10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2018

☐ 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 001-36895

FRANKLIN FINANCIAL NETWORK, INC.

(Exact name of registrant as specified in its charter)

Tennessee	20-8839445
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
722 Columbia Avenue Franklin, Tennessee	37064
(Address of principal executive offices)	(Zip Code)

615-236-2265

(Registrant’s telephone number, including area code)

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐

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

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐ (Do not check if a smaller reporting company)	Smaller reporting company	☐
Emerging growth company	☒

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

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

The number of shares outstanding of the registrant’s common stock, no par value per share, as of April 30, 2018, was 14,373,890.

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION
Cautionary Note Regarding Forward-Looking Statements	1
Item 1. Consolidated Financial Statements (unaudited)
Consolidated Balance Sheets	2
Consolidated Statements of Income	3
Consolidated Statements of Comprehensive Income	4
Consolidated Statement of Changes in Shareholders’ Equity	5
Consolidated Statements of Cash Flows	6
Notes to Consolidated Financial Statements	7
Item  2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3. Quantitative and Qualitative Disclosures About Market Risk	41
Item 4. Controls and Procedures	42
PART II OTHER INFORMATION
Item 1. Legal Proceedings	42
Item 1A. Risk Factors	42
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3. Defaults Upon Senior Securities	43
Item 4. Mine Safety Disclosures	43
Item 5. Other Information	43
Item 6. Exhibits	43
SIGNATURES

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” as defined under U.S. federal securities laws. These statements reflect management’s current knowledge, assumptions, beliefs, estimates, and expectations and express management’s current views of future performance, results, and trends and may be identified by their use of terms such as “may,” “would,” “could,”

“should,” “will,” “expect,” “anticipate,” “predict,” “project,” “potential,” “continue,” “contemplate,” “seek,” “assume,” “believe,” “intend,” “plan,” “forecast,” “goal,” and “estimate,” and other similar terms. Forward-looking statements are subject to a number of risks and uncertainties that could cause our actual results to differ materially from those described in the forward-looking statements. Readers should not place undue reliance on forward-looking statements. Such statements are made as of the date of this Quarterly Report on Form 10-Q, and we undertake no obligation to update such statements after this date.

Risks and uncertainties that could cause our actual results to differ materially from those described in forward-looking statements include those discussed in our filings with the Securities and Exchange Commission (“SEC”), including those described in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on March 16, 2018.

1

PART I FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

FRANKLIN FINANCIAL NETWORK, INC.

CONSOLIDATED BALANCE SHEETS

(Dollar amounts in thousands, except share and per share data)

	March 31, 2018			December 31, 2017
	(Unaudited)
ASSETS
Cash and due from financial institutions	$	246,164		$	251,543
Certificates of deposit at other financial institutions		2,855			2,855
Securities available for sale		1,186,420			999,881
Securities held to maturity (fair value 2018—$210,888 and 2017—$217,608)		213,381			214,856
Loans held for sale, at fair value		12,871			12,024
Loans		2,310,018			2,256,608
Allowance for loan losses		(21,738	)		(21,247	)
Net loans		2,288,280			2,235,361
Restricted equity securities, at cost		19,606			18,492
Premises and equipment, net		10,941			11,281
Accrued interest receivable		12,937			11,947
Bank owned life insurance		49,450			49,085
Deferred tax asset		13,807			10,007
Foreclosed assets		1,503			1,503
Servicing rights, net		3,602			3,620
Goodwill		9,124			9,124
Core deposit intangible, net		903			1,007
Other assets		11,819			10,940
Total assets	$	4,083,663		$	3,843,526
LIABILITIES AND EQUITY
Deposits
Non-interest bearing	$	298,503		$	272,172
Interest bearing		3,056,650			2,895,056
Total deposits		3,355,153			3,167,228
Federal Home Loan Bank advances		317,000			272,000
Federal funds purchased and repurchase agreements		36,071			31,004
Subordinated notes, net		58,559			58,515
Accrued interest payable		2,775			2,769
Other liabilities		9,240			7,357
Total liabilities		3,778,798			3,538,873
Equity
Preferred stock, no par value: 1,000,000 shares authorized; no shares outstanding at March 31, 2018 and December 31, 2017		—			—
Common stock, no par value: 30,000,000 and 30,000,000 shares authorized at March 31, 2018 and December 31, 2017 , respectively; 13,258,142 and 13,237,128 issued at March 31, 2018 and December 31, 2017 , respectively		223,594			222,665
Retained earnings		98,723			88,671
Accumulated other comprehensive loss		(17,555	)		(6,786	)
Total shareholders’ equity		304,762			304,550
Noncontrolling interest in consolidated subsidiary		103			103
Total equity		304,865			304,653
Total liabilities and equity	$	4,083,663		$	3,843,526

See accompanying notes to consolidated financial statements.

2

FRANKLIN FINANCIAL NETWORK, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Dollar amounts in thousands, except share and per share data)

(Unaudited)

	Three Months Ended March 31,
	2018		2017
Interest income and dividends
Loans, including fees	$	28,793	$	22,560
Securities:
Taxable		6,111		5,617
Tax-Exempt		1,915		2,020
Dividends on restricted equity securities		274		181
Federal funds sold and other		954		163
Total interest income		38,047		30,541
Interest expense
Deposits		10,643		5,246
Federal Home Loan Bank advances		1,110		508
Federal funds purchased and repurchase agreements		96		70
Subordinated notes and other borrowings		1,082		1,074
Total interest expense		12,931		6,898
Net interest income		25,116		23,643
Provision for loan losses		573		1,855
Net interest income after provision for loan losses		24,543		21,788
Noninterest income
Service charges on deposit accounts		42		30
Other service charges and fees		751		752
Net gains on sale of loans		1,439		2,334
Wealth management		704		593
Loan servicing fees, net		119		107
Net (loss) gain on sale of foreclosed assets		3		3
Other		398		189
Total noninterest income		3,456		4,008
Noninterest expense
Salaries and employee benefits		9,188		8,033
Occupancy and equipment		2,594		2,095
FDIC assessment expense		660		760
Marketing		280		267
Professional fees		869		1,035
Amortization of core deposit intangible		104		127
Other		1,793		1,959
Total noninterest expense		15,488		14,276
Income before income tax expense		12,511		11,520
Income tax expense		2,459		3,586
Net income		10,052		7,934
Net income available to common shareholders	$	10,052	$	7,934
Earnings per share:
Basic	$	0.76	$	0.61
Diluted		0.73		0.58

See accompanying notes to consolidated financial statements.

3

FRANKLIN FINANCIAL NETWORK, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Dollar amounts in thousands, except share and per share data)

(Unaudited)

	Three Months Ended March 31,
	2018			2017
Net income	$	10,052		$	7,934
Other comprehensive loss, net of tax:
Unrealized gains on securities:
Unrealized holding loss arising during the period		(14,577	)		(641	)
Reclassification adjustment for gains included in net income		—			—
Net unrealized losses		(14,577	)		(641	)
Tax effect		3,808			251
Total other comprehensive loss		(10,769	)		(390	)
Comprehensive income (loss)	$	(717	)	$	7,544

See accompanying notes to consolidated financial statements.

4

FRANKLIN FINANCIAL NETWORK, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Three Months Ended March 31, 2018 and 2017

(Dollar amounts in thousands, except share and per share data)

(Unaudited)

	Preferred		Common Stock						Retained		Accumulated Other Comprehensive			Noncontrolling		Total
	Stock		Shares			Amount			Earnings		Income (Loss)			Interest		Equity
Balance at December 31, 2016	$	—		13,036,954		$	218,354		$	59,386	$	(7,482	)		103	$	270,361
Exercise of common stock options		—		20,268			177			—		—			—		177
Exercise of common stock warrants		—		11,011			132			—		—			—		132
Stock based compensation expense, net of restricted share forfeitures		—		(180	)		447			—		—			—		447
Stock issued in conjunction with 401(k) employer match, net of distributions		—		(3,943	)		(151	)		—		—			—		(151	)
Net income		—		—			—			7,934		—			—		7,934
Other comprehensive loss		—		—			—			—		(390	)		—		(390	)
Balance at March 31, 2017	$	—		13,064,110		$	218,959		$	67,320	$	(7,872	)		103	$	278,510
Balance at December 31, 2017	$	—		13,237,128		$	222,665		$	88,671	$	(6,786	)		103	$	304,653
Exercise of common stock options		—		21,348			220			—		—			—		220
Stock based compensation expense, net of restricted share forfeitures		—		(334	)		759			—		—			—		759
Stock issued in conjunction with 401(k) employer match, net of distributions		—		—			(50	)		—		—			—		(50	)
Net income		—		—			—			10,052		—			—		10,052
Other comprehensive loss		—		—			—			—		(10,769	)		—		(10,769	)
Balance at March 31, 2018	$	—		13,258,142		$	223,594		$	98,723	$	(17,555	)		103	$	304,865

See accompanying notes to consolidated financial statements.

5

FRANKLIN FINANCIAL NETWORK, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollar amounts in thousands, except share and per share data)

(Unaudited)

	Three Months Ended March 31,
	2018			2017
Cash flows from operating activities
Net income	$	10,052		$	7,934
Adjustments to reconcile net income to net cash from operating activities
Depreciation and amortization on premises and equipment		403			368
Accretion of purchase accounting adjustments		(252	)		(381	)
Net amortization of securities		1,904			2,452
Amortization of loan servicing right asset		214			213
Amortization of core deposit intangible		104			127
Amortization of debt issuance costs		44			44
Provision for loan losses		573			1,855
Deferred income tax benefit		10			(561	)
Origination of loans held for sale		(83,226	)		(65,213	)
Proceeds from sale of loans held for sale		83,622			78,379
Net gain on sale of loans		(1,439	)		(2,334	)
Income from bank owned life insurance		(365	)		(155	)
Stock-based compensation		759			447
Deferred gain on sale of loans		(4	)		(58	)
Deferred gain on sale of foreclosed assets		(3	)		(3	)
Net change in:
Accrued interest receivable and other assets		(1,871	)		(1,687	)
Accrued interest payable and other liabilities		1,896			5,944
Net cash from operating activities		12,421			27,371
Cash flows from investing activities
Available for sale securities:
Purchases		(224,712	)		(363,298	)
Maturities, prepayments and calls		22,129			42,167
Held to maturity securities:
Purchases		(1,676	)		(1,996	)
Maturities, prepayments and calls		2,714			4,335
Net change in loans		(53,240	)		(177,360	)
Purchase of restricted equity securities		(1,114	)		(3,135	)
Purchases of premises and equipment, net		(63	)		(1,048	)
Increase in certificates of deposits at other financial institutions		—			(980	)
Net cash from investing activities		(255,962	)		(501,315	)
Cash flows from financing activities
Increase in deposits		187,925			425,394
Increase (Decrease) in federal funds purchased and repurchase agreements		5,067			(12,871	)
Proceeds from Federal Home Loan Bank advances		95,000			230,000
Repayment of Federal Home Loan Bank advances		(50,000	)		(145,000	)
Proceeds from exercise of common stock warrants		—			132
Proceeds from exercise of common stock options		220			177
Divestment of common stock issued to 401(k) plan		(50	)		(151	)
Net cash from financing activities		238,162			497,681
Net change in cash and cash equivalents		(5,379	)		23,737
Cash and cash equivalents at beginning of period		251,543			90,927
Cash and cash equivalents at end of period	$	246,164		$	114,664
Supplemental information:
Interest paid	$	12,925		$	6,829
Income taxes paid		525			530

See accompanying notes to consolidated financial statements.

6

FRANKLIN FINANCIAL NETWORK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands, except share and per share data)

(Unaudited)

NOTE 1—BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with instructions to Form 10-Q and therefore do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, and cash flows in conformity with U.S. generally accepted accounting principles (U.S. GAAP). All adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the periods reported have been included as required by Regulation S-X, Rule 10-01. All such adjustments are of a normal recurring nature. It is suggested that these interim consolidated financial statements and notes be read in conjunction with the financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K filed with the SEC on March 16, 2018.

These consolidated financial statements include the accounts of Franklin Financial Network, Inc. (“FFN”), and its wholly-owned subsidiaries, Franklin Synergy Bank (“Franklin Synergy” or the “Bank”) and Franklin Synergy Risk Management, Inc. (collectively, the “Company”). Franklin Synergy Investments of Tennessee, Inc., Franklin Synergy Investments of Nevada, Inc., and Franklin Synergy Preferred Capital, Inc. are direct or indirect subsidiaries of the Bank and are included in these consolidated financial statements. Significant intercompany transactions and accounts are eliminated in consolidation.

Recently Adopted Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU replaces most existing revenue recognition guidance in GAAP. The new standard was effective for the Company on January 1, 2018. Adoption of ASU 2014-09 did not have a material impact on the Company’s consolidated financial statements and related disclosures as the Company’s primary sources of revenues are derived from interest earned on loans, investment securities, and other financial instruments that are not within the scope of ASU 2014-09. The Company’s revenue recognition pattern for revenue streams within the scope of ASU 2014-09, including but not limited to service charges on deposit accounts and gains/losses on the sale of OREO, did not change significantly from current practice. The standard permits the use of either the full retrospective or modified retrospective transition method. The Company elected to use the modified retrospective transition method which requires application of ASU 2014-09 to uncompleted contracts at the date of adoption. The impact on uncompleted contracts at the date of adoption of this Update was not considered material.

The Company has identified the contract with a customer, identified the performance obligations in the contract, determined the transaction price, allocated the transaction price to the performance obligations in the contract, and recognized revenue when (or as) the Company satisfied a performance obligation. Significant revenue has not been recognized in the current reporting period that results from performance obligations satisfied in previous periods. The Company’s primary sources of revenue are derived from interest and dividends earned on loans, investment securities, and other financial instruments that are not impacted by the new standard. The Company has evaluated the nature of its contracts with customers and determined that further disaggregation of revenue from contracts with customers into more granular categories beyond what is presented in the Consolidated Statements of Income was not necessary. The Company generally fully satisfies its performance obligations on its contracts with customers as services are rendered and the transaction prices are typically fixed; charged either on a periodic basis or based on activity. Because performance obligations are satisfied as services are rendered and the transaction prices are fixed, there is little judgment involved in applying the new standard that significantly affects the determination of the amount and timing of revenue from contracts with customers.

7

In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”). The guidance affects the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements of financial instruments. ASU 2016-01 was effective for the Company on January 1, 2018 and resulted in the use of an exit price rather than an entrance price to determine the fair value of loans not measured at fair value on a non-recurring basis in the consolidated balance sheets. The Company does not have any equity investments that qualify for consideration under ASU 2016-01. See Note 8, “Fair Value,” for further information regarding the valuation of these loans.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” This Accounting Standards Update addresses the following eight specific cash flow issues: debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (COLIs) (including bank-owned life insurance policies (BOLIs)); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. The amendments in this Update became effective for the Company on January 1, 2018. The adoption of this ASU did not have a material impact on the Company’s financial statements.

In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business,” (“ASU 2017-01”) to improve such definition and, as a result, assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or as business combinations. The definition of a business impacts many areas of accounting including acquisitions, disposals, goodwill and consolidation. ASU 2017-01 was effective for the Company on January 1, 2018 and is to be applied under a prospective approach. The Company expects the adoption of this new guidance to impact the determination of whether future acquisitions are considered business combinations.

In May 2017, the FASB issued ASU 2017-09, “Compensation—Stock Compensation (Subtopic 718): Scope of Modification Accounting.” ASU 2017-09 clarifies when changes to terms or conditions of a share-based payment award must be accounted for as a modification. Under the new guidance, an entity will not apply modification accounting to a share-based payment award if all of the following are the same immediately before and after the change: (i) the fair value of the award, (ii) the vesting conditions of the award, and (iii) the classification of the award as either an equity or liability instrument. ASU 2017-09 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The guidance requires companies to apply the requirements prospectively to awards modified on or after the adoption date. The adoption of ASU 2017-09 did not have a significant impact on the Company’s consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

In February 2016, the FASB issued ASU 2016-02 which creates Topic 842, “Leases” and supersedes Topic 840, “Leases.” ASU 2016-02 is intended to improve financial reporting about leasing transactions, by increasing transparency and comparability among organizations. Under the new guidance, a lessee will be required to record all leases with lease terms of more than 12 months on their balance sheet as lease liabilities with a corresponding right-of-use asset. ASU 2016-02 maintains the dual model for lease accounting, requiring leases to be classified as either operating or finance, with lease classification determined in a manner similar to existing lease guidance. The new guidance will be effective for the Company for fiscal years beginning on or after December 15, 2018. Early adoption is permitted for all entities. At the time this ASU is adopted, the Company will recognize a right-of-use asset, and a lease liability for all leases, which will initially be measured at the present value of lease payments, and a single lease cost calculated so that the costs of the leases are allocated over the terms of the Company’s leases on a generally straight-line basis. Since an asset will be recognized at the time of adoption, the Company’s regulatory capital ratios will be impacted. Management is evaluating the impact ASU 2016-02 will have on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The ASU requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. The ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The ASU is effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 (i.e., January 1, 2020, for calendar year entities). Early application will be permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently gathering information, reviewing possible vendors and has formed a committee to formulate the methodology to be used. Most importantly, the Company is gathering data to enable review scenarios and to determine which calculations will produce the most reliable results. The impact of adopting ASU 2016-13 is not currently known.

8

In January 2017, the FASB issued ASU 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance will remain largely unchanged. ASU 2017-04 is effective for interim and annual reporting periods beginning after December 15, 2019, applied prospectively. Early adoption is permitted for any impairment tests performed after January 1, 2017. Adoption of ASU 2017-04 is not expected to have a material impact on the Company’s consolidated financial statements.

In March 2017, the FASB issued ASU 2017-08, “Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.” This Update shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date. The new guidance does not change the accounting for purchased callable debt securities held at a discount; the discount continues to be amortized to maturity. ASU 2017-08 is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. The guidance calls for a modified retrospective transition approach under which a cumulative-effect adjustment will be made to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. The Company is currently evaluating the provisions of ASU 2017-08 to determine the potential impact the new standard will have on the Company’s consolidated financial statements.

Acquisition of Civic Bank & Trust

Effective April 1, 2018, the Company acquired Civic Bank & Trust, which was located in Nashville, Tennessee. Effective with the acquisition, Dr. Anil Patel, who was the chairman of the Civic Bank & Trust board of directors, was added to the Company’s board of directors for a term expiring at the Company’s 2018 annual meeting of shareholders.

NOTE 2—SECURITIES

The following table summarizes the amortized cost and fair value of the securities available for sale portfolio at March 31, 2018 and December 31, 2017 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income.

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
March 31, 2018
U.S. Treasury securities	$	289,086	$	—	$	(515	)	$	288,571
U.S. government sponsored entities and agencies		20,103		—		(209	)		19,894
Mortgage-backed securities: residential		782,579		45		(19,496	)		763,128
Mortgage-backed securities: commercial		5,123		—		(112	)		5,011
State and political subdivisions		113,295		404		(3,883	)		109,816
Total	$	1,210,186	$	449	$	(24,215	)	$	1,186,420

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
December 31, 2017
U.S. Treasury securities	$	229,119	$	—	$	(210	)	$	228,909
U.S. government sponsored entities and agencies		20,125		—		(164	)		19,961
Mortgage-backed securities: residential		641,225		102		(8,761	)		632,566
Mortgage-backed securities: commercial		5,133		—		(59	)		5,074
State and political subdivisions		113,468		1,787		(1,884	)		113,371
Total	$	1,009,070	$	1,889	$	(11,078	)	$	999,881

9

The amortized cost and fair value of the securities held to maturity portfolio at March 31, 2018 and December 31, 2017 and the corresponding amounts of gross unrecognized gains and losses were as follows:

	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Fair Value
March 31, 2018
Mortgage backed securities: residential	$	92,152	$	111	$	(3,495	)	$	88,768
State and political subdivisions		121,229		1,064		(173	)		122,120
Total	$	213,381	$	1,175	$	(3,668	)	$	210,888
December 31, 2017
Mortgage backed securities: residential	$	93,366	$	207	$	(1,796	)	$	91,777
State and political subdivisions		121,490		4,379		(38	)		125,831
Total	$	214,856	$	4,586	$	(1,834	)	$	217,608

The proceeds from sales and calls of securities available for sale and the associated gains and losses were as follows:

	Three Months Ended March 31,
	2018		2017
Proceeds	$	—	$	—
Gross gains		—		—
Gross losses		—		—

The amortized cost and fair value of the investment securities portfolio are shown by contractual maturity. Securities not due at a single maturity date, primarily mortgage-backed securities, are shown separately.

