Thousands	Sep. 30, 2023	Jun. 30, 2023	Jan. 01, 2023	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Dec. 31, 2021
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Allowance for loan losses			$ 31,989	$ 23,334	$ 22,769	$ 21,938	$ 19,352
Allowance for credit losses, post ASU 2019-04	$ 33,687	$ 32,747
Collateral Pledged [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Allowance for loan losses				$ 506
Allowance for credit losses, post ASU 2019-04	$ 2,800

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Derivatives Financial Instruments - Fair Value Hedges on Income Statement (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Derivative Instruments, Gain (Loss) [Line Items]
Reported interest income on tax-exempt securities	$ 356	$ 561	$ 1,066	$ 1,369
Fair Value Hedging [Member] | Interest Rate Swap [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) on fair value hedging relationship		1,808		5,319
Fair Value Hedging [Member] | Interest Rate Swap [Member] | Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Interest income on tax-exempt securities		403		1,183
Effects of fair value hedge relationships		(83)		(527)
Reported interest income on tax-exempt securities		320		656
Gain (loss) on fair value hedging relationship		$ (1,808)		$ (5,319)
Derivative, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]		Reported interest income on tax-exempt securities		Reported interest income on tax-exempt securities
Carrying amount of hedged asset		$ 36,165		$ 36,165

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Derivatives Financial Instruments - Interest Rate Swaps related to Loan Hedging Program (Details) - Interest Rate Swap [Member] - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Cash Flow Hedging [Member] | Interest Income [Member]
Derivatives, Fair Value [Line Items]
Cash flow hedge estimated to be reclassified in next 12 months	$ 797
Cash Flow Hedging [Member] | Interest Expense [Member]
Derivatives, Fair Value [Line Items]
Cash flow hedge estimated to be reclassified in next 12 months	969
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member]
Derivatives, Fair Value [Line Items]
Notional Amount, Asset	150,000
Estimated Fair Value, Asset	698
Notional Amount, Liability	100,000	$ 100,000
Estimated Fair Value, Liability	(2,165)	(1,304)
Non-hedged derivatives [Member]
Derivatives, Fair Value [Line Items]
Notional Amount, Asset	243,239	216,656
Estimated Fair Value, Asset	15,482	11,834
Notional Amount, Liability	243,239	216,656
Estimated Fair Value, Liability	$ (15,482)	$ (11,834)

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Derivatives Financial Instruments - Effect of Fair Value and Cash Flow Hedge Accounting on AOCI (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Interest Income [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) on fair value hedging relationship	$ 55,448		$ 160,823
Interest Expense [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) on fair value hedging relationship	24,426		62,150
Interest Rate Swap [Member] | Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Interest Income [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) on fair value hedging relationship	$ (432)	$ (1,775)	$ (2,165)	$ (1,775)
Derivative, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]	Interest Income, Operating	Interest Income, Operating	Interest Income, Operating	Interest Income, Operating
Amount of Gain or (Loss) Reclassified from AOCI into Income	$ (173)		$ (275)
Interest Rate Swap [Member] | Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Interest Expense [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) on fair value hedging relationship	$ 585		$ 698
Derivative, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]	Interest Expense		Interest Expense
Amount of Gain or (Loss) Reclassified from AOCI into Income	$ (157)		$ (165)

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Derivatives Financial Instruments - Effect of Fair Value and Cash Flow Hedge Accounting on the Income (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Derivative Instruments, Gain (Loss) [Line Items]
Total interest income	$ 55,275	$ 42,297	$ 160,548	$ 111,521
Total interest expense	31,006	$ 36,708	98,563	$ 99,889
Interest Income [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative, Gain (Loss) on Derivative, Net	55,448		160,823
Effects of cash flow hedge relationships	(173)		(275)
Total interest income	55,275		160,548
Interest Expense [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative, Gain (Loss) on Derivative, Net	24,426		62,150
Effects of cash flow hedge relationships	(157)		(165)
Total interest expense	$ 24,269		$ 61,985

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Derivatives Financial Instruments - Interest Rate Swaps to Facilitate Customer's Transactions (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Interest Rate Swap [Member] | Non-hedged derivatives [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Transaction on income statement	$ 326	$ 53	$ 823	$ 1,449

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Derivatives Financial Instruments - Collateral Requirements (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Collateral pledged to derivative counterparties	$ 910	$ 1,400

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Leases - Lease Assets and Liabilities (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Leases [Abstract]
Operating lease right-of-use assets	$ 10,097	$ 9,314
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	Other Assets	Other Assets
Operating lease liabilities	$ 10,345	$ 9,457
Operating Lease, Liability, Statement of Financial Position [Extensible List]	Other Liabilities	Other Liabilities
Lessee, Operating Lease, Existence of Option to Extend [true false]	true