	March 31, 2018
	Amortized Cost		Fair Value
Available for sale
One year or less	$	289,086	$	288,571
Over one year through five years		20,103		19,894
Over five years through ten years		410		406
Over ten years		112,885		109,410
Mortgage-backed securities: residential		782,579		763,128
Mortgage-backed securities: commercial		5,123		5,011
Total	$	1,210,186	$	1,186,420
Held to maturity
One year or less	$	501	$	511
Over one year through five years		1,106		1,121
Over five years through ten years		11,875		11,907
Over ten years		107,747		108,581
Mortgage-backed securities: residential		92,152		88,768
Total	$	213,381	$	210,888

Securities pledged at March 31, 2018 and December 31, 2017 had a carrying amount of $1,168,275 and $975,518, respectively, and were pledged to secure public deposits and repurchase agreements.

At March 31, 2018 and December 31, 2017, there were no holdings of securities of any one issuer, other than the U.S. government-sponsored entities and agencies, in an amount greater than 10% of shareholders’ equity.

10

The following table summarizes the securities with unrealized and unrecognized losses at March 31, 2018 and December 31, 2017, aggregated by major security type and length of time in a continuous unrealized loss position:

	Less Than 12 Months					12 Months or Longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
March 31, 2018
Available for sale
U.S. Treasury securities	$	288,571	$	(515	)	$	—	$	—		$	288,571	$	(515	)
U.S. government sponsored entities and agencies		—		—			19,894		(209	)		19,894		(209	)
Mortgage-backed securities: residential		436,263		(7,882	)		295,862		(11,614	)		732,125		(19,496	)
Mortgage-backed securities: commercial		5,011		(112	)		—		—			5,011		(112	)
State and political subdivisions		11,409		(164	)		60,804		(3,719	)		72,213		(3,883	)
Total available for sale	$	741,254	$	(8,673	)	$	376,560	$	(15,542	)	$	1,117,814	$	(24,215	)
	Less Than 12 Months					12 Months or Longer					Total
	Fair Value		Unrecognized Losses			Fair Value		Unrecognized Losses			Fair Value		Unrecognized Losses
Held to maturity
Mortgage-backed securities: residential	$	13,636	$	(306	)	$	68,768	$	(3,189	)	$	82,404	$	(3,495	)
State and political subdivisions		22,825		(127	)		1,137		(46	)		23,962		(173	)
Total held to maturity	$	36,461	$	(433	)	$	69,905	$	(3,235	)	$	106,366	$	(3,668	)
	Less Than 12 Months					12 Months or Longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
December 31, 2017
Available for sale
U.S. Treasury securities	$	228,909	$	(210	)	$	—	$	—		$	228,909	$	(210	)
U.S. government sponsored entities and agencies		19,961		(164	)		—		—			19,961		(164	)
Mortgage-backed securities: residential		301,158		(2,447	)		311,366		(6,314	)		612,524		(8,761	)
Mortgage-backed securities: commercial		5,074		(59	)		—		—			5,074		(59	)
State and political subdivisions		1,298		(2	)		62,725		(1,882	)		64,023		(1,884	)
Total available for sale	$	556,400	$	(2,882	)	$	374,091	$	(8,196	)	$	930,491	$	(11,078	)
	Less Than 12 Months					12 Months or Longer					Total
	Fair Value		Unrecognized Losses			Fair Value		Unrecognized Losses			Fair Value		Unrecognized Losses
Held to maturity
Mortgage-backed securities: residential	$	11,191	$	(69	)	$	72,582	$	(1,727	)	$	83,773	$	(1,796	)
State and political subdivisions		262		(2	)		1,148		(36	)		1,410		(38	)
Total held to maturity	$	11,453	$	(71	)	$	73,730	$	(1,763	)	$	85,183	$	(1,834	)

Unrealized losses on debt securities have not been recognized into income because the issuers’ bonds are of high credit quality (rated AA or higher), management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions. The fair value is expected to recover as the bonds approach maturity.

11

NOTE 3—LOANS

Loans at March 31, 2018 and December 31, 2017 were as follows:

	March 31, 2018			December 31, 2017
Loans that are not PCI loans
Construction and land development	$	523,660		$	494,818
Commercial real estate:
Nonfarm, nonresidential		673,497			628,554
Other		43,110			49,684
Residential real estate:
Closed-end 1-4 family		430,467			407,695
Other		172,216			169,640
Commercial and industrial		462,954			502,006
Consumer and other		3,899			3,781
Loans before net deferred loan fees		2,309,803			2,256,178
Deferred loan fees, net		(2,225	)		(1,963	)
Total loans that are not PCI loans		2,307,578			2,254,215
Total PCI loans		2,440			2,393
Allowance for loan losses		(21,738	)		(21,247	)
Total loans, net of allowance for loan losses	$	2,288,280		$	2,235,361

The following table presents the activity in the allowance for loan losses by portfolio segment for the three month periods ended March 31, 2018 and 2017:

	Construction and Land Development			Commercial Real Estate			Residential Real Estate			Commercial and Industrial			Consumer and Other			Total
Three Months Ended March 31, 2018
Allowance for loan losses:
Beginning balance	$	3,802		$	5,981		$	3,834		$	7,587		$	43		$	21,247
Provision for loan losses		582			(106	)		(241	)		328			10			573
Loans charged-off		(39	)		—			(7	)		(49	)		(11	)		(106	)
Recoveries		—			—			19			—			5			24
Total ending allowance balance	$	4,345		$	5,875		$	3,605		$	7,866		$	47		$	21,738
Three Months Ended March 31, 2017
Allowance for loan losses:
Beginning balance	$	3,776		$	4,266		$	2,398		$	6,068		$	45		$	16,553
Provision for loan losses		61			393			262			1,117			22			1,855
Loans charged-off		—			—			—			(300	)		(23	)		(323	)
Recoveries		—			—			12			—			8			20
Total ending allowance balance	$	3,837		$	4,659		$	2,672		$	6,885		$	52		$	18,105

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of March 31, 2018 and December 31, 2017. For purposes of this disclosure, recorded investment in loans excludes accrued interest receivable and deferred loan fees, net due to immateriality.

	Construction and Land Development		Commercial Real Estate		Residential Real Estate		Commercial and Industrial		Consumer and Other		Total
March 31, 2018
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	—	$	—	$	—	$	543	$	—	$	543
Collectively evaluated for impairment		4,345		5,875		3,605		7,317		47		21,189

12

	Construction and Land Development		Commercial Real Estate		Residential Real Estate		Commercial and Industrial		Consumer and Other		Total
Purchased credit-impaired loans		—		—		—		6		—		6
Total ending allowance balance	$	4,345	$	5,875	$	3,605	$	7,866	$	47	$	21,738
Loans:
Individually evaluated for impairment	$	165	$	—	$	694	$	2,466	$	—	$	3,325
Collectively evaluated for impairment		523,495		716,607		601,989		460,488		3,899		2,306,478
Purchased credit-impaired loans		—		371		96		1,973		—		2,440
Total ending loans balance	$	523,660	$	716,978	$	602,779	$	464,927	$	3,899	$	2,312,243
December 31, 2017
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	—	$	—	$	—	$	879	$	—	$	879
Collectively evaluated for impairment		3,802		5,981		3,834		6,708		43		20,368
Purchased credit-impaired loans		—		—		—		—		—		—
Total ending allowance balance	$	3,802	$	5,981	$	3,834	$	7,587	$	43	$	21,247
Loans:
Individually evaluated for impairment	$	217	$	—	$	834	$	3,090	$	—	$	4,141
Collectively evaluated for impairment		494,601		678,238		576,501		498,916		3,781		2,252,037
Purchased credit-impaired loans		—		380		105		1,908		—		2,393
Total ending loans balance	$	494,818	$	678,618	$	577,440	$	503,914	$	3,781	$	2,258,571

Loans collectively evaluated for impairment reported at March 31, 2018 include certain acquired loans. At March 31, 2018, these non-PCI loans had a carrying value of $50,759, comprised of contractually unpaid principal totaling $52,121 and discounts totaling $1,362. Management evaluated these loans for credit deterioration since acquisition and determined that $10 in allowance for loan losses was necessary at March 31, 2018. As of December 31, 2017, these non-PCI loans had a carrying value of $50,341, comprised of contractually unpaid principal totaling $51,767 and discounts totaling $1,426. Management evaluated these loans for credit deterioration since acquisition and determined that a $10 allowance for loan losses was necessary at December 31, 2017.

The following table presents information related to impaired loans by class of loans as of March 31, 2018 and December 31, 2017:

	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
March 31, 2018
With no allowance recorded:
Construction and land development	$	203	$	165	$	—
Commercial real estate:
Nonfarm, nonresidential		—		—		—
Residential real estate:
Closed-end 1-4 family		581		581		—
Other		113		113		—
Commercial and industrial		92		92		—
Consumer and other		—		—		—
Subtotal		989		951		—
With an allowance recorded:
Commercial and industrial		2,374		2,374		543
Subtotal		2,374		2,374		543
Total	$	3,363	$	3,325	$	543
December 31, 2017
With no allowance recorded:
Construction and land development	$	217	$	217	$	—

13

	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
Residential real estate:
Closed-end 1-4 family		14		14		—
Other		820		820		—
Commercial and industrial		108		108		—
Subtotal		1,159		1,159		—
With an allowance recorded:
Commercial and industrial		2,982		2,982		879
Subtotal		2,982		2,982		879
Total	$	4,141	$	4,141	$	879

The following table presents the average recorded investment of impaired loans by class of loans for the three months ended March 31, 2018 and 2017:

	Three Months Ended March 31,
Average Recorded Investment	2018		2017
With no allowance recorded:
Construction and land development	$	367	$	—
Commercial real estate:
Nonfarm, nonresidential		—		4,128
Residential real estate:
Closed-end 1-4 family		420		1,799
Other		372		120
Commercial and industrial		626		—
Subtotal		1,785		6,047
With an allowance recorded:
Commercial and industrial	$	1,785	$	2,585
Subtotal		1,785		2,585
Total	$	3,570	$	8,632

The impact on net interest income for these loans was not material to the Company’s results of operations for the three months ended March 31, 2018 and 2017.

The following table presents the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of March 31, 2018 and December 31, 2017:

	Nonaccrual		Loans Past Due Over 90 Days
March 31, 2018
Construction and land development	$	165	$	—
Residential real estate:
Closed-end 1-4 family		581		—
Other		113		12
Commercial and industrial		2,466		166
Total	$	3,325	$	178
December 31, 2017
Residential real estate:
Closed-end 1-4 family	$	257	$	14
Other		114		—
Commercial and industrial		2,466		191
Total	$	2,837	$	205

14

Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

The following table presents the aging of the recorded investment in past due loans as of March 31, 2018 and December 31, 2017 by class of loans:

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 89 Days Past Due		Nonaccrual		Total Past Due and Nonaccrual		Loans Not Past Due		PCI Loans		Total
March 31, 2018
Construction and land development	$	473	$	—	$	—	$	165	$	638	$	523,022	$	—	$	523,660
Commercial real estate:
Nonfarm, nonresidential		—		—		—		—		—		673,497		371		673,868
Other		5		—		—		—		5		43,105		—		43,110
Residential real estate:
Closed-end 1-4 family		610		1,060		—		581		2,251		428,216		96		430,563
Other		116		—		12		113		241		171,975		—		172,216
Commercial and industrial		440		195		166		2,466		3,267		459,687		1,973		464,927
Consumer and other		—		200		—		—		200		3,699		—		3,899
	$	1,644	$	1,455	$	178	$	3,325	$	6,602	$	2,303,201	$	2,440	$	2,312,243
December 31, 2017
Construction and land development	$	1,918	$	136	$	—	$	—	$	2,054	$	492,764	$	—	$	494,818
Commercial real estate:
Nonfarm, nonresidential		—		—		—		—		—		628,554		380		628,934
Other		—		—		—		—		—		49,681		—		49,684
Residential real estate:
Closed-end 1-4 family		—		—		14		257		271		407,424		105		407,800
Other		146		719		—		114		979		168,661		—		169,640
Commercial and industrial		532		27		191		2,466		3,216		498,790		1,908		503,914
Consumer and other		—		—		—		—		—		3,781		—		3,781
	$	2,596	$	882	$	205	$	2,837	$	6,520	$	2,249,658	$	2,393	$	2,258,571

Credit Quality Indicators: The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes non-homogeneous loans, such as commercial and commercial real estate loans as well as non-homogeneous residential real estate loans. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk ratings:

Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

15

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass-rated loans. The following table includes PCI loans, which are included in the “Substandard” column. Based on the most recent analysis performed, the risk category of loans by class of loans is as follows as of March 31, 2018 and December 31, 2017:

	Pass		Special Mention		Substandard		Total
March 31, 2018
Construction and land development	$	519,831	$	3,664	$	165	$	523,660
Commercial real estate:
Nonfarm, nonresidential		658,683		11,098		4,087		673,868
Other		42,730		—		380		43,110
Residential real estate:
Closed-end 1-4 family		426,856		—		3,707		430,563
Other		170,467		—		1,749		172,216
Commercial and industrial		448,395		9,003		7,529		464,927
Consumer and other		3,896		3		—		3,899
	$	2,270,858	$	23,768	$	17,617	$	2,312,243
	Pass		Special Mention		Substandard		Total
December 31, 2017
Construction and land development	$	494,601	$	—	$	217	$	494,818
Commercial real estate:
Nonfarm, nonresidential		609,458		12,602		6,874		628,934
Other		49,303		—		381		49,684
Residential real estate:
1-4 family		404,832		615		2,353		407,800
Other		167,886		—		1,754		169,640
Commercial and industrial		485,363		10,350		8,201		503,914
Consumer and other		3,777		4		—		3,781
	$	2,215,220	$	23,571	$	19,780	$	2,258,571

Troubled Debt Restructurings

As of March 31, 2018 and December 31, 2017, the Company’s loan portfolio contains one loan that has been modified in a troubled debt restructuring with a balance of $165 and $608, respectively. During the first quarter of 2018 one loan was added as a troubled debt restructuring with a balance of $165, and the loan that was previously reported as a troubled debt restructuring at December 31, 2017 was paid down by $575 by the borrower, and the remaining $33 was charged off.

NOTE 4—LOAN SERVICING

Loans serviced for others are not reported as assets. The principal balances of these loans at March 31, 2018 and December 31, 2017 are as follows:

	March 31, 2018		December 31, 2017
Loan portfolios serviced for:
Federal Home Loan Mortgage Corporation	$	507,375	$	507,233
Other		4,589		4,626

16

The components of net loan servicing fees for the three months ended March 31, 2018 and 2017 were as follows:

	Three Months Ended March 31,
	2018			2017
Loan servicing fees, net:
Loan servicing fees	$	333		$	320
Amortization of loan servicing fees		(214	)		(213	)
Change in impairment		—			—
Total	$	119		$	107

The fair value of servicing rights was estimated by management to be approximately $5,305 at March 31, 2018. Fair value for March 31, 2018 was determined using a weighted average discount rate of 10.5% and a weighted average prepayment speed of 9.4%. At December 31, 2017, the fair value of servicing rights was estimated by management to be approximately $5,089. Fair value for December 31, 2017 was determined using a weighted average discount rate of 10.5% and a weighted average prepayment speed of 9.9%.

NOTE 5—SECURITIES SOLD UNDER AGREEMENT TO REPURCHASE

Our subsidiary bank enters into borrowing arrangements with our retail business customers and correspondent banks through agreements to repurchase (“securities sold under agreements to repurchase”) under which the bank pledges investment securities owned and under its control as collateral against these short-term borrowing arrangements. At maturity the securities underlying the agreements are returned to the Company. At March 31, 2018 and December 31, 2017, these short-term borrowings totaled $36,071 and $31,004, respectively, and were secured by securities with carrying amounts of $41,377 and $41,618, respectively. At March 31, 2018, all of the Company’s repurchase agreements had one-day maturities.

The following table provides additional details as of March 31, 2018:

As of March 31, 2018	Mortgage- Backed Securities: Residential			State and Political Subdivisions			Total
Market value of securities pledged	$	919		$	40,845		$	41,764
Borrowings related to pledged amounts	$	—		$	36,071		$	36,071
Market value pledged as a % of borrowings		—	%		113	%		116	%

The following table provides additional details as of December 31, 2017:

As of December 31, 2017	Mortgage- Backed Securities: Residential			State and Political Subdivisions			Total
Market value of securities pledged	$	1,004		$	42,109		$	43,113
Borrowings related to pledged amounts	$	—		$	31,004		$	31,004
Market value pledged as a % of borrowings		—	%		136	%		139	%

NOTE 6—SHARE-BASED PAYMENTS

In connection with the Company’s 2010 private offering, 32,425 warrants were issued to shareholders, one warrant for every twenty shares of common stock purchased. Each warrant allowed the shareholders to purchase an additional share of common stock at $12.00 per share. The warrants were issued with an effective date of March 30, 2010 and were exercisable in whole or in part up to seven years following the date of issuance. The warrants were detachable from the common stock. There were 11,011 warrants exercised during the three months ended March 31, 2017. The warrants expired on March 30, 2017; therefore at March 31, 2018, there were no outstanding warrants associated with the 2010 offering. A summary of the stock warrant activity for the three months ended March 31, 2018 and 2017 follows:

	March 31, 2018		March 31, 2017
Stock warrants exercised:
Intrinsic value of warrants exercised	$	—	$	291
Cash received from warrants exercised		—		132

17

The Company has two share based compensation plans as described below. Total compensation cost that has been charged against income for those plans was $759 and $447 for the three months ended March 31, 2018 and 2017, respectively. The total income tax benefit, which is shown on the Consolidated Statements of Income as a reduction of income tax expense, was $63 and $93 for the three months ended March 31, 2018 and 2017, respectively.

Stock Options: The Company’s 2007 Omnibus Equity Incentive Plan (the “2007 Plan”), as amended and shareholder-approved, provided for authorized shares up to 4,000,000. The 2007 Plan provided that no options intended to be ISOs may be granted after April 9, 2017. As a result, the Company’s board of directors approved, and recommended to its shareholders for approval, an equity incentive plan, the 2017 Omnibus Equity Incentive Plan (the “2017 Plan”). The Company’s shareholders approved the 2017 Plan at the 2017 annual meeting of shareholders. The terms of the 2017 Plan are substantially similar to the terms of the 2007 Plan it was intended to replace. The 2017 Plan provides for authorized shares up to 5,000,000. At March 31, 2018, there were 4,709,454 authorized shares available for issuance under the 2017 Plan.

On April 12, 2018, the Compensation Committee of the Company’s Board of Directors (the “Committee”) approved the Amended and Restated 2017 Omnibus Equity Incentive Plan (the “Amended and Restated 2017 Plan”) in order to make the following amendments to the 2017 Plan in response to feedback the Company received from its shareholders:

• reduce the number of shares of common stock available for issuance from 5,000,000 shares under the 2017 Plan to 3,500,000 shares under the Amended and Restated 2017 Plan;

• revise the definition of Change in Control to include only actual changes in control (and removed triggering events that represented a potential change in control);

• remove the Committee’s authority to accelerate vesting (other than in cases of termination of the participant’s employment);

• remove certain provisions allowing recycling of shares and to clarify that (1) shares tendered in payment of an option, (2) shares delivered or withheld to satisfy tax withholding obligations and (3) shares covered by a stock-settled SAR or other awards that were not issued upon settlement of the award will not be available for issuance under the Amended and Restated 2017 Plan; and

• remove the ability to grant reload options (automatic granting of new options at the time of exercise).

Employee, organizer and director awards are generally granted with an exercise price equal to the market price of the Company’s common stock at the date of grant; those option awards have a vesting period of three to five years and have a ten-year contractual term. The Company assigns discretion to its Board of Directors to make grants either as qualified incentive stock options or as non-qualified stock options. All employee grants are intended to be treated as qualified incentive stock options, if allowable. All other grants are expected to be treated as non-qualified.

The fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model that uses the assumptions noted in the table below. Expected stock price volatility is based on historical volatilities of a peer group. The Company uses historical data to estimate option exercise and post-vesting termination behavior.

The expected term of options granted represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

The fair value of options granted was determined using the following weighted-average assumptions as of grant date.

	March 31, 2018			March 31, 2017
Risk-free interest rate		2.49	%		2.28	%
Expected term		7.5 years			7.4 years
Expected stock price volatility		32.48	%		34.20	%
Dividend yield		0.00	%		0.04	%

The weighted average fair value of options granted for the three months ended March 31, 2018 and 2017 were $14.77 and $17.25, respectively.

18

A summary of the activity in the plans for the three months ended March 31, 2018 follows:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at beginning of year		1,507,168		$	21.37		6.55	$	19,180
Granted		28,125			36.40
Exercised		(21,348	)		10.32
Forfeited, expired, or cancelled		(11,754	)		29.37
Outstanding at period end		1,502,191		$	21.75		6.41	$	16,299
Vested or expected to vest		1,427,082		$	21.75		6.41	$	15,484
Exercisable at period end		760,955		$	14.17		4.75	$	14,022

	For the three months ended March 31,
	2018		2017
Stock options exercised:
Intrinsic value of options exercised	$	511	$	610
Cash received from options exercised		220		177
Tax benefit realized from option exercises		63		93

As of March 31, 2018, there was $5,708 of total unrecognized compensation cost related to non-vested stock options granted under the plans. The cost is expected to be recognized over a weighted-average period of 1.6 years.

Restricted Stock: Additionally, the 2007 Omnibus Equity Incentive Plan and the 2017 Omnibus Equity Incentive Plan each provides for the granting of restricted share awards and other performance related incentives. When the restricted shares are awarded, a participant receives voting and dividend rights with respect to the shares, but is not able to transfer the shares until the restrictions have lapsed. These awards have a vesting period of three to five years and vest in equal annual installments on the anniversary date of the grant.

A summary of activity for non-vested restricted share awards for the three months ended March 31, 2018 is as follows:

Non-vested Shares	Shares			Weighted- Average Grant- Date Fair Value
Non-vested at December 31, 2017		94,181		$	25.42
Granted		—			—
Vested		—			—
Forfeited		(334	)		37.35
Non-vested at March 31, 2018		96,409		$	25.38

Compensation expense associated with the restricted share awards is recognized on a straight-line basis over the time period that the restrictions associated with the awards lapse based on the total cost of the award at the grant date. As of March 31, 2018, there was $1,580 of total unrecognized compensation cost related to non-vested shares granted under the Plan. The cost is expected to be recognized over a weighted-average period of 3.1 years. There were no shares that vested during the three months ended March 31, 2018 or 2017, respectively.

NOTE 7—REGULATORY CAPITAL MATTERS

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. Banks (Basel III rules) became effective for the Company on January 1, 2016 with full compliance with all of the requirements being phased in over a multi-year schedule, and fully phased in by January 1, 2019.

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The Basel III rules additionally provide for countercyclical capital requirements so that the required amount of capital increases in times of economic expansion and decreases in times of economic contraction, consistent with safety and soundness. Under the Basel III rules, banks must maintain a capital conservation buffer consisting of additional Common Equity Tier 1 Capital equal to 2.5% of risk-weighted assets above each of the required minimum capital levels in order to avoid limitations on paying dividends, engaging in share repurchases, and paying certain discretionary bonuses. This new capital conservation buffer requirement was phased in beginning January 2016 at 0.625% of risk-weighted assets and will increase each year until fully implemented at 2.5% in January 2019. The capital conservation buffer in effect for 2018 is 1.875%.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At March 31, 2018, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. Management believes that, as of March 31, 2018, the Company and Bank met all capital adequacy requirements to which they are subject. There are no conditions or events since that notification that management believes have changed the institution’s category.

Actual and required capital amounts and ratios are presented below as of March 31, 2018 and December 31, 2017 for the Company and Bank:

	Actual					Required For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Regulations
	Amount		Ratio			Amount		Ratio			Amount		Ratio
March 31, 2018
Company common equity Tier 1 capital to risk-weighted assets	$	310,218		11.45	%	$	121,874		4.50	%		N/A		N/A
Company Total Capital to risk weighted assets	$	390,600		14.42	%	$	216,665		8.00	%		N/A		N/A
Company Tier 1 (Core) Capital to risk weighted assets	$	310,218		11.45	%	$	162,499		6.00	%		N/A		N/A
Company Tier 1 (Core) Capital to average assets	$	310,218		7.80	%	$	158,986		4.00	%		N/A		N/A
Bank common equity Tier 1 capital to risk-weighted assets	$	365,295		13.49	%	$	121,874		4.50	%	$	176,040		6.50	%
Bank Total Capital to risk weighted assets	$	387,126		14.29	%	$	216,665		8.00	%	$	270,831		10.00	%
Bank Tier 1 (Core) Capital to risk weighted assets	$	365,295		13.49	%	$	162,499		6.00	%	$	216,665		8.00	%
Bank Tier 1 (Core) Capital to average assets	$	365,295		9.19	%	$	158,857		4.00	%	$	198,572		5.00	%
December 31, 2017
Company common equity Tier 1 capital to risk-weighted assets	$	299,229		11.37	%	$	118,479		4.50	%		N/A		N/A
Company Total Capital to risk weighted assets	$	379,083		14.40	%	$	210,629		8.00	%		N/A		N/A
Company Tier 1 (Core) Capital to risk weighted assets	$	299,229		11.37	%	$	157,972		6.00	%		N/A		N/A
Company Tier 1 (Core) Capital to average assets	$	299,229		8.25	%	$	145,100		4.00	%		N/A		N/A
Bank common equity Tier 1 capital to risk-weighted assets	$	353,512		13.43	%	$	118,489		4.50	%	$	171,151		6.50	%
Bank Total Capital to risk weighted assets	$	374,851		14.24	%	$	210,647		8.00	%	$	263,309		10.00	%
Bank Tier 1 (Core) Capital to risk weighted assets	$	353,512		13.43	%	$	157,985		6.00	%	$	210,647		8.00	%
Bank Tier 1 (Core) Capital to average assets	$	353,512		9.75	%	$	145,003		4.00	%	$	181,253		5.00	%

Note: Minimum ratios presented exclude the capital conservation buffer

Dividend Restrictions: The Company’s principal source of funds for dividend payments is dividends received from the Bank. Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year’s net profits, combined with the retained net profits of the preceding two years, subject to the capital requirements described above. The Bank may not currently pay dividends without prior written approval from its primary regulatory agencies.

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NOTE 8—FAIR VALUE

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as 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.

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Securities: The fair values for investment securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2), using matrix pricing. Matrix pricing is a mathematical technique commonly used to price debt securities that are not actively traded, values debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3).

Derivatives: The fair values of derivatives are based on valuation models using observable market data as of the measurement date (Level 2).

Impaired Loans: The fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly. Appraisals for impaired loans are generally obtained annually but may be obtained more frequently based on changing circumstances as part of the aforementioned quarterly evaluation.

Foreclosed Assets: Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals which are updated no less frequently than annually. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Foreclosed assets are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Appraisals for both collateral-dependent impaired loans and real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, a member of the credit administration department reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. On an annual basis, the Company compares the actual selling price of collateral that has been sold to the most recent appraised value to determine what additional adjustment should be made to the appraisal value to arrive at fair value.

Loans Held For Sale: The Company has elected the fair value option for loans held for sale to align with other accounting policies related to mortgage banking, such as mortgage banking derivatives. These loans are typically sold to an investor following loan origination and the fair value of such accounts are readily available based on direct quotes from investors or similar transactions experienced in the secondary loan market. Fair value adjustments, as well as realized gains and losses are recorded in current earnings. Fair value is determined by market prices for similar transactions adjusted for specific attributes of that loan (Level 2).

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Assets and liabilities measured at fair value on a recurring basis, including financial assets and liabilities for which the Company has elected the fair value option, are summarized below:

	Fair Value Measurements at March 31, 2018 Using:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets
Securities available for sale
U.S. Treasury securities	$	—	$	288,571	$	—
U.S. government sponsored entities and agencies		—		19,894		—
Mortgage-backed securities-residential		—		763,128		—
Mortgage-backed securities-commercial		—		5,011		—
State and political subdivisions		—		109,816		—
Total securities available for sale	$	—	$	1,186,420	$	—
Loans held for sale	$	—	$	12,871	$	—
Mortgage banking derivatives	$	—	$	382	$	—
Financial Liabilities
Mortgage banking derivatives	$	—	$	45	$	—
	Fair Value Measurements at December 31, 2017 Using:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets
Securities available for sale
U.S. Treasury securities	$	—	$	228,909	$	—
U.S. government sponsored entities and agencies		—		19,961		—
Mortgage-backed securities-residential		—		632,566		—
Mortgage-backed securities-commercial		—		5,074		—
State and political subdivisions		—		113,371		—
Total securities available for sale	$	—	$	999,881	$	—
Loans held for sale	$	—	$	12,024	$	—
Mortgage banking derivatives	$	—	$	175	$	—
Financial Liabilities
Mortgage banking derivatives	$	—	$	35	$	—

As of March 31, 2018, the unpaid principal balance of loans held for sale was $12,554 resulting in an unrealized gain of $317 included in gains on sale of loans. As of December 31, 2017, the unpaid principal balance of loans held for sale was $11,681, resulting in an unrealized gain of $343 included in gains on sale of loans. For the three months ended March 31, 2018 and 2017, the change in fair value related to loans held for sale, which is included in gain on sale of loans, was $(26) and $113, respectively. None of these loans were 90 days or more past due or on nonaccrual as of March 31, 2018 and December 31, 2017.

There were no transfers between level 1 and 2 during 2018 or 2017.

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Assets measured at fair value on a non-recurring basis are summarized below:

There was one collateral-dependent commercial and industrial impaired loans carried at fair value of $1,831 as of March 31, 2018 and December 31, 2017. For the three months ended March 31, 2018 and 2017, there was no additional provision for loan losses recorded related to impaired loans recorded at fair value of collateral.

Foreclosed assets measured at fair value less costs to sell, had a net carrying amount of $1,503 as of March 31, 2018 and December 31, 2017. The foreclosed property was previously collateral for a commercial real estate loan. There were no properties at March 31, 2018 or 2017 that had required write-downs to fair value resulting in no write downs for the three months ended March 31, 2018 and 2017, respectively.

The carrying amounts and estimated fair values of financial instruments at March 31, 2018 and December 31, 2017 are as follows:

	Carrying Amount		Fair Value Measurements at March 31, 2018 Using:
			Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	246,164	$	246,164	$	—	$	—	$	246,164
Certificates of deposit held at other financial institutions		2,855		—		2,855		—		2,855
Securities available for sale		1,186,420		—		1,186,420		—		1,186,420
Securities held to maturity		213,381		—		210,888		—		210,888
Loans held for sale		12,871		—		12,871		—		12,871
Net loans		2,288,280		—		—		2,295,275		2,295,275
Restricted equity securities		19,606		n/a		n/a		n/a		n/a
Servicing rights, net		3,602		—		—		5,305		5,305
Mortgage banking derivative assets		382		—		382		—		382
Accrued interest receivable		12,937		182		6,400		6,355		12,937
Financial liabilities
Deposits	$	3,355,153	$	2,026,994	$	1,284,426	$	—	$	3,311,420
Repurchase agreements		36,071		—		36,071		—		36,071
Federal Home Loan Bank advances		317,000		—		314,341		—		314,341
Subordinated notes, net		58,559		—		—		62,259		62,259
Mortgage banking derivative liabilities		45		—		45		—		45
Accrued interest payable		2,775		93		2,332		350		2,775
	Carrying Amount		Fair Value Measurements at December 31, 2017 Using:
			Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	251,543	$	251,543	$	—	$	—	$	251,543
Certificates of deposit held at other financial institutions		2,855		—		2,855		—		2,855
Securities available for sale		999,881		—		999,881		—		999,881
Securities held to maturity		214,856		—		217,608		—		217,608
Loans held for sale		12,024		—		12,024		—		12,024
Net loans		2,235,361		—		—		2,230,607		2,230,607
Restricted equity securities		18,492		n/a		n/a		n/a		n/a
Servicing rights, net		3,620		—		—		5,089		5,089
Mortgage banking derivative assets		175		—		175		—		175
Accrued interest receivable		11,947		73		5,724		6,150		11,947
Financial liabilities
Deposits	$	3,167,228	$	1,911,928	$	1,224,041	$	—	$	3,135,969
Federal funds purchased and repurchase agreements		31,004		—		31,004		—		31,004
Federal Home Loan Bank advances		272,000		—		270,311		—		270,311
Subordinated notes, net		58,515		—		—		59,951		59,951
Mortgage banking derivative liabilities		35		—		35		—		35
Accrued interest payable		2,769		51		2,030		688		2,769

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The methods and assumptions not previously described used to estimate fair values are described as follows:

(a) Cash and Cash Equivalents: The carrying amounts of cash and short-term instruments approximate fair values and are classified as Level 1.

(b) Loans: Fair values of loans, excluding loans held for sale, are estimated as follows: In accordance with ASU 2016-01, the fair value of loans held for investment, excluding previously presented impaired loans measured at fair value on a non-recurring basis, is estimated using a cash flow projection methodology that relies on three primary assumptions: (1) the expected prepayment rate of loans; (2) the magnitude of future net losses based on expected default rate and severity of loss; and (3) the discount rate applicable to the expected cash flows of the loan portfolio. Loans are considered a Level 3 classification.

(c) Restricted Equity Securities: It is not practical to determine the fair value of Federal Home Loan Bank or Federal Reserve Bank stock due to restrictions placed on its transferability.

(d) Mortgage Servicing Rights: Fair value of mortgage servicing rights is based on valuation models that calculate the present value of estimated net cash flows based on industry market data. The valuation model incorporates assumptions that market participants would use in estimating future net cash flows resulting in a Level 3 classification.

(e) Deposits: The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in a Level 1 classification. The carrying amounts of fixed-term money market accounts approximate their fair values at the reporting date resulting in a Level 1 classification. Fair values for certificates of deposit are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.

(f) Federal Funds Purchased and Repurchase Agreements: The carrying amounts of federal funds purchased, borrowings under repurchase agreements, and other short-term borrowings, generally maturing within ninety days, approximate their fair values resulting in a Level 2 classification.

(g) Federal Home Loan Bank Advances: The fair values of the Company’s long-term borrowings are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification.

(h) Subordinated Notes: The fair values of the Company’s subordinated notes are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 3 classification.

(i) Accrued Interest Receivable/Payable: The carrying amounts of accrued interest approximate fair value resulting in a Level 1, Level 2 or Level 3 classification based on the asset/liability with which they are associated.

(j) Off-balance Sheet Instruments: Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair value of commitments is not material.

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NOTE 9—EARNINGS PER SHARE

The two-class method is used in the calculation of basic and diluted earnings per share. Under the two-class method, earnings available to common shareholders for the period are allocated between common shareholders and participating securities according to dividends declared (or accumulated) and participation rights in undistributed earnings. The factors used in the earnings per share computation follow:

	Three Months Ended March 31,
	2018			2017
Basic
Net income available to common shareholders	$	10,052		$	7,934
Less: earnings allocated to participating securities		(71	)		(65	)
Net income allocated to common shareholders	$	9,981		$	7,869
Weighted average common shares outstanding including participating securities		13,249,728			13,049,012
Less: Participating securities		(94,010	)		(106,323	)
Average shares		13,155,718			12,942,689
Basic earnings per common share	$	0.76		$	0.61
Diluted
Net income allocated to common shareholders	$	9,981		$	7,869
Weighted average common shares outstanding for basic earnings per common share		13,155,718			12,942,689
Add: Dilutive effects of assumed exercises of stock options		516,666			708,694
Add: Dilutive effects of assumed exercises of stock warrants		—			5,974
Average shares and dilutive potential common shares		13,672,384			13,657,357
Diluted earnings per common share	$	0.73		$	0.58

For the three months ended March 31, 2018 and 2017, stock options for 411,279 and 108,000 shares of common stock were not considered in computing diluted earnings per common share because they were antidilutive.

NOTE 10—SUBORDINATED DEBT ISSUANCE

The Company’s subordinated notes, net of issuance costs, totaled $58,559 and $58,515 at March 31, 2018 and at December 31, 2017, respectively. For regulatory capital purposes, the subordinated notes are treated as Tier 2 capital, subject to certain limitations, and are included in total regulatory capital when calculating the Company’s total capital to risk weighted assets ratio as indicated in Note 7 of these consolidated financial statements.

The Company completed the issuance of $60,000 in principal amount of subordinated notes in two separate offerings. In March 2016, $40,000 of 6.875% fixed-to-floating rate subordinated notes (the “March 2016 Subordinated Notes”) were issued in a public offering to accredited institutional investors, and in June 2016, $20,000 of 7.00% fixed-to-floating rate subordinated notes (the “June 2016 Subordinated Notes”) were issued to certain accredited institutional investors in a private offering. The subordinated notes are unsecured and will rank at least equally with all of the Company’s other unsecured subordinated indebtedness and will be effectively subordinated to all of our secured debt to the extent of the value of the collateral securing such debt. The subordinated notes will be subordinated in right of payment to all of our existing and future senior indebtedness, and will rank structurally junior to all existing and future liabilities of our subsidiaries including, in the case of the Company’s bank subsidiary, its depositors, and any preferred equity holders of our subsidiaries. The holders of the subordinated notes may be fully subordinated to interests held by the U.S. government in the event that we enter into a receivership, insolvency, liquidation, or similar proceeding.

25

The issuance costs related to the March 2016 Subordinated Notes amounted to $1,382 and are being amortized as interest expense over the ten-year term of the March 2016 Subordinated Notes. The issuance costs related to the June 2016 Subordinated Notes were $404 and are being amortized as interest expense over the ten-year term of the June 2016 Subordinated Notes. For the three months ended March 31, 2018 and 2017, amortization of issuance costs has amounted to $45 for both periods.

The following table summarizes the terms of each subordinated note offering:

	March 2016 Subordinated Notes	June 2016 Subordinated Notes
Principal amount issued	$40,000	$20,000
Maturity date	March 30, 2026	July 1, 2026
Initial fixed interest rate	6.875%	7.00%
Initial interest rate period	5 years	5 years
First interest rate change date	March 30, 2021	July 1, 2021
Interest payment frequency through year five*	Semiannually	Semiannually
Interest payment frequency after five years*	Quarterly	Quarterly
Interest repricing index and margin	3-month LIBOR plus 5.636%	3-month LIBOR plus 6.04%
Repricing frequency after five years	Quarterly	Quarterly

* Through March 31, 2018 all interest payments have been made in accordance with the terms of the agreements.

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

The following discussion is intended to assist in the understanding and assessment of significant changes and trends related to the Company’s results of operations and financial condition. This discussion and analysis should be read in conjunction with the accompanying unaudited financial statements, the audited financial statements and accompanying notes included in the Company’s Form 10-K filed with the SEC on March 16, 2018, which includes additional information about critical accounting policies and practices and risk factors. Historical results and trends that might appear in the consolidated financial statements should not be interpreted as being indicative of future operations. All amounts are in thousands, except per share data or unless otherwise indicated.

Company Overview

We are a financial holding company headquartered in Franklin, Tennessee. Through our wholly-owned bank subsidiary, Franklin Synergy Bank, a Tennessee-chartered commercial bank and a member of the Federal Reserve System, we provide a full range of banking and related financial services with a focus on service to small businesses, corporate entities, local governments and individuals. We operate through 14 branches and one loan production office in the demographically attractive and growing Williamson, Rutherford and Davidson Counties within the Nashville metropolitan area. As used in this report, unless the context otherwise indicates, any reference to “Franklin Financial,” “our Company,” “the Company,” “us,” “we” and “our” refers to Franklin Financial Network, Inc. together with its consolidated subsidiaries (including Franklin Synergy), any reference to “FFN” refers to Franklin Financial Network, Inc. only and any reference to “Franklin Synergy” or the “Bank” refers to our banking subsidiary, Franklin Synergy Bank.

Critical Accounting Policies

The accounting and reporting policies of the Company are in accordance with accounting principles generally accepted in the United States of America and conform to general practices within the banking industry. To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ.

The Company’s accounting policies are integral to understanding the results reported. Accounting policies are described in detail in Note 1 of the notes to the consolidated financial statements in the Company’s Form 10-K that was filed with the SEC on March 16, 2018. The critical accounting policies require judgment to ascertain the valuation of assets, liabilities, commitments and contingencies. Management has established policies and control procedures that are intended to ensure valuation methods are well controlled and applied consistently from period to period. In addition, the policies and procedures are intended to ensure that the process for changing methodologies occurs in an appropriate manner. The following is a brief summary of the more significant policies.

Allowance for Loan Losses

The allowance for loan losses is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors.

Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged off.

The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired. A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired.

Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

All loans classified by management as substandard or worse are individually evaluated for impairment. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral.

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Troubled debt restructurings are separately identified for impairment disclosures and are measured at the present value of estimated future cash flows using the loan’s effective rate at inception. If a troubled debt restructuring is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral. For troubled debt restructurings that subsequently default, the Company determines the amount of reserve in accordance with the accounting policy for the allowance for loan losses.

The general component covers non-impaired loans and is based on historical loss experience adjusted for current factors. The historical loss experience is determined by portfolio segment and is based on a combination of the Bank’s loss history and loss history from the Bank’s peer group over the past three years. This actual loss experience is supplemented with other economic factors based on the risks present for each portfolio segment. These economic factors include consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations.

COMPARISON OF RESULTS OF OPERATIONS FOR

THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017

(Dollar Amounts in Thousands)

Overview

The Company reported net income of $10,052 and $7,934 for the three months ended March 31, 2018 and 2017, respectively. The primary reasons for the increase in net income for the three months ended March 31, 2018 were increased interest income on loans and investment securities due to organic growth in these portfolios, decreased provision for loan losses related to the Company’s loan quality and the decrease in income tax expense related to the Tax Act legislation that was passed in December 2017.