XML

Leases (Narrative) (Details)	Sep. 30, 2023
Leases [Abstract]
Weighted average remaining lease term	9 years 2 months 4 days
Weighted average discount rate	2.86%

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Leases - Lease Costs and Other Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Lease costs:
Operating lease costs	$ 438	$ 403	$ 1,247	$ 1,220
Variable lease costs	30	26	87	76
Total	468	429	1,334	1,296
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$ 393	$ 385	$ 1,142	$ 1,163

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Leases - Future Minimum Payments (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Leases [Abstract]
Remainder of 2023	$ 276
2024	1,455
2025	1,359
2026	1,291
2027	1,107
Thereafter	6,476
Total future minimum lease payments	11,964
Amounts representing interest	(1,619)
Present value of net future minimum lease payments	$ 10,345	$ 9,457

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Regulatory Matters (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Sep. 30, 2023	Mar. 31, 2023
Banking and Thrift [Abstract]
Dividends	$ 10
Common stock dividends, quarterly (in dollars per share)		$ 0.08

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Regulatory Matters (Regulatory Capital Levels) (Details) $ in Thousands	Sep. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)
SmartFinancial, Inc. [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total Capital (to Risk-Weighted Assets), Actual Amount	$ 449,546	$ 425,957
Tier 1 Capital (to Risk-Weighted Assets), Actual Amount	380,272	360,608
Common Equity Tier 1 Capital (to Risk-Weighted Assets), Actual Amount	380,272	360,608
Tier 1 Capital (to Average Assets), Actual Amount	$ 380,272	$ 360,608
Total Capital (to Risk-Weighted Assets), Actual Ratio (as a percent)	0.1190	0.1140
Tier 1 Capital (to Risk-Weighted Assets), Actual Ratio (as a percent)	0.1007	0.0965
Common Equity Tier 1 Capital (to Risk-Weighted Assets), Actual Ration (as percent)	0.1007	0.0965
Tier 1 Capital (to Average Assets), Actual Ratio (as a percent)	0.0813	0.0795
Total Capital (to Risk-Weighted Assets), Minimum for capital adequacy purposes Amount	$ 302,100	$ 298,966
Tier 1 Capital (to Risk-Weighted Assets), Minimum for capital adequacy purposes Amount	226,575	224,224
Common Equity Tier 1 Capital (to Risk-Weighted Assets), Minimum for capital adequacy purposes Amount	169,931	168,168
Tier 1 Capital (to Average Assets), Minimum for capital adequacy purposes Amount	$ 187,074	$ 181,387
Total Capital (to Risk-Weighted Assets), Minimum for capital adequacy purposes Ratio (as a percent)	0.0800	0.0800
Tier 1 Capital (to Risk-Weighted Assets), Minimum for capital adequacy purposes Ratio (as a percent)	0.0600	0.0600
Common Equity Tier 1 Capital (to Risk-Weighted Assets), Minimum for capital adequacy purposes Ratio (as a percent)	0.0450	0.0450
Tier 1 Capital (to Average Assets), Minimum for capital adequacy purposes Ratio (as a percent)	0.0400	0.0400
Smart Bank [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total Capital (to Risk-Weighted Assets), Actual Amount	$ 447,326	$ 426,947
Tier 1 Capital (to Risk-Weighted Assets), Actual Amount	420,130	403,613
Common Equity Tier 1 Capital (to Risk-Weighted Assets), Actual Amount	420,130	403,613
Tier 1 Capital (to Average Assets), Actual Amount	$ 420,130	$ 403,613
Total Capital (to Risk-Weighted Assets), Actual Ratio (as a percent)	0.1187	0.1144
Tier 1 Capital (to Risk-Weighted Assets), Actual Ratio (as a percent)	0.1115	0.1082
Common Equity Tier 1 Capital (to Risk-Weighted Assets), Actual Ration (as percent)	0.1115	0.1082
Tier 1 Capital (to Average Assets), Actual Ratio (as a percent)	0.0900	0.0890
Total Capital (to Risk-Weighted Assets), Minimum for capital adequacy purposes Amount	$ 301,538	$ 298,476
Tier 1 Capital (to Risk-Weighted Assets), Minimum for capital adequacy purposes Amount	226,153	223,857
Common Equity Tier 1 Capital (to Risk-Weighted Assets), Minimum for capital adequacy purposes Amount	169,615	167,892
Tier 1 Capital (to Average Assets), Minimum for capital adequacy purposes Amount	$ 186,792	$ 181,383
Total Capital (to Risk-Weighted Assets), Minimum for capital adequacy purposes Ratio (as a percent)	0.0800	0.0800
Tier 1 Capital (to Risk-Weighted Assets), Minimum for capital adequacy purposes Ratio (as a percent)	0.0600	0.0600
Common Equity Tier 1 Capital (to Risk-Weighted Assets), Minimum for capital adequacy purposes Ratio (as a percent)	0.0450	0.0450
Tier 1 Capital (to Average Assets), Minimum for capital adequacy purposes Ratio (as a percent)	0.0400	0.0400
Total Capital (to Risk-Weighted Assets), Minimum to be well capitalized under prompt corrective action provisions Amount	$ 376,922	$ 373,094
Tier 1 Capital (to Risk-Weighted Assets), Minimum to be well capitalized under prompt corrective action provisions Amount	301,538	298,476
Common Equity Tier 1 Capital (to Risk-Weighted Assets), Minimum to be well capitalized under prompt corrective action provisions Amount	244,999	242,511
Tier 1 Capital (to Average Assets), Minimum to be well capitalized under prompt corrective action provisions Amount	$ 233,490	$ 226,729
Total Capital (to Risk-Weighted Assets), Minimum to be well capitalized under prompt corrective action provisions Ratio (as a percent)	0.1000	0.1000
Tier 1 Capital (to Risk-Weighted Assets), Minimum to be well capitalized under prompt corrective action provisions Ratio (as a percent)	0.0800	0.0800
Common Equity Tier 1 Capital (to Risk-Weighted Assets), Minimum to be well capitalized under prompt corrective action provisions Ratio (as a percent)	0.0650	0.0650
Tier 1 Capital (to Average Assets), Minimum to be well capitalized under prompt corrective action provisions Ratio (as a percent)	0.0500	0.0500