Net Interest Income/Margin

Net interest income consists of interest income generated by earning assets, less interest expense. Net interest income for the three months ended March 31, 2018 and 2017 totaled $25,116 and $23,643, respectively, an increase of $1,473, or 6.2%. For the three months ended March 31, 2018 and 2017, interest income was $38,047 and $30,541, respectively, an increase of 24.6%, due to growth in both the loan and investment securities portfolios. For the three months ended March 31, 2018 and 2017, interest expense was $12,931 and $6,898, respectively, an increase of 87.5%, which is a result of increases in interest-bearing deposits and Federal Home Loan Bank advances.

Interest-earning assets averaged $3,867,957 and $3,184,516 during the three months ended March 31, 2018 and 2017, respectively, an increase of $683,441, or 21.5%. This increase was due to organic growth in both the loan portfolio and the securities portfolio over the past year, as well as growth in the average balance of federal funds sold. Average loans increased 23.5%, average investment securities increased 5.7% and average federal funds sold and other increased 208.0%, when comparing the three months ended March 31, 2018 with the same period in 2017.

When comparing the three months ended March 31, 2018 and 2017, the yield on average interest earning assets, adjusted for tax-equivalent yield, remained consistent at 4.06%. When comparing the first quarter of 2018 with the same period in 2017, the tax-equivalent yield on loans increased by 16 basis points. The increase is primarily related to an increase in current interest rates.

For the three months ended March 31, 2018, the tax-equivalent yield on available for sale securities was 2.52%, and for the three months ended March 31, 2017, the tax-equivalent yield on available for sale securities was 2.69%. For the three months ended March 31, 2018, the tax-equivalent yield on held to maturity securities was 3.83%, and for the three months ended March 31, 2017, the tax-equivalent yield on held to maturity securities was 4.20%. The primary driver for the yield decreases in both available for sale securities and held to maturity securities was the decrease in volume of tax-exempt securities that have been purchased combined with the reduction of the effective tax rate.

Interest-bearing liabilities averaged $3,371,827 during the three months ended March 31, 2018, compared to $2,750,555 for the same period in 2017, an increase of $621,272, or 22.6%. Total average interest-bearing deposits grew $533,604, including increases in average brokered deposits of $195,915 and average interest-bearing public funds deposits of $165,726 for the three-month period ended March 31, 2018, as compared to the same period during 2017. Rapid growth in the loan portfolio also resulted in increases in average Federal Home Loan Bank advances of $100,111, when comparing the first three months of 2018 with the same period in 2017.

For the three month periods ended March 31, 2018 and 2017, the cost of average interest-bearing liabilities increased 54 basis points to 1.56% from 1.02%. The increase was primarily due to rate increases in interest-bearing checking, money market deposits, time deposits, and Federal Home Loan Bank advances when comparing the first quarter of 2018 with the first quarter of 2017.

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The tables below summarize average balances, annualized yields and rates, cost of funds, and the analysis of changes in interest income and interest expense for the three-months ended March 31, 2018 and 2017:

Average Balances—Yields & Rates⁽¹⁾

(Dollars are in thousands)

	Three Months Ended March 31,
	2018								2017
	Average Balance(1)			Interest Inc / Exp		Average Yield / Rate			Average Balance(1)			Interest Inc / Exp		Average Yield / Rate
ASSETS:
Loans(2)(6)	$	2,307,899		$	28,805		5.06	%	$	1,868,678		$	22,583		4.90	%
Securities available for sale(6)		1,074,981			6,682		2.52	%		991,679			6,584		2.69	%
Securities held to maturity(6)		214,214			2,021		3.83	%		227,662			2,355		4.20	%
Restricted equity securities		18,658			274		5.96	%		13,695			181		5.36	%
Certificates of deposit at other financial institutions		2,814			12		1.73	%		1,820			7		1.56	%
Federal funds sold and other(3)		249,391			942		1.53	%		80,982			156		0.78	%
TOTAL INTEREST EARNING ASSETS	$	3,867,957		$	38,736		4.06	%	$	3,184,516		$	31,866		4.06	%
Allowance for loan losses		(21,683	)							(17,162	)
All other assets		125,590								96,018
TOTAL ASSETS	$	3,971,864							$	3,263,372
LIABILITIES & EQUITY
Deposits:
Interest checking	$	918,332		$	3,166		1.40	%	$	701,983		$	1,062		0.61	%
Money market		744,473			2,600		1.42	%		613,574			1,228		0.81	%
Savings		50,442			38		0.31	%		55,613			42		0.31	%
Time deposits		1,271,558			4,839		1.54	%		1,080,031			2,914		1.09	%
Federal Home Loan Bank advances		296,667			1,110		1.52	%		196,556			508		1.05	%
Federal funds purchased and repurchase agreements		31,823			96		1.22	%		44,446			70		0.64	%
Subordinated notes and other borrowings		58,532			1,082		7.50	%		58,352			1,074		7.46	%
TOTAL INTEREST BEARING LIABILITIES	$	3,371,827		$	12,931		1.56	%	$	2,750,555		$	6,898		1.02	%
Demand deposits		286,918								230,494
Other liabilities		13,279								9,610
Total equity		299,840								272,713
TOTAL LIABILITIES AND EQUITY	$	3,971,864							$	3,263,372
NET INTEREST SPREAD(4)							2.50	%							3.04	%
NET INTEREST INCOME				$	25,805							$	24,968
NET INTEREST MARGIN(5)							2.71	%							3.18	%

⁽¹⁾  Average balances are average daily balances.

⁽²⁾  Loan balances include both loans held in the Bank’s portfolio and mortgage loans held for sale and are net of deferred origination fees and costs. Non-accrual loans are included in total loan balances.

⁽³⁾  Includes federal funds sold and interest-bearing deposits at the Federal Reserve Bank, the Federal Home Loan Bank and at other financial institutions.

⁽⁴⁾  Represents the average rate earned on interest-earning assets minus the average rate paid on interest-bearing liabilities.

⁽⁵⁾  Represents net interest income (annualized) divided by total average earning assets.

⁽⁶⁾  Interest income and rates include the effects of tax-equivalent adjustments to adjust tax-exempt interest income on tax-exempt loans and investment securities to a fully taxable basis.

The tables below detail the components of the changes in net interest income for the periods indicated. For each major category of interest-earning assets and interest-bearing liabilities, information is provided with respect to changes due to average volume and changes due to rates, with the changes in both volumes and rates allocated to these two categories based on the proportionate absolute changes in each category.

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Analysis of Changes in Interest Income and Expenses

	Net change three months ended March 31, 2018 versus March 31, 2017
	Volume			Rate			Net Change
INTEREST INCOME
Loans	$	5,311		$	911		$	6,222
Securities available for sale		549			(451	)		98
Securities held to maturity		(139	)		(195	)		(334	)
Restricted equity securities		65			28			93
Certificates of deposit at other financial institutions		4			1			5
Federal funds sold and other		325			461			786
TOTAL INTEREST INCOME	$	6,115		$	755		$	6,870
INTEREST EXPENSE
Deposits
Interest checking	$	315		$	1,789		$	2,104
Money market accounts		252			1,120			1,372
Savings		(4	)		—			(4	)
Time deposits		514			1,411			1,925
Federal Home Loan Bank advances		258			344			602
Federal funds purchased and repurchase agreements		(20	)		46			26
Subordinated notes and other borrowings		2			6			8
TOTAL INTEREST EXPENSE	$	1,317		$	4,716		$	6,033
NET INTEREST INCOME	$	4,798		$	(3,961	)	$	837

Provision for Loan Losses

The provision for loan losses represents a charge to earnings necessary to establish an allowance for loan losses that, in management’s evaluation, should be adequate to provide coverage for probable losses incurred in the loan portfolio. The allowance is increased by the provision for loan losses and is decreased by charge-offs, net of recoveries on prior loan charge-offs.

The provision for loan losses was $573 and $1,855 for the three months ended March 31, 2018 and 2017, respectively. The decrease in loan loss provision is due primarily to the Company’s loan quality. Nonperforming loans at March 31, 2018 totaled $3,503 compared to $4,036 at March 31, 2017, representing 0.15% and 0.21% of total loans, respectively.

Non-Interest Income

Non-interest income for the three months ended March 31, 2018 and 2017 was $3,456 and $4,008, respectively. The following is a summary of the components of non-interest income (in thousands):

	Three Months Ended March 31,				$ Increase (Decrease)			% Increase (Decrease)
	2018		2017
Service charges on deposit accounts	$	42	$	30	$	12			40.0	%
Other service charges and fees		751		752		(1	)		(0.1	%)
Net gains on sale of loans		1,439		2,334		(895	)		(38.3	%)
Wealth management		704		593		111			18.7	%
Loan servicing fees, net		119		107		12			11.2	%
Net gain on sale of foreclosed assets		3		3		—			—	%
Other		398		189		209			110.6	%
Total non-interest income	$	3,456	$	4,008	$	(552	)		(13.8	%)

Net gains on the sale of loans include net gains realized from the sales of mortgage loans and from the fair value adjustments related to mortgage loan derivatives. Net gains on the sale of mortgage loans are based, in part, on differences between the carrying value of loans being sold to third-party investors and the selling price. Also included are changes in the fair value of mortgage banking derivatives entered

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into by the Company to hedge the change in interest rates on loan commitments prior to their sale in the secondary market. Fluctuations in mortgage interest rates, changes in the demand for certain loans by investors, and whether servicing rights associated with the loans being sold are retained or released all affect the net gains on mortgage loan sales. Net gains for the three months ending March 31, 2018 were $1,439, a decrease of $895, or 38.3%, from $2,334 for the three months ended March 31, 2017. The decrease was due to the volume of mortgage loans originated, the sales related to those loans, and less favorable market rates in first quarter 2018, which resulted in less favorable fair value adjustments on mortgage derivatives.

Wealth management income for the three months ended March 31, 2018 increased $111, or 18.7%, in comparison with the same period in 2017. The increase was primarily due to the growth in the client base and the assets under management in the wealth management division.

Other non-interest income increased $209, or 110.6%, when comparing first quarter 2018 with first quarter 2017. The increase is primarily attributed to bank owned life insurance income increasing $211 when compared to the first quarter of 2017.

Non-Interest Expense

Non-interest expense for the three months ended March 31, 2018 and 2017 was $15,488 and $14,276, respectively, an increase of $1,212, or 8.5%. This increase was the result of the following components listed in the table below (in thousands):

	Three Months Ended March 31,				$ Increase (Decrease)			% Increase (Decrease)
	2018		2017
Salaries and employee benefits	$	9,188	$	8,033	$	1,155			14.4	%
Occupancy and equipment		2,594		2,095		499			23.8	%
FDIC assessment expense		660		760		(100	)		(13.2	%)
Marketing		280		267		13			4.9	%
Professional fees		869		1,035		(166	)		(16.0	%)
Amortization of core deposit intangible		104		127		(23	)		(18.1	%)
Other		1,793		1,959		(166	)		(8.5	%)
Total non-interest expense	$	15,488	$	14,276	$	1,212			8.5	%

The increase in non-interest expense noted in the table above is indicative of the Company’s overall growth. The Company’s biggest variances for the three months ended March 31, 2018, in comparison with the same period of 2017, were in salaries and benefits, occupancy and equipment, FDIC assessment expense, professional fees, and other non-interest expense.

Salaries and employee benefits increased $1,155, or 14.4%, when comparing the three months ended March 31, 2018 with the same period in 2017, primarily due to the Company’s staffing growth from 274 full-time equivalent employees as of March 31, 2017, to 299 as of March 31, 2018. The Company added several lending professionals and lending support personnel, additional compliance professionals, additional credit administration professionals and other operational staff, to support the Company’s growth and to provide enhanced corporate governance. The Company also experienced growth in incentive expenses related to the Company’s overall financial performance and in stock option expense.

Occupancy and equipment expense increased $499, or 23.8%, when comparing the three months ended March 31, 2018 with the same period in 2017. This variance is attributable to increases in building rent expense ($237), software maintenance fees ($125), other furniture, fixture and equipment expense ($49) and furniture, fixture and equipment depreciation expense ($24).

The Company’s FDIC assessment expense decreased $100, or 13.2%, when comparing the three months ended March 31, 2018 with the same period in 2017. The decrease is primarily due to the change in the base assessment rate of the Company, on which FDIC assessments are calculated.

The $166, or 16.0%, decrease in professional fees, when comparing the three months ended March 31, 2018 with the same period in 2017, is attributable to a decrease in other professional fees ($204), which was offset by an increase in legal fees ($31).

For the three months ended March 31, 2018, other non-interest expenses decreased $166, or 8.5%, from the same period during 2017. The reduction in other non-interest expense is attributed to larger decreases in the following expense types: appraisal expenses ($125); and foreclosed property expenses ($75).

Income Tax Expense

The Company recognized an income tax expense for the three months ended March 31, 2018 and 2017, of $2,459 and $3,586, respectively. The Company’s year-to-date income tax expense for the period ended March 31, 2018 reflects an effective income tax rate of 19.7%, compared to 31.1% for the same period in 2017. The decrease in the effective tax rate for the three months ended March 31, 2018 is a result of the 2017 Tax Cuts and Jobs Act enacted in December 2017.

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COMPARISON OF BALANCE SHEETS AT MARCH 31, 2018 AND DECEMBER 31, 2017

Overview

The Company’s total assets increased by $240,137, or 6.2%, from December 31, 2017 to March 31, 2018. The increase in total assets has primarily been the result of organic growth in the loan and investment securities portfolios.

Loans

Lending-related income is the most important component of the Company’s net interest income and is a major contributor to profitability. The loan portfolio is the largest component of earning assets, and therefore generates the largest portion of revenues. For purposes of the discussion in this section, the term “loans” refers to loans, excluding loans held for sale, unless otherwise noted.

The absolute volume of loans and the volume of loans as a percentage of earning assets is an important determinant of net interest margin as loans are expected to produce higher yields than securities and other earning assets. Total loans, net of deferred fees, at March 31, 2018 and December 31, 2017 were $2,310,018 and $2,256,608, respectively, an increase of $53,410, or 2.4%. Growth in the loan portfolio is primarily due to increased market penetration and a healthy local economy.

The table below provides a summary of the loan portfolio composition for the periods noted.

	March 31, 2018						December 31, 2017
Types of Loans	Amount			% of Total Loans			Amount			% of Total Loans
Total loans, excluding PCI loans
Real estate:
Construction and land development	$	523,660			22.6	%	$	494,818			21.9	%
Commercial		716,607			31.0	%		678,238			30.0	%
Residential		602,683			26.1	%		577,335			25.6	%
Commercial and industrial		462,954			20.0	%		502,006			22.2	%
Consumer and other		3,899			0.2	%		3,781			0.2	%
Total loans—gross, excluding PCI loans		2,309,803			99.9	%		2,256,178			99.9	%
Total PCI loans		2,440			0.1	%		2,393			0.1	%
Total gross loans		2,312,243			100.0	%		2,258,571			100.0	%
Less: deferred loan fees, net		(2,225	)					(1,963	)
Allowance for loan losses		(21,738	)					(21,247	)
Total loans, net allowance for loan losses	$	2,288,280					$	2,235,361

Gross loans increased 2.4% during the first three months of 2018, primarily due to organic growth as a result of continued market penetration and the strength of the local economies. During this period, the Company experienced growth in real estate loans of 5.3% with the majority of the growth occurring in the commercial real estate (5.7%) and construction and land development (5.8%) segments. The Company also experienced a decline of 7.7% in the commercial and industrial segment during the first three months of 2018.

Real estate loans comprised 79.7% of the loan portfolio at March 31, 2018. The largest portion of the real estate segments as of March 31, 2018, was commercial real estate loans, which totaled 38.9% of real estate loans. Commercial real estate loans comprised 31.0% of the total loan portfolio. The commercial real estate loan classification primarily includes commercial-based mortgage loans that are secured by nonfarm, nonresidential real estate properties and multi-family residential properties.

The residential real estate classification primarily includes 1-4 family residential loans which are typically conventional first-lien home mortgages, not including loans held-for-sale in the secondary market, and it also includes home equity lines of credit and other junior lien mortgage loans. Residential real estate loans totaled $602,779 at March 31, 2018 and comprised 32.7% of real estate loans and 26.1% of total loans.

Construction and land development loans totaled $523,660 at March 31, 2018, and comprised 28.4% of total real estate loans and 22.6% of the total loan portfolio. Loans in this classification provide financing for the construction and development of residential properties and commercial income properties, multi-family residential development, and land designated for future development.

Commercial and industrial loans totaled $464,927 at March 31, 2018 and comprised 20.1% of total loans at March 31, 2018. The commercial and industrial classification consists of commercial loans to small-to-medium sized businesses, shared national credits, and healthcare loans.

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The repayment of loans is a source of additional liquidity for the Company. The following table sets forth the loans maturing within specific intervals at March 31, 2018, excluding unearned net fees and costs.

Loan Maturity Schedule

	March 31, 2018
	One year or less		Over one year to five years		Over five years		Total
Real estate:
Construction and land development	$	304,484	$	145,396	$	73,780	$	523,660
Commercial		46,613		205,124		465,241		716,978
Residential		44,473		118,380		439,926		602,779
Commercial and industrial		90,923		312,226		61,778		464,927
Consumer and other		2,124		1,411		364		3,899
Total	$	488,617	$	782,537	$	1,041,089	$	2,312,243
Fixed interest rate	$	182,630	$	338,721	$	548,296	$	1,069,647
Variable interest rate		305,987		443,816		492,793		1,242,596
Total	$	488,617	$	782,537	$	1,041,089	$	2,312,243

The information presented in the above table is based upon the contractual maturities of the individual loans, including loans which may be subject to renewal at their contractual maturity. Renewal of such loans is subject to review and credit approval, as well as modification of terms upon their maturity. Consequently, management believes this treatment presents fairly the maturity structure of the loan portfolio.

Allowance for Loan Losses

The Company maintains an allowance for loan losses that management believes is adequate to absorb the probable incurred losses inherent in the Company’s loan portfolio. The allowance is increased by provisions for loan losses charged to earnings and is decreased by loan charge-offs net of recoveries of prior period loan charge-offs. The level of the allowance is determined on a quarterly basis, although management is engaged in monitoring the adequacy of the allowance on a more frequent basis. In estimating the allowance balance, the following factors are considered:

• past loan experience;

• the nature and volume of the portfolio;

• risks known about specific borrowers;

• underlying estimated values of collateral securing loans;

• current and anticipated economic conditions; and

• other factors which may affect the allowance for probable incurred losses.

The allowance for loan losses consists of two primary components: (1) a specific component which relates to loans that are individually classified as impaired and (2) a general component which covers non-impaired loans and is based on historical loss experience adjusted for current factors. The historical loss experience is determined by portfolio segment and is based on a combination of the Company’s loss history and loss history from peer group data over the past three years. This actual loss experience is supplemented with other economic factors based on the risks present for each portfolio segment.

The following loan portfolio segments have been identified: (1) Construction and land development loans, (2) Commercial real estate loans, (3) Residential real estate loans, (4) Commercial and industrial loans, and (5) Consumer and other loans. Management evaluates the risks associated with these segments based upon specific characteristics associated with the loan segments. These risk characteristics include, but are not limited to, the value of the underlying collateral, adverse economic conditions, and the borrower’s cash flow. While the total allowance consists of a specific portion and a general portion, both portions of the allowance are available to provide for probable incurred loan losses in the entire portfolio.

In the table below, the components, as discussed above, of the allowance for loan losses are shown at March 31, 2018 and December 31, 2017.

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	March 31, 2018							December 31, 2017							Increase (Decrease)
	Loan Balance		ALLL Balance		%			Loan Balance		ALLL Balance		%			Loan Balance			ALLL Balance
Non impaired loans	$	2,255,719	$	21,179		0.94	%	$	2,201,515	$	20,358		0.92	%	$	54,204		$	821		2 bps
Non-PCI acquired loans (Note 1)		50,759		10		0.02	%		50,522		10		0.02	%		237			—		—
Impaired loans		3,325		543		16.33	%		4,141		879		21.23	%		(816	)		(336	)	-490 bps
Non-PCI loans		2,309,803		21,732		0.94	%		2,256,178		21,247		0.94	%		53,625			485		—
PCI loans		2,440		6		0.25	%		2,393		—		—	%		47			6		25 bps
Total loans	$	2,312,243	$	21,738		0.94	%	$	2,258,571	$	21,247		0.94	%	$	53,672		$	491		—

Note 1: Loans acquired pursuant to the July 1, 2014 acquisition of MidSouth Bank (“MidSouth”) that are not PCI loans. These are performing loans recorded at estimated fair value at the acquisition date. The fair value adjustment at the acquisition date was approximately $5,014 of the outstanding non-PCI loan balances acquired. This amount is accreted into interest income over the remaining lives of the related loans on a level yield basis. Based on the analysis performed by management as of March 31, 2018, $10 in allowance for loan loss was recorded related to the loans acquired from MidSouth.

At March 31, 2018, the allowance for loan losses was $21,738, compared to $21,247 at December 31, 2017. The allowance for loan losses as a percentage of total loans was 0.94% at both March 31, 2018 and December 31, 2017. Loan growth during the first quarter of 2018 is the primary reason for the increase in the allowance amount.

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

	Three Months Ended March 31, 2018			Three Months Ended March 31, 2017
Beginning balance	$	21,247		$	16,553
Loans charged-off:
Construction & land development		39			—
Commercial real estate		—			—
Residential real estate		7			—
Commercial & industrial		49			300
Consumer & other		11			23
Total loans charged-off		106			323
Recoveries on loans previously charged-off:
Construction & land development		—			—
Commercial real estate		—			—
Residential real estate		19			12
Commercial & industrial		—			—
Consumer & other		5			8
Total loan recoveries		24			20
Net charge-offs		(82	)		(303	)
Provision for loan losses charged to expense		573			1,855
Total allowance at end of period	$	21,738		$	18,105
Total loans, gross, at end of period (1)	$	2,312,243		$	1,950,686
Average gross loans (1)	$	2,301,054		$	1,860,081
Allowance to total loans		0.94	%		0.93	%
Net charge-offs to average loans, annualized		0.01	%		0.07	%

(1) Loan balances exclude loans held for sale

While no portion of the allowance is in any way restricted to any individual loan or group of loans, and the entire allowance is available to absorb losses from any and all loans, the following table summarizes the allocation of allowance for loan losses by loan category and loans in each category as a percentage of total loans, for the periods presented.

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	March 31, 2018					December 31, 2017
	Amount		% of Allowance to Total			Amount		% of Allowance to Total
Real estate loans:
Construction and land development	$	4,345		20.0	%	$	3,802		21.9	%
Commercial		5,875		27.0	%		5,981		30.0	%
Residential		3,605		16.6	%		3,834		25.6	%
Total real estate		13,825		63.6	%		13,617		77.5	%
Commercial and industrial		7,866		36.2	%		7,587		22.3	%
Consumer and other		47		0.2	%		43		0.2	%
	$	21,738		100.0	%	$	21,247		100.0	%

Nonperforming Assets

Non-performing loans consist of non-accrual loans and loans that are past due 90 days or more and still accruing interest. Non-performing assets consist of non-performing loans plus other real estate owned (“OREO”), i.e., real estate acquired through foreclosure or deed in lieu of foreclosure. Loans are placed on non-accrual status when they are past due 90 days and management believes the borrower’s financial condition, after giving consideration to economic conditions and collection efforts, is such that collection of interest is doubtful. When a loan is placed on non-accrual status, interest accruals cease and uncollected interest is reversed and charged against current income. The interest on these loans is accounted for on the cash-basis, or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

The primary component of non-performing loans is non-accrual loans, which as of March 31, 2018 totaled $3,503. The other component of non-performing loans are loans past due greater than 90 days and still accruing interest. Loans past due greater than 90 days are placed on non-accrual status, unless they are both well-secured and in the process of collection. There were outstanding loans totaling $178 that were past due 90 days or more and still accruing interest at March 31, 2018.

The table below summarizes non-performing loans and assets for the periods presented.

	March 31, 2018			December 31, 2017
Non-accrual loans	$	3,325		$	2,837
Past due loans 90 days or more and still accruing interest		178			205
Total non-performing loans		3,503			3,042
Foreclosed real estate (“OREO”)		1,503			1,503
Total non-performing assets		5,006			4,545
Total non-performing loans as a percentage of total loans		0.2	%		0.1	%
Total non-performing assets as a percentage of total assets		0.1	%		0.1	%
Allowance for loan losses as a percentage of non-performing loans		621	%		698	%

As of March 31, 2018, there were nine loans on non-accrual status. The amount and number are further delineated by collateral category and number of loans in the table below.

	Total Amount		Percentage of Total Non-Accrual Loans			Number of Non-Accrual Loans
Construction & land development	$	165		5.0	%		1
Residential real estate		694		20.9	%		3
Commercial & industrial		2,466		74.1	%		5
Total non-accrual loans	$	3,325		100.0	%		9

35

Investment Securities and Other Earning Assets

The investment securities portfolio is intended to provide the Company with adequate liquidity, flexible asset/liability management and a source of stable income. The portfolio is structured with minimal credit exposure to the Company and consists of both securities classified as available-for-sale and securities classified as held-to-maturity. All available-for sale securities are carried at fair value and may be used for liquidity purposes should management deem it to be in the Company’s best interest. Securities available-for-sale, consisting primarily of U.S. government sponsored enterprises and mortgage-backed securities, were $1,186,420 at March 31, 2018, compared to $999,881 at December 31, 2017, an increase of $186,539, or 18.7%. The increase in available-for-sale securities was primarily attributed to the volume of securities purchased during the first quarter of 2018.

The held-to-maturity securities are carried at amortized cost. This portfolio, consisting of U.S. government sponsored enterprises, mortgage-backed securities and municipal securities, totaled $213,381 at March 31, 2018, compared to $214,856 at December 31, 2017, a decrease of $1,475, or 0.7%. The decrease is attributable to securities that matured during the first quarter of 2018.

The combined portfolios represented 34.3% and 31.6% of total assets at March 31, 2018 and December 31, 2017, respectively. At March 31, 2018, the Company had no securities that were classified as having Other Than Temporary Impairment.

The Company also had other investments of $19,606 and $18,492 at March 31, 2018 and December 31, 2017, respectively, consisting of capital stock in the Federal Reserve and the Federal Home Loan Bank (required as members of the Federal Reserve Bank System and the Federal Home Loan Bank System). The Federal Home Loan Bank and Federal Reserve investments are “restricted” in that they can only be sold back to the respective institutions or another member institution at par, and are thus, not liquid, have no ready market or quoted market value, and are carried at cost.

Bank Premises and Equipment

Bank premises and equipment totaled $10,941 at March 31, 2018 compared to $11,281 at December 31, 2017, a decrease of $340, or 3.0%. This decrease was the result of the increase in accumulated depreciation in the normal course of business.

Deposits

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

At March 31, 2018, total deposits were $3,355,153, an increase of $187,925, or 5.9%, compared to $3,167,228 at December 31, 2017. The growth in deposits is attributable to growth in public funds deposits, money market deposits, noninterest-bearing deposits, and interest checking deposits.

Included in the Company’s funding strategy are brokered deposits. Total brokered deposits increased from $779,886 at December 31, 2017 to $855,256 at March 31, 2018, due to the increased need for funding for the Bank’s loan growth and due to the fluctuation in certain brokered deposits that are interest-bearing checking and money market accounts that can fluctuate daily.

Public funds deposits in the form of county deposits are a part of the Company’s funding strategy and are cyclical in nature, with the peak of those deposit balances occurring during the middle of the first quarter of each calendar year. Public funds declined $10,477, or 1.1%, from $1,002,584 at December 31, 2017 to $992,107 at March 31, 2018.

Time deposits excluding brokered deposits as of March 31, 2018, amounted to $667,958, compared to $675,150 as of December 31, 2017, a decrease of $7,193, or 1.1%, primarily due to a decrease in Local Government Investment Pool (LGIP) deposits of $30,000 during the first quarter of 2018. Non-public funds money market accounts, excluding brokered deposits, increased $16,721, or 3.5%, from December 31, 2017 to March 31, 2018. Noninterest-bearing checking deposits grew $26,331, or 9.7%, and non-public funds interest checking accounts, excluding brokered deposits, grew $60,536, or 45.2%, respectively, when comparing deposit balances from March 31, 2018 with balances at December 31, 2017.

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The following table shows time deposits in denominations of $100 or more by category based on time remaining until maturity.

Maturity of non-brokered time deposits of $100 or more

	March 31, 2018
Three months or less	$	241,833
Three through six months		72,936
Six through twelve months		71,190
Over twelve months		144,681
Total	$	530,640

Federal Funds Purchased and Repurchase Agreements

As of March 31, 2018 and December 31, 2017, the Company had no federal funds purchased from correspondent banks. Securities sold under agreements to repurchase had an outstanding balance of $36,071 as of March 31, 2018, compared to $31,004 as of December 31, 2017. Securities sold under agreements to repurchase are financing arrangements that mature daily or within a short period of time. At maturity, the securities underlying the agreements are returned to the Company.

Federal Home Loan Bank Advances

The Company has established a line of credit with the Federal Home Bank of Cincinnati which is secured by a blanket pledge of 1-4 family residential mortgages. At March 31, 2018 and at December 31, 2017, advances totaled $317,000 and $272,000, respectively.

At March 31, 2018, the scheduled maturities and interest rates of these advances were as follows:

Scheduled Maturities	Amount		Weighted Average Rates
2018		152,000		1.41	%
2019		110,000		1.78	%
2020		55,000		1.72	%
Total	$	317,000		1.59	%

Subordinated Notes

At March 31, 2018, the Company’s subordinated notes, net of issuance costs, totaled $58,559, compared with $58,515 at December 31, 2017. For more information related to the subordinated notes and the related issuance costs, please see Note 10 of the consolidated financial statements.

Liquidity

Liquidity is defined as the ability to meet anticipated customer demands for funds under credit commitments and deposit withdrawals at a reasonable cost and on a timely basis.

Liquidity risk involves the risk of being unable to fund assets with the appropriate duration and rate-based liabilities, as well as the risk of not being able to meet unexpected cash needs. Liquidity planning and management are necessary to ensure the ability to fund operations cost-effectively and to meet current and future potential obligations such as loan commitments, lease obligations, and unexpected deposit outflows. In this process, management focuses on both assets and liabilities and on the manner in which they combine to provide adequate liquidity to meet the Company’s needs. Our source of funds to pay interest on our subordinated notes is generally in the form of a dividend from the Bank to the Company, or those payments may be serviced from cash balances held by the Company. Under the terms of the informal agreement with the Reserve Bank, described in “Other Events” in ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS and in “ITEM 1A. RISK FACTORS,” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, the Bank is required to receive prior written approval from its regulatory agencies to pay dividends to the Company.

Funds are available from a number of basic banking activity sources including the core deposit base, the repayment and maturity of loans, payments of principal and interest as well as sales of investments classified as available-for-sale, and sales of brokered deposits. As of March 31, 2018, $1,186,420 of the investment securities portfolio was classified as available-for-sale and is reported at fair value on the consolidated balance sheet. Another $213,381 of the portfolio was classified as held-to-maturity and is reported at amortized cost. Approximately $1,168,275 of the total $1,399,801 investment securities portfolio on hand at March 31, 2018, was pledged to secure public deposits and repurchase agreements. Other funding sources available include repurchase agreements, federal funds purchased, and borrowings from the Federal Home Loan Bank.

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Equity

As of March 31, 2018, the Company’s equity was $304,865, as compared with $304,653 as of December 31, 2017. The increase in equity was due to the Company’s earnings of $10,052 in the first quarter of 2018 and the increase in common stock of $929 during the first quarter, offset by a $10,769 reduction in other comprehensive income from the reduced valuation of available for sale securities.

Effects of Inflation and Changing Prices

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

Off Balance Sheet Arrangements

The Company generally does not have any off-balance sheet arrangements other than approved and unfunded loans and lines and letters of credit to customers in the ordinary course of business. At March 31, 2018, the Company had unfunded loan commitments outstanding of $41,381, unused lines of credit of $621,697, and outstanding standby letters of credit of $31,951.

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

Some of the financial data included in our selected historical consolidated financial information are not measures of financial performance recognized by GAAP. Our management uses these non-GAAP financial measures in its analysis of our performance:

• “Common shareholders’ equity” is defined as total shareholders’ equity at end of period less the liquidation preference value of the preferred stock;

• “Tangible common shareholders’ equity” is common shareholders’ equity less goodwill and other intangible assets;

• “Total tangible assets” is defined as total assets less goodwill and other intangible assets;

• “Other intangible assets” is defined as the sum of core deposit intangible and SBA servicing rights;

• “Tangible book value per share” is defined as tangible common shareholders’ equity divided by total common shares outstanding. This measure is important to investors interested in changes from period-to-period in book value per share exclusive of changes in intangible assets;

• “Tangible common shareholders’ equity ratio” is defined as the ratio of tangible common shareholders’ equity divided by total tangible assets. We believe that this measure is important to many investors in the marketplace who are interested in relative changes from period-to period in common equity and total assets, each exclusive of changes in intangible assets;

• “Return on Average Tangible Common Equity” is defined as net income available to common shareholders divided by average tangible common shareholders’ equity;

• “Efficiency ratio” is defined as noninterest expenses divided by our operating revenue, which is equal to net interest income plus noninterest income;

• “Adjusted yield on loans” is our yield on loans after excluding loan accretion from our acquired loan portfolio. Our management uses this metric to better assess the impact of purchase accounting on our yield on loans, as the effect of loan discount accretion is expected to decrease as the acquired loans mature or roll off of our balance sheet;

• “Net interest margin” is defined as annualized net interest income divided by average interest-earning assets for the period;

• “Adjusted net interest margin” is net interest margin after excluding loan accretion from the acquired loan portfolio and premiums for acquired time deposits. Our management uses this metric to better assess the impact of purchase accounting on net interest margin, as the effect of loan discount accretion and accretion of net discounts and premiums related to deposits is expected to decrease as the acquired loans and deposits mature or roll off of our balance sheet.

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We believe these non-GAAP financial measures provide useful information to management and investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with GAAP; however, we acknowledge that our non-GAAP financial measures have a number of limitations. As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies use. The following reconciliation table provides a more detailed analysis of these non-GAAP financial measures:

The following reconciliation table provides a more detailed analysis of these non-GAAP financial measures:

(Amounts in thousands, except share/per share data and percentages)	As of or for the Three Months Ended
	Mar 31, 2018			Dec 31, 2017			Sept 30, 2017			Jun 30, 2017			Mar 31, 2017
Total shareholders’ equity	$	304,762		$	304,550		$	303,594		$	292,918		$	278,407
Less: Preferred stock		—			—			—			—			—
Total common shareholders’ equity		304,762			304,550			303,594			292,918			278,407
Less: Goodwill and other intangible assets		10,074			10,181			10,294			10,356			10,477
Tangible common shareholders’ equity	$	294,688		$	294,369		$	293,300		$	282,562		$	267,930
Common shares outstanding		13,258,142			13,237,128			13,209,055			13,181,501			13,064,110
Tangible book value per share	$	22.23		$	22.24		$	22.20		$	21.44		$	20.51
Average total common equity		299,840			304,847			298,088			285,659		$	272,713
Less: Average Goodwill and other intangible assets		10,136			10,247			10,321			10,427			10,565
Average tangible common shareholders’ equity	$	289,704		$	294,600		$	287,767		$	275,232		$	262,148
Net income available to common shareholders		10,052			2,394			8,889			8,866			7,934
Average tangible common equity		289,704			294,600			287,767			275,232			262,148
Return on average tangible common equity		14.07	%		3.22	%		12.26	%		12.92	%		12.27	%
Efficiency Ratio:
Net interest income	$	25,116		$	24,608		$	24,326		$	24,469		$	23,643
Noninterest income		3,456			3,264			3,569			3,880			4,008
Operating revenue		28,572			27,872			27,895			28,349			27,651
Expense
Total noninterest expense		15,488			15,987			15,278			15,283			14,276
Efficiency ratio		54.21	%		57.36	%		54.77	%		53.91	%		51.63	%

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FRANKLIN FINANCIAL NETWORK, INC.

SUMMARY QUARTERLY CONSOLIDATED FINANCIAL DATA (UNAUDITED)

(Amounts in thousands, except per share data and percentages)

	As of and for the three months ended
	Mar 31, 2018		Dec 31, 2017		Sept 30, 2017			Jun 30, 2017		Mar 31, 2017
Income Statement Data ($):
Interest income		38,047		35,121		33,780			33,011		30,541
Interest expense		12,931		10,513		9,454			8,542		6,898
Net interest income		25,116		24,608		24,326			24,469		23,643
Provision for loan losses		573		1,295		590			573		1,855
Noninterest income		3,456		3,264		3,569			3,880		4,008
Noninterest expense		15,488		15,987		15,278			15,283		14,276
Net income before taxes		12,511		10,590		12,027			12,493		11,520
Income tax expense		2,459		8,188		3,138			3,619		3,586
Net income		10,052		2,402		8,889			8,874		7,934
Earnings before interest and taxes		25,442		21,103		21,481			21,035		18,418
Net income available to common shareholders		10,052		2,394		8,889			8,866		7,934
Weighted average diluted common shares		13,249,728		13,767,979		13,773,539			13,701,762		13,657,357
Earnings per share, basic		0.76		0.18		0.67			0.68		0.61
Earnings per share, diluted		0.73		0.17		0.65			0.64		0.58
Profitability (%)
Return on average assets		1.03		0.26		1.03			1.03		0.99
Return on average equity		13.60		3.13		11.83			12.46		11.80
Return on average tangible common equity(3)		14.07		3.22		12.26			12.92		12.27
Efficiency ratio(3)		54.21		57.36		54.77			53.91		51.63
Net interest margin(1)		2.71		2.92		3.05			3.08		3.18
Balance Sheet Data ($):
Loans (including HFS)		2,322,889		2,268,632		2,127,753			2,023,679		1,962,397
Loan loss reserve		21,738		21,247		19,944			18,689		18,105
Cash		246,164		251,543		155,842			96,741		114,664
Securities		1,399,801		1,214,737		1,198,049			1,243,406		1,299,349
Goodwill		9,124		9,124		9,124			9,124		9,124
Intangible assets (Sum of core deposit intangible and SBA servicing rights)		950		1,057		1,170			1,232		1,353
Assets		4,083,663		3,843,526		3,565,278			3,443,593		3,454,788
Deposits		3,355,153		3,167,228		2,824,825			2,754,425		2,817,212
Liabilities		3,778,798		3,538,873		3,261,581			3,150,572		3,176,278
Total equity		304,865		304,653		303,697			293,021		278,510
Common equity		304,762		304,550		303,594			292,918		278,407
Tangible common equity(3)		294,688		294,369		293,300			282,562		267,930
Asset Quality (%)
Nonperforming loans/ total loans(2)		0.15		0.13		0.14			0.19		0.21
Nonperforming assets / (total loans(2) + foreclosed assets)		0.22		0.20		0.21			0.26		0.27
Loan loss reserve / total loans(2)		0.94		0.94		0.94			0.93		0.93
Net charge-offs / average loans		0.01		0.00		(0.13	)		0.00		0.07
Capital (%)
Tangible common equity to tangible assets		7.23		7.68		8.25			8.23		7.78
Leverage ratio		7.80		8.25		8.58			8.21		8.36
Common Equity Tier 1 ratio		11.45		11.37		11.58			11.54		11.32
Tier 1 risk-based capital ratio		11.45		11.37		11.58			11.54		11.32
Total risk-based capital ratio		14.42		14.40		14.68			14.69		14.51

⁽¹⁾  Net interest margins shown in the table above include tax-equivalent adjustments to adjust interest income on tax-exempt loans and tax-exempt investment securities to a fully taxable basis.

⁽²⁾  Total loans in this ratio exclude loans held for sale.

⁽³⁾  See Non-GAAP table in the preceding pages.

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Emerging Growth Company Status

The Company is an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and may take advantage of certain exemptions from various reporting requirements that are applicable to public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. In addition, even if the Company complies with the greater obligations of public companies that are not emerging growth companies, the Company may avail itself of the reduced requirements applicable to emerging growth companies from time to time in the future, so long as the Company is an emerging growth company. The Company will continue to be an emerging growth company until the earliest to occur of: (1) the end of the fiscal year following the fifth anniversary of the effectiveness of our Registration Statement on Form S-4, which was declared effective by the SEC on May 14, 2014; (2) the last day of the fiscal year in which we have more than $1.07 billion in annual revenues; (3) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act; or (4) the date on which we have, during the previous three-year period, issued publicly or privately, more than $1.0 billion in non-convertible debt securities. Management cannot predict if investors will find the Company’s common stock less attractive because it will rely on these exemptions. If some investors find the Company’s common stock less attractive as a result, there may be a less active trading market for its common stock and the Company’s stock price may be more volatile.

Further, the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, it adopts the new or revised standard at the time public companies adopt the new or revised standard. This election is irrevocable.

Subsequent Events

Effective April 1, 2018, the Company acquired Civic Bank & Trust (“Civic”), which was located in Nashville, Tennessee and on the same date, Civic was merged with and into the Bank. Effective with the acquisition, Dr. Anil Patel, who was the chairman of the Civic Bank & Trust board of directors, was added to the Company’s board of directors for a term expiring at the Company’s 2018 annual meeting of shareholders.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Company’s primary component of market risk is interest rate volatility. Fluctuations in interest rates will ultimately impact both the level of income and expense recorded on a large portion of the Company’s assets and liabilities, and the market value of all interest-earning assets and interest-bearing liabilities, other than those which possess a short term to maturity. Based upon the nature of the Company’s operations, the Company is not subject to foreign currency exchange or commodity price risk.