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Other comprehensive income (loss) (Activity in Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
AOCI Attributable to Parent, Net of Tax [Roll Forward]
BALANCE	$ 444,847	$ 420,427	$ 432,452	$ 429,430
BALANCE	446,652	414,711	446,652	414,711
AOCI, Accumulated Gain (Loss), Debt Securities, Available-for-sale, Parent [Member]
AOCI Attributable to Parent, Net of Tax [Roll Forward]
BALANCE	(33,132)	(23,526)	(33,616)	25
Other comprehensive income (loss)	(4,325)	(14,942)	(3,841)	(38,493)
Reclassification of amounts included in net income	5,044		5,044
Net other comprehensive income (loss) during period	719	(14,942)	1,203	(38,493)
BALANCE	(32,413)	(38,468)	(32,413)	(38,468)
AOCI, Available-for-Sale Securities Transfer to Held-to-Maturity [Member]
AOCI Attributable to Parent, Net of Tax [Roll Forward]
BALANCE	(684)	(804)	(742)	665
Other comprehensive income (loss)				(1,490)
Reclassification of amounts included in net income	27	31	85	52
Net other comprehensive income (loss) during period	27	31	85	(1,438)
BALANCE	(657)	(773)	(657)	(773)
AOCI, Fair Value Municipal Security Hedges [Member]
AOCI Attributable to Parent, Net of Tax [Roll Forward]
BALANCE				753
Other comprehensive income (loss)				(1,002)
Net other comprehensive income (loss) during period				(1,002)
BALANCE		(249)		(249)
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent [Member]
AOCI Attributable to Parent, Net of Tax [Roll Forward]
BALANCE	(1,201)		(966)
Other comprehensive income (loss)	115	(1,317)	(120)	(1,317)
Net other comprehensive income (loss) during period	115	(1,317)	(120)	(1,317)
BALANCE	(1,086)	(1,317)	(1,086)	(1,317)
AOCI Attributable to Parent [Member]
AOCI Attributable to Parent, Net of Tax [Roll Forward]
BALANCE	(35,017)	(24,648)	(35,324)	1,443
Other comprehensive income (loss)	(4,210)	(16,190)	(3,961)	(42,302)
Reclassification of amounts included in net income	5,071	31	5,129	52
Net other comprehensive income (loss) during period	861	(16,159)	1,168	(42,250)
BALANCE	$ (34,156)	(40,807)	$ (34,156)	(40,807)
AOCI, Derivative Qualifying as Hedge, Excluded Component, Parent [Member]
AOCI Attributable to Parent, Net of Tax [Roll Forward]
BALANCE		(318)
Other comprehensive income (loss)		69
Net other comprehensive income (loss) during period		69
BALANCE		$ (249)		$ (249)

XML

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Pay vs Performance Disclosure
Net Income (Loss)	$ 2,067	$ 11,543	$ 22,403	$ 30,018

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Insider Trading Arrangements	3 Months Ended
	Sep. 30, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false