Management seeks to maintain profitability in both immediate and long-term earnings through funds management/interest rate risk management. Interest rate risk (sensitivity) management deals with the potential impact on earnings associated with changing interest rates using various rate change (shock) scenarios. The Company’s rate sensitivity position has an important impact on earnings. Senior management monitors the Company’s rate sensitivity position throughout each month, and then the Asset Liability Committee (“ALCO”) of the Bank meets on a quarterly basis to analyze the rate sensitivity position and other aspects of asset/liability management. These meetings cover the spread between the cost of funds (primarily time deposits) and interest yields generated primarily through loans and investments, rate shock analyses, liquidity and dependency positions, and other areas necessary for proper balance sheet management.

41

Management believes interest rate risk is best measured by earnings simulation modeling. The simulation is run using the prime rate as the base with the assumption of rates increasing 100, 200, 300 and 400 basis points or decreasing 100 and 200 basis points. All rates are increased or decreased parallel to the change in prime rate. As a result of the simulation, over a 12-month time period ended March 31, 2018, net interest income was estimated to decrease 2.23% and 4.92% if rates were to increase 100 basis points and 200 basis points, respectively, and was estimated to increase 1.81% and 0.69% in a 100 basis points and 200 basis points declining rate assumption, respectively. These results are in line with the Company’s guidelines for rate sensitivity.

The following chart reflects the Company’s sensitivity to changes in interest rates as indicated as of March 31, 2018.

Projected Interest Rate Change	Net Interest Income		Net Interest Income $ Change from Base			% Change from Base
-200		105,060		715			0.69	%
-100		106,229		1,884			1.81	%
Base		104,345		—			0.00	%
+100		102,017		(2,328	)		(2.23	%)
+200		99,207		(5,138	)		(4.92	%)
+300		97,041		(7,304	)		(7.00	%)
+400		94,045		(10,300	)		(9.87	%)

The preceding sensitivity analysis is a modeling analysis, which changes periodically and consists of hypothetical estimates based upon numerous assumptions including interest rate levels, changes in the shape of the yield curve, prepayments on loans and securities, rates on loans and deposits, reinvestments of pay downs and maturities of loans, investments and deposits, changes in spreads between key market rates, and other assumptions. In addition, there is no input for growth or a change in asset mix. While assumptions are developed based on the current economic and market conditions, the Company cannot make any assurances as to the predictive nature of these assumptions, including how customer preferences or competitor influences might change. As market conditions vary from those assumed in the sensitivity analysis, actual results will differ. Also, these results do not include any management action that might be taken in responding to or anticipating changes in interest rates. The simulation results are one indicator of interest rate risk, and actual net interest income is largely impacted by the allocation of assets, liabilities, and product mix.

ITEM 4. CONTROLS AND PROCEDURES.

(a) Evaluation of Disclosure Controls and Procedures. The Company’s chief executive officer and chief financial officer have evaluated the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as that term is defined in Rule 13a-15(e) under the Exchange Act) as of March 31, 2018, the end of the fiscal quarter covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the chief executive officer and chief financial officer have concluded that the Company’s disclosure controls and procedures are effective.

(b) Changes in Internal Controls. There has been no change in our internal control over financial reporting that occurred during the fiscal quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

Management is not aware of any material pending legal proceedings against the Company which, if determined adversely, the Company believes would have a material adverse impact on the Company’s financial position, results of operations or cash flows.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K filed with the SEC on March 16, 2018.

42

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS

Exhibit No.	Description
10.1	Triple Net Office Lease Agreement, by and between 204 9th Avenue Partners, LLC and Franklin Synergy Bank (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 29, 2018)
31.1*	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) (Section 302 Certification).
31.2*	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) (Section 302 Certification).
32*	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 (Section 906 Certification).
101*	Interactive Data Files.

* Filed herewith

43

SIGNATURES

Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	FRANKLIN FINANCIAL NETWORK, INC.
May 10, 2018	By:	/s/ Sarah Meyerrose
		Sarah Meyerrose
		On behalf of the registrant and as Chief Financial Officer (Principal Financial Officer)

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Richard E. Herrington, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Franklin Financial Network, Inc.;

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

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

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

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

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

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

(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: May 10, 2018	By:	/s/ Richard E. Herrington
		Richard E. Herrington
		Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Sarah Meyerrose, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Franklin Financial Network, Inc.;

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

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

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

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

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

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

(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: May 10, 2018	By:	/s/ Sarah Meyerrose
		Sarah Meyerrose
		Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO RULE 13a-14(b) UNDER

THE SECURITIES EXCHANGE ACT OF 1934 AND

SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF THE UNITED STATES CODE

Each of the undersigned, Richard E. Herrington, the Chief Executive Officer of Franklin Financial Network, Inc. (the “Company”), and Sarah Meyerrose, Chief Financial Officer of the Company, certifies, pursuant to Rule 13a-14(b) under the Securities and Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code, that (1) this Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act, and (2) the information contained in this report fairly presents, in all material respects, the financial condition and results of operations of the Company.

This Certification is signed on May 10, 2018.

By:	/s/ Richard E. Herrington
	Richard E. Herrington
	Chief Executive Officer

By:	/s/ Sarah Meyerrose
	Sarah Meyerrose
	Chief Financial Officer

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2018	Apr. 30, 2018
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1
Trading Symbol	FSB
Entity Registrant Name	FRANKLIN FINANCIAL NETWORK INC.
Entity Central Index Key	0001407067
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		14,373,890

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
ASSETS
Cash and due from financial institutions	$ 246,164	$ 251,543
Certificates of deposit at other financial institutions	2,855	2,855
Securities available for sale	1,186,420	999,881
Securities held to maturity (fair value 2018-$210,888 and 2017-$217,608)	213,381	214,856
Loans held for sale, at fair value	12,871	12,024
Loans	2,310,018	2,256,608
Allowance for loan losses	(21,738)	(21,247)
Net loans	2,288,280	2,235,361
Restricted equity securities, at cost	19,606	18,492
Premises and equipment, net	10,941	11,281
Accrued interest receivable	12,937	11,947
Bank owned life insurance	49,450	49,085
Deferred tax asset	13,807	10,007
Foreclosed assets	1,503	1,503
Servicing rights, net	3,602	3,620
Goodwill	9,124	9,124
Core deposit intangible, net	903	1,007
Other assets	11,819	10,940
Total assets	4,083,663	3,843,526
Deposits
Non-interest bearing	298,503	272,172
Interest bearing	3,056,650	2,895,056
Total deposits	3,355,153	3,167,228
Federal Home Loan Bank advances	317,000	272,000
Federal funds purchased and repurchase agreements	36,071	31,004
Subordinated notes, net	58,559	58,515
Accrued interest payable	2,775	2,769
Other liabilities	9,240	7,357
Total liabilities	3,778,798	3,538,873
Equity
Preferred stock, no par value: 1,000,000 shares authorized; no shares outstanding at March 31, 2018 and December 31, 2017
Common stock, no par value: 30,000,000 and 30,000,000 shares authorized at March 31, 2018 and December 31, 2017 , respectively; 13,258,142 and 13,237,128 issued at March 31, 2018 and December 31, 2017 , respectively	223,594	222,665
Retained earnings	98,723	88,671
Accumulated other comprehensive loss	(17,555)	(6,786)
Total shareholders' equity	304,762	304,550
Noncontrolling interest in consolidated subsidiary	103	103
Total equity	304,865	304,653
Total liabilities and equity	$ 4,083,663	$ 3,843,526

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Held-to-maturity securities, fair value	$ 210,888	$ 217,608
Preferred stock, no par value
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares outstanding	0	0
Common stock, no par value
Common stock shares authorized	30,000,000	30,000,000
Common stock shares issued	13,258,142	13,237,128

XML

CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Interest income and dividends
Loans, including fees	$ 28,793	$ 22,560
Securities:
Taxable	6,111	5,617
Tax-Exempt	1,915	2,020
Dividends on restricted equity securities	274	181
Federal funds sold and other	954	163
Total interest income	38,047	30,541
Interest expense
Deposits	10,643	5,246
Federal Home Loan Bank advances	1,110	508
Federal funds purchased and repurchase agreements	96	70
Subordinated notes and other borrowings	1,082	1,074
Total interest expense	12,931	6,898
Net interest income	25,116	23,643
Provision for loan losses	573	1,855
Net interest income after provision for loan losses	24,543	21,788
Noninterest income
Service charges on deposit accounts	42	30
Other service charges and fees	751	752
Net gains on sale of loans	1,439	2,334
Wealth management	704	593
Loan servicing fees, net	119	107
Net (loss) gain on sale of foreclosed assets	3	3
Other	398	189
Total noninterest income	3,456	4,008
Noninterest expense
Salaries and employee benefits	9,188	8,033
Occupancy and equipment	2,594	2,095
FDIC assessment expense	660	760
Marketing	280	267
Professional fees	869	1,035
Amortization of core deposit intangible	104	127
Other	1,793	1,959
Total noninterest expense	15,488	14,276
Income before income tax expense	12,511	11,520
Income tax expense	2,459	3,586
Net income	10,052	7,934
Net income available to common shareholders	$ 10,052	$ 7,934
Earnings per share:
Basic	$ 0.76	$ 0.61
Diluted	$ 0.73	$ 0.58

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Statement of Comprehensive Income [Abstract]
Net income	$ 10,052	$ 7,934
Unrealized gains on securities:
Unrealized holding loss arising during the period	(14,577)	(641)
Reclassification adjustment for gains included in net income	0	0
Net unrealized losses	(14,577)	(641)
Tax effect	3,808	251
Total other comprehensive loss	(10,769)	(390)
Comprehensive income (loss)	$ (717)	$ 7,544

XML

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited) - USD ($) $ in Thousands	Total	Preferred Stock [Member]	Common Stock [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Noncontrolling Interest [Member]
Beginning balance at Dec. 31, 2016	$ 270,361	$ 0	$ 218,354	$ 59,386	$ (7,482)	$ 103
Beginning balance, shares at Dec. 31, 2016			13,036,954
Exercise of common stock options	177		$ 177
Exercise of common stock options, number of shares			20,268
Exercise of common stock warrants	$ 132		$ 132
Exercise of common stock warrants, number of shares	11,011		11,011
Stock based compensation expense, net of restricted share forfeitures	$ 447		$ 447
Stock based compensation expense, net of restricted share forfeitures, shares			(180)
Stock issued in conjunction with 401(k) employer match, net of distributions	(151)		$ (151)
Stock issued in conjunction with 401(k) employer match, net of distributions, number of shares			(3,943)
Net income	7,934			7,934
Other comprehensive loss	(390)				(390)
Ending balance at Mar. 31, 2017	278,510		$ 218,959	67,320	(7,872)	103
Ending balance, shares at Mar. 31, 2017			13,064,110
Beginning balance at Dec. 31, 2017	304,653		$ 222,665	88,671	(6,786)	103
Beginning balance, shares at Dec. 31, 2017			13,237,128
Exercise of common stock options	220		$ 220
Exercise of common stock options, number of shares			21,348
Stock based compensation expense, net of restricted share forfeitures	759		$ 759
Stock based compensation expense, net of restricted share forfeitures, shares			(334)
Stock issued in conjunction with 401(k) employer match, net of distributions	(50)		$ (50)
Net income	10,052			10,052
Other comprehensive loss	(10,769)				(10,769)
Ending balance at Mar. 31, 2018	$ 304,865		$ 223,594	$ 98,723	$ (17,555)	$ 103
Ending balance, shares at Mar. 31, 2018			13,258,142

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash flows from operating activities
Net income	$ 10,052	$ 7,934
Adjustments to reconcile net income to net cash from operating activities
Depreciation and amortization on premises and equipment	403	368
Accretion of purchase accounting adjustments	(252)	(381)
Net amortization of securities	1,904	2,452
Amortization of loan servicing right asset	214	213
Amortization of core deposit intangible	104	127
Amortization of debt issuance costs	44	44
Provision for loan losses	573	1,855
Deferred income tax benefit	10	(561)
Origination of loans held for sale	(83,226)	(65,213)
Proceeds from sale of loans held for sale	83,622	78,379
Net gain on sale of loans	(1,439)	(2,334)
Income from bank owned life insurance	(365)	(155)
Stock-based compensation	759	447
Deferred gain on sale of loans	(4)	(58)
Deferred gain on sale of foreclosed assets	(3)	(3)
Net change in:
Accrued interest receivable and other assets	(1,871)	(1,687)
Accrued interest payable and other liabilities	1,896	5,944
Net cash from operating activities	12,421	27,371
Available for sale securities:
Purchases	(224,712)	(363,298)
Maturities, prepayments and calls	22,129	42,167
Held to maturity securities:
Purchases	(1,676)	(1,996)
Maturities, prepayments and calls	2,714	4,335
Net change in loans	(53,240)	(177,360)
Purchase of restricted equity securities	(1,114)	(3,135)
Purchases of premises and equipment, net	(63)	(1,048)
Increase in certificates of deposits at other financial institutions		(980)
Net cash from investing activities	(255,962)	(501,315)
Cash flows from financing activities
Increase in deposits	187,925	425,394
Increase (Decrease) in federal funds purchased and repurchase agreements	5,067	(12,871)
Proceeds from Federal Home Loan Bank advances	95,000	230,000
Repayment of Federal Home Loan Bank advances	(50,000)	(145,000)
Proceeds from exercise of common stock warrants		132
Proceeds from exercise of common stock options	220	177
Divestment of common stock issued to 401(k) plan	(50)	(151)
Net cash from financing activities	238,162	497,681
Net change in cash and cash equivalents	(5,379)	23,737
Cash and cash equivalents at beginning of period	251,543	90,927
Cash and cash equivalents at end of period	246,164	114,664
Supplemental information:
Interest paid	12,925	6,829
Income taxes paid	$ 525	$ 530

XML

Basis of Presentation

3 Months Ended

Mar. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

NOTE 1—BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with instructions to Form 10-Q and therefore do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, and cash flows in conformity with U.S. generally accepted accounting principles (U.S. GAAP). All adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the periods reported have been included as required by Regulation S-X, Rule 10-01. All such adjustments are of a normal recurring nature. It is suggested that these interim consolidated financial statements and notes be read in conjunction with the financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K filed with the SEC on March 16, 2018.

These consolidated financial statements include the accounts of Franklin Financial Network, Inc. (“FFN”), and its wholly-owned subsidiaries, Franklin Synergy Bank (“Franklin Synergy” or the “Bank”) and Franklin Synergy Risk Management, Inc. (collectively, the “Company”). Franklin Synergy Investments of Tennessee, Inc., Franklin Synergy Investments of Nevada, Inc., and Franklin Synergy Preferred Capital, Inc. are direct or indirect subsidiaries of the Bank and are included in these consolidated financial statements. Significant intercompany transactions and accounts are eliminated in consolidation.

Recently Adopted Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU replaces most existing revenue recognition guidance in GAAP. The new standard was effective for the Company on January 1, 2018. Adoption of ASU 2014-09 did not have a material impact on the Company’s consolidated financial statements and related disclosures as the Company’s primary sources of revenues are derived from interest earned on loans, investment securities, and other financial instruments that are not within the scope of ASU 2014-09. The Company’s revenue recognition pattern for revenue streams within the scope of ASU 2014-09, including but not limited to service charges on deposit accounts and gains/losses on the sale of OREO, did not change significantly from current practice. The standard permits the use of either the full retrospective or modified retrospective transition method. The Company elected to use the modified retrospective transition method which requires application of ASU 2014-09 to uncompleted contracts at the date of adoption. The impact on uncompleted contracts at the date of adoption of this Update was not considered material.

The Company has identified the contract with a customer, identified the performance obligations in the contract, determined the transaction price, allocated the transaction price to the performance obligations in the contract, and recognized revenue when (or as) the Company satisfied a performance obligation. Significant revenue has not been recognized in the current reporting period that results from performance obligations satisfied in previous periods. The Company’s primary sources of revenue are derived from interest and dividends earned on loans, investment securities, and other financial instruments that are not impacted by the new standard. The Company has evaluated the nature of its contracts with customers and determined that further disaggregation of revenue from contracts with customers into more granular categories beyond what is presented in the Consolidated Statements of Income was not necessary. The Company generally fully satisfies its performance obligations on its contracts with customers as services are rendered and the transaction prices are typically fixed; charged either on a periodic basis or based on activity. Because performance obligations are satisfied as services are rendered and the transaction prices are fixed, there is little judgment involved in applying the new standard that significantly affects the determination of the amount and timing of revenue from contracts with customers.

In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”). The guidance affects the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements of financial instruments. ASU 2016-01 was effective for the Company on January 1, 2018 and resulted in the use of an exit price rather than an entrance price to determine the fair value of loans not measured at fair value on a non-recurringbasis in the consolidated balance sheets. The Company does not have any equity investments that qualify for consideration under ASU 2016-01. See Note 8, “Fair Value,” for further information regarding the valuation of these loans.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” This Accounting Standards Update addresses the following eight specific cash flow issues: debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (COLIs) (including bank-owned life insurance policies (BOLIs)); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. The amendments in this Update became effective for the Company on January 1, 2018. The adoption of this ASU did not have a material impact on the Company’s financial statements.

In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business,” (“ASU 2017-01”) to improve such definition and, as a result, assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or as business combinations. The definition of a business impacts many areas of accounting including acquisitions, disposals, goodwill and consolidation. ASU 2017-01 was effective for the Company on January 1, 2018 and is to be applied under a prospective approach. The Company expects the adoption of this new guidance to impact the determination of whether future acquisitions are considered business combinations.

In May 2017, the FASB issued ASU 2017-09, “Compensation—Stock Compensation (Subtopic 718): Scope of Modification Accounting.” ASU 2017-09 clarifies when changes to terms or conditions of a share-based payment award must be accounted for as a modification. Under the new guidance, an entity will not apply modification accounting to a share-based payment award if all of the following are the same immediately before and after the change: (i) the fair value of the award, (ii) the vesting conditions of the award, and (iii) the classification of the award as either an equity or liability instrument. ASU 2017-09 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The guidance requires companies to apply the requirements prospectively to awards modified on or after the adoption date. The adoption of ASU 2017-09 did not have a significant impact on the Company’s consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

In February 2016, the FASB issued ASU 2016-02 which creates Topic 842, “Leases” and supersedes Topic 840, “Leases.” ASU 2016-02 is intended to improve financial reporting about leasing transactions, by increasing transparency and comparability among organizations. Under the new guidance, a lessee will be required to record all leases with lease terms of more than 12 months on their balance sheet as lease liabilities with a corresponding right-of-use asset. ASU 2016-02 maintains the dual model for lease accounting, requiring leases to be classified as either operating or finance, with lease classification determined in a manner similar to existing lease guidance. The new guidance will be effective for the Company for fiscal years beginning on or after December 15, 2018. Early adoption is permitted for all entities. At the time this ASU is adopted, the Company will recognize a right-of-use asset, and a lease liability for all leases, which will initially be measured at the present value of lease payments, and a single lease cost calculated so that the costs of the leases are allocated over the terms of the Company’s leases on a generally straight-line basis. Since an asset will be recognized at the time of adoption, the Company’s regulatory capital ratios will be impacted. Management is evaluating the impact ASU 2016-02 will have on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The ASU requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. The ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The ASU is effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 (i.e., January 1, 2020, for calendar year entities). Early application will be permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently gathering information, reviewing possible vendors and has formed a committee to formulate the methodology to be used. Most importantly, the Company is gathering data to enable review scenarios and to determine which calculations will produce the most reliable results. The impact of adopting ASU 2016-13 is not currently known.

In January 2017, the FASB issued ASU 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance will remain largely unchanged. ASU 2017-04 is effective for interim and annual reporting periods beginning after December 15, 2019, applied prospectively. Early adoption is permitted for any impairment tests performed after January 1, 2017. Adoption of ASU 2017-04 is not expected to have a material impact on the Company’s consolidated financial statements.

In March 2017, the FASB issued ASU 2017-08, “Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.” This Update shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date. The new guidance does not change the accounting for purchased callable debt securities held at a discount; the discount continues to be amortized to maturity. ASU 2017-08 is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. The guidance calls for a modified retrospective transition approach under which a cumulative-effect adjustment will be made to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. The Company is currently evaluating the provisions of ASU 2017-08 to determine the potential impact the new standard will have on the Company’s consolidated financial statements.

Acquisition of Civic Bank & Trust

Effective April 1, 2018, the Company acquired Civic Bank & Trust, which was located in Nashville, Tennessee. Effective with the acquisition, Dr. Anil Patel, who was the chairman of the Civic Bank & Trust board of directors, was added to the Company’s board of directors for a term expiring at the Company’s 2018 annual meeting of shareholders.

XML

Securities

3 Months Ended

Mar. 31, 2018

Investments, Debt and Equity Securities [Abstract]

Securities

NOTE 2—SECURITIES

The following table summarizes the amortized cost and fair value of the securities available for sale portfolio at March 31, 2018 and December 31, 2017 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income.

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
March 31, 2018
U.S. Treasury securities	$	289,086	$	—	$	(515	)	$	288,571
U.S. government sponsored entities and agencies		20,103		—		(209	)		19,894
Mortgage-backed securities: residential		782,579		45		(19,496	)		763,128
Mortgage-backed securities: commercial		5,123		—		(112	)		5,011
State and political subdivisions		113,295		404		(3,883	)		109,816
Total	$	1,210,186	$	449	$	(24,215	)	$	1,186,420

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
December 31, 2017
U.S. Treasury securities	$	229,119	$	—	$	(210	)	$	228,909
U.S. government sponsored entities and agencies		20,125		—		(164	)		19,961
Mortgage-backed securities: residential		641,225		102		(8,761	)		632,566
Mortgage-backed securities: commercial		5,133		—		(59	)		5,074
State and political subdivisions		113,468		1,787		(1,884	)		113,371
Total	$	1,009,070	$	1,889	$	(11,078	)	$	999,881

The amortized cost and fair value of the securities held to maturity portfolio at March 31, 2018 and December 31, 2017 and the corresponding amounts of gross unrecognized gains and losses were as follows:

	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Fair Value
March 31, 2018
Mortgage backed securities: residential	$	92,152	$	111	$	(3,495	)	$	88,768
State and political subdivisions		121,229		1,064		(173	)		122,120
Total	$	213,381	$	1,175	$	(3,668	)	$	210,888
December 31, 2017
Mortgage backed securities: residential	$	93,366	$	207	$	(1,796	)	$	91,777
State and political subdivisions		121,490		4,379		(38	)		125,831
Total	$	214,856	$	4,586	$	(1,834	)	$	217,608

The proceeds from sales and calls of securities available for sale and the associated gains and losses were as follows:

	Three Months Ended March 31,
	2018		2017
Proceeds	$	—	$	—
Gross gains		—		—
Gross losses		—		—

The amortized cost and fair value of the investment securities portfolio are shown by contractual maturity. Securities not due at a single maturity date, primarily mortgage-backed securities, are shown separately.

	March 31, 2018
	Amortized Cost		Fair Value
Available for sale
One year or less	$	289,086	$	288,571
Over one year through five years		20,103		19,894
Over five years through ten years		410		406
Over ten years		112,885		109,410
Mortgage-backed securities: residential		782,579		763,128
Mortgage-backed securities: commercial		5,123		5,011
Total	$	1,210,186	$	1,186,420
Held to maturity
One year or less	$	501	$	511
Over one year through five years		1,106		1,121
Over five years through ten years		11,875		11,907
Over ten years		107,747		108,581
Mortgage-backed securities: residential		92,152		88,768
Total	$	213,381	$	210,888

Securities pledged at March 31, 2018 and December 31, 2017 had a carrying amount of $1,168,275 and $975,518, respectively, and were pledged to secure public deposits and repurchase agreements.

At March 31, 2018 and December 31, 2017, there were no holdings of securities of any one issuer, other than the U.S. government-sponsored entities and agencies, in an amount greater than 10% of shareholders’ equity.

The following table summarizes the securities with unrealized and unrecognized losses at March 31, 2018 and December 31, 2017, aggregated by major security type and length of time in a continuous unrealized loss position:

	Less Than 12 Months					12 Months or Longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
March 31, 2018
Available for sale
U.S. Treasury securities	$	288,571	$	(515	)	$	—	$	—		$	288,571	$	(515	)
U.S. government sponsored entities and agencies		—		—			19,894		(209	)		19,894		(209	)
Mortgage-backed securities: residential		436,263		(7,882	)		295,862		(11,614	)		732,125		(19,496	)
Mortgage-backed securities: commercial		5,011		(112	)		—		—			5,011		(112	)
State and political subdivisions		11,409		(164	)		60,804		(3,719	)		72,213		(3,883	)
Total available for sale	$	741,254	$	(8,673	)	$	376,560	$	(15,542	)	$	1,117,814	$	(24,215	)
	Less Than 12 Months					12 Months or Longer					Total
	Fair Value		Unrecognized Losses			Fair Value		Unrecognized Losses			Fair Value		Unrecognized Losses
Held to maturity
Mortgage-backed securities: residential	$	13,636	$	(306	)	$	68,768	$	(3,189	)	$	82,404	$	(3,495	)
State and political subdivisions		22,825		(127	)		1,137		(46	)		23,962		(173	)
Total held to maturity	$	36,461	$	(433	)	$	69,905	$	(3,235	)	$	106,366	$	(3,668	)
	Less Than 12 Months					12 Months or Longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
December 31, 2017
Available for sale
U.S. Treasury securities	$	228,909	$	(210	)	$	—	$	—		$	228,909	$	(210	)
U.S. government sponsored entities and agencies		19,961		(164	)		—		—			19,961		(164	)
Mortgage-backed securities: residential		301,158		(2,447	)		311,366		(6,314	)		612,524		(8,761	)
Mortgage-backed securities: commercial		5,074		(59	)		—		—			5,074		(59	)
State and political subdivisions		1,298		(2	)		62,725		(1,882	)		64,023		(1,884	)
Total available for sale	$	556,400	$	(2,882	)	$	374,091	$	(8,196	)	$	930,491	$	(11,078	)
	Less Than 12 Months					12 Months or Longer					Total
	Fair Value		Unrecognized Losses			Fair Value		Unrecognized Losses			Fair Value		Unrecognized Losses
Held to maturity
Mortgage-backed securities: residential	$	11,191	$	(69	)	$	72,582	$	(1,727	)	$	83,773	$	(1,796	)
State and political subdivisions		262		(2	)		1,148		(36	)		1,410		(38	)
Total held to maturity	$	11,453	$	(71	)	$	73,730	$	(1,763	)	$	85,183	$	(1,834	)

Unrealized losses on debt securities have not been recognized into income because the issuers’ bonds are of high credit quality (rated AA or higher), management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions. The fair value is expected to recover as the bonds approach maturity.

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Loans

3 Months Ended

Mar. 31, 2018

Receivables [Abstract]

Loans

NOTE 3—LOANS

Loans at March 31, 2018 and December 31, 2017 were as follows:

	March 31, 2018			December 31, 2017
Loans that are not PCI loans
Construction and land development	$	523,660		$	494,818
Commercial real estate:
Nonfarm, nonresidential		673,497			628,554
Other		43,110			49,684
Residential real estate:
Closed-end 1-4 family		430,467			407,695
Other		172,216			169,640
Commercial and industrial		462,954			502,006
Consumer and other		3,899			3,781
Loans before net deferred loan fees		2,309,803			2,256,178
Deferred loan fees, net		(2,225	)		(1,963	)
Total loans that are not PCI loans		2,307,578			2,254,215
Total PCI loans		2,440			2,393
Allowance for loan losses		(21,738	)		(21,247	)
Total loans, net of allowance for loan losses	$	2,288,280		$	2,235,361

The following table presents the activity in the allowance for loan losses by portfolio segment for the three month periods ended March 31, 2018 and 2017:

	Construction and Land Development			Commercial Real Estate			Residential Real Estate			Commercial and Industrial			Consumer and Other			Total
Three Months Ended March 31, 2018
Allowance for loan losses:
Beginning balance	$	3,802		$	5,981		$	3,834		$	7,587		$	43		$	21,247
Provision for loan losses		582			(106	)		(241	)		328			10			573
Loans charged-off		(39	)		—			(7	)		(49	)		(11	)		(106	)
Recoveries		—			—			19			—			5			24
Total ending allowance balance	$	4,345		$	5,875		$	3,605		$	7,866		$	47		$	21,738
Three Months Ended March 31, 2017
Allowance for loan losses:
Beginning balance	$	3,776		$	4,266		$	2,398		$	6,068		$	45		$	16,553
Provision for loan losses		61			393			262			1,117			22			1,855
Loans charged-off		—			—			—			(300	)		(23	)		(323	)
Recoveries		—			—			12			—			8			20
Total ending allowance balance	$	3,837		$	4,659		$	2,672		$	6,885		$	52		$	18,105

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of March 31, 2018 and December 31, 2017. For purposes of this disclosure, recorded investment in loans excludes accrued interest receivable and deferred loan fees, net due to immateriality.

	Construction and Land Development		Commercial Real Estate		Residential Real Estate		Commercial and Industrial		Consumer and Other		Total
March 31, 2018
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	—	$	—	$	—	$	543	$	—	$	543
Collectively evaluated for impairment		4,345		5,875		3,605		7,317		47		21,189

	Construction and Land Development		Commercial Real Estate		Residential Real Estate		Commercial and Industrial		Consumer and Other		Total
Purchased credit-impaired loans		—		—		—		6		—		6
Total ending allowance balance	$	4,345	$	5,875	$	3,605	$	7,866	$	47	$	21,738
Loans:
Individually evaluated for impairment	$	165	$	—	$	694	$	2,466	$	—	$	3,325
Collectively evaluated for impairment		523,495		716,607		601,989		460,488		3,899		2,306,478
Purchased credit-impaired loans		—		371		96		1,973		—		2,440
Total ending loans balance	$	523,660	$	716,978	$	602,779	$	464,927	$	3,899	$	2,312,243
December 31, 2017
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	—	$	—	$	—	$	879	$	—	$	879
Collectively evaluated for impairment		3,802		5,981		3,834		6,708		43		20,368
Purchased credit-impaired loans		—		—		—		—		—		—
Total ending allowance balance	$	3,802	$	5,981	$	3,834	$	7,587	$	43	$	21,247
Loans:
Individually evaluated for impairment	$	217	$	—	$	834	$	3,090	$	—	$	4,141
Collectively evaluated for impairment		494,601		678,238		576,501		498,916		3,781		2,252,037
Purchased credit-impaired loans		—		380		105		1,908		—		2,393
Total ending loans balance	$	494,818	$	678,618	$	577,440	$	503,914	$	3,781	$	2,258,571

Loans collectively evaluated for impairment reported at March 31, 2018 include certain acquired loans. At March 31, 2018, these non-PCI loans had a carrying value of $50,759, comprised of contractually unpaid principal totaling $52,121 and discounts totaling $1,362. Management evaluated these loans for credit deterioration since acquisition and determined that $10 in allowance for loan losses was necessary at March 31, 2018. As of December 31, 2017, these non-PCI loans had a carrying value of $50,341, comprised of contractually unpaid principal totaling $51,767 and discounts totaling $1,426. Management evaluated these loans for credit deterioration since acquisition and determined that a $10 allowance for loan losses was necessary at December 31, 2017.

The following table presents information related to impaired loans by class of loans as of March 31, 2018 and December 31, 2017:

	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
March 31, 2018
With no allowance recorded:
Construction and land development	$	203	$	165	$	—
Commercial real estate:
Nonfarm, nonresidential		—		—		—
Residential real estate:
Closed-end 1-4 family		581		581		—
Other		113		113		—
Commercial and industrial		92		92		—
Consumer and other		—		—		—
Subtotal		989		951		—
With an allowance recorded:
Commercial and industrial		2,374		2,374		543
Subtotal		2,374		2,374		543
Total	$	3,363	$	3,325	$	543
December 31, 2017
With no allowance recorded:
Construction and land development	$	217	$	217	$	—

	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
Residential real estate:
Closed-end 1-4 family		14		14		—
Other		820		820		—
Commercial and industrial		108		108		—
Subtotal		1,159		1,159		—
With an allowance recorded:
Commercial and industrial		2,982		2,982		879
Subtotal		2,982		2,982		879
Total	$	4,141	$	4,141	$	879

The following table presents the average recorded investment of impaired loans by class of loans for the three months ended March 31, 2018 and 2017:

	Three Months Ended March 31,
Average Recorded Investment	2018		2017
With no allowance recorded:
Construction and land development	$	367	$	—
Commercial real estate:
Nonfarm, nonresidential		—		4,128
Residential real estate:
Closed-end 1-4 family		420		1,799
Other		372		120
Commercial and industrial		626		—
Subtotal		1,785		6,047
With an allowance recorded:
Commercial and industrial	$	1,785	$	2,585
Subtotal		1,785		2,585
Total	$	3,570	$	8,632

The impact on net interest income for these loans was not material to the Company’s results of operations for the three months ended March 31, 2018 and 2017.

The following table presents the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of March 31, 2018 and December 31, 2017:

	Nonaccrual		Loans Past Due Over 90 Days
March 31, 2018
Construction and land development	$	165	$	—
Residential real estate:
Closed-end 1-4 family		581		—
Other		113		12
Commercial and industrial		2,466		166
Total	$	3,325	$	178
December 31, 2017
Residential real estate:
Closed-end 1-4 family	$	257	$	14
Other		114		—
Commercial and industrial		2,466		191
Total	$	2,837	$	205

Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

The following table presents the aging of the recorded investment in past due loans as of March 31, 2018 and December 31, 2017 by class of loans:

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 89 Days Past Due		Nonaccrual		Total Past Due and Nonaccrual		Loans Not Past Due		PCI Loans		Total
March 31, 2018
Construction and land development	$	473	$	—	$	—	$	165	$	638	$	523,022	$	—	$	523,660
Commercial real estate:
Nonfarm, nonresidential		—		—		—		—		—		673,497		371		673,868
Other		5		—		—		—		5		43,105		—		43,110
Residential real estate:
Closed-end 1-4 family		610		1,060		—		581		2,251		428,216		96		430,563
Other		116		—		12		113		241		171,975		—		172,216
Commercial and industrial		440		195		166		2,466		3,267		459,687		1,973		464,927
Consumer and other		—		200		—		—		200		3,699		—		3,899
	$	1,644	$	1,455	$	178	$	3,325	$	6,602	$	2,303,201	$	2,440	$	2,312,243
December 31, 2017
Construction and land development	$	1,918	$	136	$	—	$	—	$	2,054	$	492,764	$	—	$	494,818
Commercial real estate:
Nonfarm, nonresidential		—		—		—		—		—		628,554		380		628,934
Other		—		—		—		—		—		49,681		—		49,684
Residential real estate:
Closed-end 1-4 family		—		—		14		257		271		407,424		105		407,800
Other		146		719		—		114		979		168,661		—		169,640
Commercial and industrial		532		27		191		2,466		3,216		498,790		1,908		503,914
Consumer and other		—		—		—		—		—		3,781		—		3,781
	$	2,596	$	882	$	205	$	2,837	$	6,520	$	2,249,658	$	2,393	$	2,258,571

Credit Quality Indicators: The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes non-homogeneous loans, such as commercial and commercial real estate loans as well as non-homogeneous residential real estate loans. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk ratings:

Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass-rated loans. The following table includes PCI loans, which are included in the “Substandard” column. Based on the most recent analysis performed, the risk category of loans by class of loans is as follows as of March 31, 2018 and December 31, 2017:

	Pass		Special Mention		Substandard		Total
March 31, 2018
Construction and land development	$	519,831	$	3,664	$	165	$	523,660
Commercial real estate:
Nonfarm, nonresidential		658,683		11,098		4,087		673,868
Other		42,730		—		380		43,110
Residential real estate:
Closed-end 1-4 family		426,856		—		3,707		430,563
Other		170,467		—		1,749		172,216
Commercial and industrial		448,395		9,003		7,529		464,927
Consumer and other		3,896		3		—		3,899
	$	2,270,858	$	23,768	$	17,617	$	2,312,243
	Pass		Special Mention		Substandard		Total
December 31, 2017
Construction and land development	$	494,601	$	—	$	217	$	494,818
Commercial real estate:
Nonfarm, nonresidential		609,458		12,602		6,874		628,934
Other		49,303		—		381		49,684
Residential real estate:
1-4 family		404,832		615		2,353		407,800
Other		167,886		—		1,754		169,640
Commercial and industrial		485,363		10,350		8,201		503,914
Consumer and other		3,777		4		—		3,781
	$	2,215,220	$	23,571	$	19,780	$	2,258,571

Troubled Debt Restructurings

As of March 31, 2018 and December 31, 2017, the Company’s loan portfolio contains one loan that has been modified in a troubled debt restructuring with a balance of $165 and $608, respectively. During the first quarter of 2018 one loan was added as a troubled debt restructuring with a balance of $165, and the loan that was previously reported as a troubled debt restructuring at December 31, 2017 was paid down by $575 by the borrower, and the remaining $33 was charged off.

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Loan Servicing

3 Months Ended

Mar. 31, 2018

Text Block [Abstract]

Loan Servicing

NOTE 4—LOAN SERVICING

Loans serviced for others are not reported as assets. The principal balances of these loans at March 31, 2018 and December 31, 2017 are as follows:

	March 31, 2018		December 31, 2017
Loan portfolios serviced for:
Federal Home Loan Mortgage Corporation	$	507,375	$	507,233
Other		4,589		4,626

The components of net loan servicing fees for the three months ended March 31, 2018 and 2017 were as follows:

	Three Months Ended March 31,
	2018			2017
Loan servicing fees, net:
Loan servicing fees	$	333		$	320
Amortization of loan servicing fees		(214	)		(213	)
Change in impairment		—			—
Total	$	119		$	107

The fair value of servicing rights was estimated by management to be approximately $5,305 at March 31, 2018. Fair value for March 31, 2018 was determined using a weighted average discount rate of 10.5% and a weighted average prepayment speed of 9.4%. At December 31, 2017, the fair value of servicing rights was estimated by management to be approximately $5,089. Fair value for December 31, 2017 was determined using a weighted average discount rate of 10.5% and a weighted average prepayment speed of 9.9%.

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Securities Sold Under Agreement to Repurchase

3 Months Ended

Mar. 31, 2018

Brokers and Dealers [Abstract]

Securities Sold Under Agreement to Repurchase

NOTE 5—SECURITIES SOLD UNDER AGREEMENT TO REPURCHASE

Our subsidiary bank enters into borrowing arrangements with our retail business customers and correspondent banks through agreements to repurchase (“securities sold under agreements to repurchase”) under which the bank pledges investment securities owned and under its control as collateral against these short-term borrowing arrangements. At maturity the securities underlying the agreements are returned to the Company. At March 31, 2018 and December 31, 2017, these short-term borrowings totaled $36,071 and $31,004, respectively, and were secured by securities with carrying amounts of $41,377 and $41,618, respectively. At March 31, 2018, all of the Company’s repurchase agreements had one-day maturities.

The following table provides additional details as of March 31, 2018:

As of March 31, 2018	Mortgage- Backed Securities: Residential			State and Political Subdivisions			Total
Market value of securities pledged	$	919		$	40,845		$	41,764
Borrowings related to pledged amounts	$	—		$	36,071		$	36,071
Market value pledged as a % of borrowings		—	%		113	%		116	%

The following table provides additional details as of December 31, 2017:

As of December 31, 2017	Mortgage- Backed Securities: Residential			State and Political Subdivisions			Total
Market value of securities pledged	$	1,004		$	42,109		$	43,113
Borrowings related to pledged amounts	$	—		$	31,004		$	31,004
Market value pledged as a % of borrowings		—	%		136	%		139	%

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Share-Based Payments

3 Months Ended

Mar. 31, 2018

Equity [Abstract]

Share-Based Payments

NOTE 6—SHARE-BASED PAYMENTS

In connection with the Company’s 2010 private offering, 32,425 warrants were issued to shareholders, one warrant for every twenty shares of common stock purchased. Each warrant allowed the shareholders to purchase an additional share of common stock at $12.00 per share. The warrants were issued with an effective date of March 30, 2010 and were exercisable in whole or in part up to seven years following the date of issuance. The warrants were detachable from the common stock. There were 11,011 warrants exercised during the three months ended March 31, 2017. The warrants expired on March 30, 2017; therefore at March 31, 2018, there were no outstanding warrants associated with the 2010 offering. A summary of the stock warrant activity for the three months ended March 31, 2018 and 2017 follows:

	March 31, 2018		March 31, 2017
Stock warrants exercised:
Intrinsic value of warrants exercised	$	—	$	291
Cash received from warrants exercised		—		132

The Company has two share based compensation plans as described below. Total compensation cost that has been charged against income for those plans was $759 and $447 for the three months ended March 31, 2018 and 2017, respectively. The total income tax benefit, which is shown on the Consolidated Statements of Income as a reduction of income tax expense, was $63 and $93 for the three months ended March 31, 2018 and 2017, respectively.

Stock Options: The Company’s 2007 Omnibus Equity Incentive Plan (the “2007 Plan”), as amended and shareholder-approved, provided for authorized shares up to 4,000,000. The 2007 Plan provided that no options intended to be ISOs may be granted after April 9, 2017. As a result, the Company’s board of directors approved, and recommended to its shareholders for approval, an equity incentive plan, the 2017 Omnibus Equity Incentive Plan (the “2017 Plan”). The Company’s shareholders approved the 2017 Plan at the 2017 annual meeting of shareholders. The terms of the 2017 Plan are substantially similar to the terms of the 2007 Plan it was intended to replace. The 2017 Plan provides for authorized shares up to 5,000,000. At March 31, 2018, there were 4,709,454 authorized shares available for issuance under the 2017 Plan.

On April 12, 2018, the Compensation Committee of the Company’s Board of Directors (the “Committee”) approved the Amended and Restated 2017 Omnibus Equity Incentive Plan (the “Amended and Restated 2017 Plan”) in order to make the following amendments to the 2017 Plan in response to feedback the Company received from its shareholders:

• reduce the number of shares of common stock available for issuance from 5,000,000 shares under the 2017 Plan to 3,500,000 shares under the Amended and Restated 2017 Plan;

• revise the definition of Change in Control to include only actual changes in control (and removed triggering events that represented a potential change in control);

• remove the Committee’s authority to accelerate vesting (other than in cases of termination of the participant’s employment);

• remove certain provisions allowing recycling of shares and to clarify that (1) shares tendered in payment of an option, (2) shares delivered or withheld to satisfy tax withholding obligations and (3) shares covered by a stock-settled SAR or other awards that were not issued upon settlement of the award will not be available for issuance under the Amended and Restated 2017 Plan; and

• remove the ability to grant reload options (automatic granting of new options at the time of exercise).

Employee, organizer and director awards are generally granted with an exercise price equal to the market price of the Company’s common stock at the date of grant; those option awards have a vesting period of three to five years and have a ten-year contractual term. The Company assigns discretion to its Board of Directors to make grants either as qualified incentive stock options or as non-qualified stock options. All employee grants are intended to be treated as qualified incentive stock options, if allowable. All other grants are expected to be treated as non-qualified.

The fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model that uses the assumptions noted in the table below. Expected stock price volatility is based on historical volatilities of a peer group. The Company uses historical data to estimate option exercise and post-vesting termination behavior.

The expected term of options granted represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

The fair value of options granted was determined using the following weighted-average assumptions as of grant date.

	March 31, 2018			March 31, 2017
Risk-free interest rate		2.49	%		2.28	%
Expected term		7.5 years			7.4 years
Expected stock price volatility		32.48	%		34.20	%
Dividend yield		0.00	%		0.04	%

The weighted average fair value of options granted for the three months ended March 31, 2018 and 2017 were $14.77 and $17.25, respectively.

A summary of the activity in the plans for the three months ended March 31, 2018 follows:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at beginning of year		1,507,168		$	21.37		6.55	$	19,180
Granted		28,125			36.40
Exercised		(21,348	)		10.32
Forfeited, expired, or cancelled		(11,754	)		29.37
Outstanding at period end		1,502,191		$	21.75		6.41	$	16,299
Vested or expected to vest		1,427,082		$	21.75		6.41	$	15,484
Exercisable at period end		760,955		$	14.17		4.75	$	14,022

	For the three months ended March 31,
	2018		2017
Stock options exercised:
Intrinsic value of options exercised	$	511	$	610
Cash received from options exercised		220		177
Tax benefit realized from option exercises		63		93

As of March 31, 2018, there was $5,708 of total unrecognized compensation cost related to non-vested stock options granted under the plans. The cost is expected to be recognized over a weighted-average period of 1.6 years.

Restricted Stock: Additionally, the 2007 Omnibus Equity Incentive Plan and the 2017 Omnibus Equity Incentive Plan each provides for the granting of restricted share awards and other performance related incentives. When the restricted shares are awarded, a participant receives voting and dividend rights with respect to the shares, but is not able to transfer the shares until the restrictions have lapsed. These awards have a vesting period of three to five years and vest in equal annual installments on the anniversary date of the grant.

A summary of activity for non-vested restricted share awards for the three months ended March 31, 2018 is as follows:

Non-vested Shares	Shares			Weighted- Average Grant- Date Fair Value
Non-vested at December 31, 2017		94,181		$	25.42
Granted		—			—
Vested		—			—
Forfeited		(334	)		37.35
Non-vested at March 31, 2018		96,409		$	25.38

Compensation expense associated with the restricted share awards is recognized on a straight-line basis over the time period that the restrictions associated with the awards lapse based on the total cost of the award at the grant date. As of March 31, 2018, there was $1,580 of total unrecognized compensation cost related to non-vested shares granted under the Plan. The cost is expected to be recognized over a weighted-average period of 3.1 years. There were no shares that vested during the three months ended March 31, 2018 or 2017, respectively.

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Regulatory Capital Matters

3 Months Ended

Mar. 31, 2018

Banking and Thrift [Abstract]

Regulatory Capital Matters

NOTE 7—REGULATORY CAPITAL MATTERS

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. Banks (Basel III rules) became effective for the Company on January 1, 2016 with full compliance with all of the requirements being phased in over a multi-year schedule, and fully phased in by January 1, 2019.

The Basel III rules additionally provide for countercyclical capital requirements so that the required amount of capital increases in times of economic expansion and decreases in times of economic contraction, consistent with safety and soundness. Under the Basel III rules, banks must maintain a capital conservation buffer consisting of additional Common Equity Tier 1 Capital equal to 2.5% of risk-weighted assets above each of the required minimum capital levels in order to avoid limitations on paying dividends, engaging in share repurchases, and paying certain discretionary bonuses. This new capital conservation buffer requirement was phased in beginning January 2016 at 0.625% of risk-weighted assets and will increase each year until fully implemented at 2.5% in January 2019. The capital conservation buffer in effect for 2018 is 1.875%.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At March 31, 2018, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. Management believes that, as of March 31, 2018, the Company and Bank met all capital adequacy requirements to which they are subject. There are no conditions or events since that notification that management believes have changed the institution’s category.

Actual and required capital amounts and ratios are presented below as of March 31, 2018 and December 31, 2017 for the Company and Bank:

	Actual					Required For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Regulations
	Amount		Ratio			Amount		Ratio			Amount		Ratio
March 31, 2018
Company common equity Tier 1 capital to risk-weighted assets	$	310,218		11.45	%	$	121,874		4.50	%		N/A		N/A
Company Total Capital to risk weighted assets	$	390,600		14.42	%	$	216,665		8.00	%		N/A		N/A
Company Tier 1 (Core) Capital to risk weighted assets	$	310,218		11.45	%	$	162,499		6.00	%		N/A		N/A
Company Tier 1 (Core) Capital to average assets	$	310,218		7.80	%	$	158,986		4.00	%		N/A		N/A
Bank common equity Tier 1 capital to risk-weighted assets	$	365,295		13.49	%	$	121,874		4.50	%	$	176,040		6.50	%
Bank Total Capital to risk weighted assets	$	387,126		14.29	%	$	216,665		8.00	%	$	270,831		10.00	%
Bank Tier 1 (Core) Capital to risk weighted assets	$	365,295		13.49	%	$	162,499		6.00	%	$	216,665		8.00	%
Bank Tier 1 (Core) Capital to average assets	$	365,295		9.19	%	$	158,857		4.00	%	$	198,572		5.00	%
December 31, 2017
Company common equity Tier 1 capital to risk-weighted assets	$	299,229		11.37	%	$	118,479		4.50	%		N/A		N/A
Company Total Capital to risk weighted assets	$	379,083		14.40	%	$	210,629		8.00	%		N/A		N/A
Company Tier 1 (Core) Capital to risk weighted assets	$	299,229		11.37	%	$	157,972		6.00	%		N/A		N/A
Company Tier 1 (Core) Capital to average assets	$	299,229		8.25	%	$	145,100		4.00	%		N/A		N/A
Bank common equity Tier 1 capital to risk-weighted assets	$	353,512		13.43	%	$	118,489		4.50	%	$	171,151		6.50	%
Bank Total Capital to risk weighted assets	$	374,851		14.24	%	$	210,647		8.00	%	$	263,309		10.00	%
Bank Tier 1 (Core) Capital to risk weighted assets	$	353,512		13.43	%	$	157,985		6.00	%	$	210,647		8.00	%
Bank Tier 1 (Core) Capital to average assets	$	353,512		9.75	%	$	145,003		4.00	%	$	181,253		5.00	%

Note: Minimum ratios presented exclude the capital conservation buffer

Dividend Restrictions: The Company’s principal source of funds for dividend payments is dividends received from the Bank. Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year’s net profits, combined with the retained net profits of the preceding two years, subject to the capital requirements described above. The Bank may not currently pay dividends without prior written approval from its primary regulatory agencies.

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Fair Value

3 Months Ended

Mar. 31, 2018

Fair Value Disclosures [Abstract]

Fair Value

NOTE 8—FAIR VALUE

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as 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.

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Securities: The fair values for investment securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2), using matrix pricing. Matrix pricing is a mathematical technique commonly used to price debt securities that are not actively traded, values debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3).

Derivatives: The fair values of derivatives are based on valuation models using observable market data as of the measurement date (Level 2).

Impaired Loans: The fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly. Appraisals for impaired loans are generally obtained annually but may be obtained more frequently based on changing circumstances as part of the aforementioned quarterly evaluation.

Foreclosed Assets: Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals which are updated no less frequently than annually. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Foreclosed assets are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Appraisals for both collateral-dependent impaired loans and real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, a member of the credit administration department reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. On an annual basis, the Company compares the actual selling price of collateral that has been sold to the most recent appraised value to determine what additional adjustment should be made to the appraisal value to arrive at fair value.

Loans Held For Sale: The Company has elected the fair value option for loans held for sale to align with other accounting policies related to mortgage banking, such as mortgage banking derivatives. These loans are typically sold to an investor following loan origination and the fair value of such accounts are readily available based on direct quotes from investors or similar transactions experienced in the secondary loan market. Fair value adjustments, as well as realized gains and losses are recorded in current earnings. Fair value is determined by market prices for similar transactions adjusted for specific attributes of that loan (Level 2).

Assets and liabilities measured at fair value on a recurring basis, including financial assets and liabilities for which the Company has elected the fair value option, are summarized below:

	Fair Value Measurements at March 31, 2018 Using:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets
Securities available for sale
U.S. Treasury securities	$	—	$	288,571	$	—
U.S. government sponsored entities and agencies		—		19,894		—
Mortgage-backed securities-residential		—		763,128		—
Mortgage-backed securities-commercial		—		5,011		—
State and political subdivisions		—		109,816		—
Total securities available for sale	$	—	$	1,186,420	$	—
Loans held for sale	$	—	$	12,871	$	—
Mortgage banking derivatives	$	—	$	382	$	—
Financial Liabilities
Mortgage banking derivatives	$	—	$	45	$	—
	Fair Value Measurements at December 31, 2017 Using:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets
Securities available for sale
U.S. Treasury securities	$	—	$	228,909	$	—
U.S. government sponsored entities and agencies		—		19,961		—
Mortgage-backed securities-residential		—		632,566		—
Mortgage-backed securities-commercial		—		5,074		—
State and political subdivisions		—		113,371		—
Total securities available for sale	$	—	$	999,881	$	—
Loans held for sale	$	—	$	12,024	$	—
Mortgage banking derivatives	$	—	$	175	$	—
Financial Liabilities
Mortgage banking derivatives	$	—	$	35	$	—

As of March 31, 2018, the unpaid principal balance of loans held for sale was $12,554 resulting in an unrealized gain of $317 included in gains on sale of loans. As of December 31, 2017, the unpaid principal balance of loans held for sale was $11,681, resulting in an unrealized gain of $343 included in gains on sale of loans. For the three months ended March 31, 2018 and 2017, the change in fair value related to loans held for sale, which is included in gain on sale of loans, was $(26) and $113, respectively. None of these loans were 90 days or more past due or on nonaccrual as of March 31, 2018 and December 31, 2017.

There were no transfers between level 1 and 2 during 2018 or 2017.

Assets measured at fair value on a non-recurring basis are summarized below:

There was one collateral-dependent commercial and industrial impaired loans carried at fair value of $1,831 as of March 31, 2018 and December 31, 2017. For the three months ended March 31, 2018 and 2017, there was no additional provision for loan losses recorded related to impaired loans recorded at fair value of collateral.

Foreclosed assets measured at fair value less costs to sell, had a net carrying amount of $1,503 as of March 31, 2018 and December 31, 2017. The foreclosed property was previously collateral for a commercial real estate loan. There were no properties at March 31, 2018 or 2017 that had required write-downs to fair value resulting in no write downs for the three months ended March 31, 2018 and 2017, respectively.

The carrying amounts and estimated fair values of financial instruments at March 31, 2018 and December 31, 2017 are as follows:

	Carrying Amount		Fair Value Measurements at March 31, 2018 Using:
			Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	246,164	$	246,164	$	—	$	—	$	246,164
Certificates of deposit held at other financial institutions		2,855		—		2,855		—		2,855
Securities available for sale		1,186,420		—		1,186,420		—		1,186,420
Securities held to maturity		213,381		—		210,888		—		210,888
Loans held for sale		12,871		—		12,871		—		12,871
Net loans		2,288,280		—		—		2,295,275		2,295,275
Restricted equity securities		19,606		n/a		n/a		n/a		n/a
Servicing rights, net		3,602		—		—		5,305		5,305
Mortgage banking derivative assets		382		—		382		—		382
Accrued interest receivable		12,937		182		6,400		6,355		12,937
Financial liabilities
Deposits	$	3,355,153	$	2,026,994	$	1,284,426	$	—	$	3,311,420
Repurchase agreements		36,071		—		36,071		—		36,071
Federal Home Loan Bank advances		317,000		—		314,341		—		314,341
Subordinated notes, net		58,559		—		—		62,259		62,259
Mortgage banking derivative liabilities		45		—		45		—		45
Accrued interest payable		2,775		93		2,332		350		2,775
	Carrying Amount		Fair Value Measurements at December 31, 2017 Using:
			Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	251,543	$	251,543	$	—	$	—	$	251,543
Certificates of deposit held at other financial institutions		2,855		—		2,855		—		2,855
Securities available for sale		999,881		—		999,881		—		999,881
Securities held to maturity		214,856		—		217,608		—		217,608
Loans held for sale		12,024		—		12,024		—		12,024
Net loans		2,235,361		—		—		2,230,607		2,230,607
Restricted equity securities		18,492		n/a		n/a		n/a		n/a
Servicing rights, net		3,620		—		—		5,089		5,089
Mortgage banking derivative assets		175		—		175		—		175
Accrued interest receivable		11,947		73		5,724		6,150		11,947
Financial liabilities
Deposits	$	3,167,228	$	1,911,928	$	1,224,041	$	—	$	3,135,969
Federal funds purchased and repurchase agreements		31,004		—		31,004		—		31,004
Federal Home Loan Bank advances		272,000		—		270,311		—		270,311
Subordinated notes, net		58,515		—		—		59,951		59,951
Mortgage banking derivative liabilities		35		—		35		—		35
Accrued interest payable		2,769		51		2,030		688		2,769

The methods and assumptions not previously described used to estimate fair values are described as follows:

(a) Cash and Cash Equivalents: The carrying amounts of cash and short-term instruments approximate fair values and are classified as Level 1.

(b) Loans: Fair values of loans, excluding loans held for sale, are estimated as follows: In accordance with ASU 2016-01, the fair value of loans held for investment, excluding previously presented impaired loans measured at fair value on a non-recurring basis, is estimated using a cash flow projection methodology that relies on three primary assumptions: (1) the expected prepayment rate of loans; (2) the magnitude of future net losses based on expected default rate and severity of loss; and (3) the discount rate applicable to the expected cash flows of the loan portfolio. Loans are considered a Level 3 classification.

(c) Restricted Equity Securities: It is not practical to determine the fair value of Federal Home Loan Bank or Federal Reserve Bank stock due to restrictions placed on its transferability.

(d) Mortgage Servicing Rights: Fair value of mortgage servicing rights is based on valuation models that calculate the present value of estimated net cash flows based on industry market data. The valuation model incorporates assumptions that market participants would use in estimating future net cash flows resulting in a Level 3 classification.

(e) Deposits: The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in a Level 1 classification. The carrying amounts of fixed-term money market accounts approximate their fair values at the reporting date resulting in a Level 1 classification. Fair values for certificates of deposit are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.

(f) Federal Funds Purchased and Repurchase Agreements: The carrying amounts of federal funds purchased, borrowings under repurchase agreements, and other short-term borrowings, generally maturing within ninety days, approximate their fair values resulting in a Level 2 classification.

(g) Federal Home Loan Bank Advances: The fair values of the Company’s long-term borrowings are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification.

(h) Subordinated Notes: The fair values of the Company’s subordinated notes are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 3 classification.

(i) Accrued Interest Receivable/Payable: The carrying amounts of accrued interest approximate fair value resulting in a Level 1, Level 2 or Level 3 classification based on the asset/liability with which they are associated.

(j) Off-balance Sheet Instruments: Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair value of commitments is not material.

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Earnings Per Share

3 Months Ended

Mar. 31, 2018

Earnings Per Share [Abstract]

Earnings Per Share

NOTE 9—EARNINGS PER SHARE

The two-class method is used in the calculation of basic and diluted earnings per share. Under the two-class method, earnings available to common shareholders for the period are allocated between common shareholders and participating securities according to dividends declared (or accumulated) and participation rights in undistributed earnings. The factors used in the earnings per share computation follow:

	Three Months Ended March 31,
	2018			2017
Basic
Net income available to common shareholders	$	10,052		$	7,934
Less: earnings allocated to participating securities		(71	)		(65	)
Net income allocated to common shareholders	$	9,981		$	7,869
Weighted average common shares outstanding including participating securities		13,249,728			13,049,012
Less: Participating securities		(94,010	)		(106,323	)
Average shares		13,155,718			12,942,689
Basic earnings per common share	$	0.76		$	0.61
Diluted
Net income allocated to common shareholders	$	9,981		$	7,869
Weighted average common shares outstanding for basic earnings per common share		13,155,718			12,942,689
Add: Dilutive effects of assumed exercises of stock options		516,666			708,694
Add: Dilutive effects of assumed exercises of stock warrants		—			5,974
Average shares and dilutive potential common shares		13,672,384			13,657,357
Diluted earnings per common share	$	0.73		$	0.58

For the three months ended March 31, 2018 and 2017, stock options for 411,279 and 108,000 shares of common stock were not considered in computing diluted earnings per common share because they were antidilutive.

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Subordinated Debt Issuance

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

Subordinated Debt Issuance

NOTE 10—SUBORDINATED DEBT ISSUANCE

The Company’s subordinated notes, net of issuance costs, totaled $58,559 and $58,515 at March 31, 2018 and at December 31, 2017, respectively. For regulatory capital purposes, the subordinated notes are treated as Tier 2 capital, subject to certain limitations, and are included in total regulatory capital when calculating the Company’s total capital to risk weighted assets ratio as indicated in Note 7 of these consolidated financial statements.

The Company completed the issuance of $60,000 in principal amount of subordinated notes in two separate offerings. In March 2016, $40,000 of 6.875% fixed-to-floating rate subordinated notes (the “March 2016 Subordinated Notes”) were issued in a public offering to accredited institutional investors, and in June 2016, $20,000 of 7.00% fixed-to-floating rate subordinated notes (the “June 2016 Subordinated Notes”) were issued to certain accredited institutional investors in a private offering. The subordinated notes are unsecured and will rank at least equally with all of the Company’s other unsecured subordinated indebtedness and will be effectively subordinated to all of our secured debt to the extent of the value of the collateral securing such debt. The subordinated notes will be subordinated in right of payment to all of our existing and future senior indebtedness, and will rank structurally junior to all existing and future liabilities of our subsidiaries including, in the case of the Company’s bank subsidiary, its depositors, and any preferred equity holders of our subsidiaries. The holders of the subordinated notes may be fully subordinated to interests held by the U.S. government in the event that we enter into a receivership, insolvency, liquidation, or similar proceeding.

The issuance costs related to the March 2016 Subordinated Notes amounted to $1,382 and are being amortized as interest expense over the ten-year term of the March 2016 Subordinated Notes. The issuance costs related to the June 2016 Subordinated Notes were $404 and are being amortized as interest expense over the ten-year term of the June 2016 Subordinated Notes. For the three months ended March 31, 2018 and 2017, amortization of issuance costs has amounted to $45 for both periods.

The following table summarizes the terms of each subordinated note offering:

	March 2016 Subordinated Notes	June 2016 Subordinated Notes
Principal amount issued	$40,000	$20,000
Maturity date	March 30, 2026	July 1, 2026
Initial fixed interest rate	6.875%	7.00%
Initial interest rate period	5 years	5 years
First interest rate change date	March 30, 2021	July 1, 2021
Interest payment frequency through year five*	Semiannually	Semiannually
Interest payment frequency after five years*	Quarterly	Quarterly
Interest repricing index and margin	3-month LIBOR plus 5.636%	3-month LIBOR plus 6.04%
Repricing frequency after five years	Quarterly	Quarterly

* Through March 31, 2018 all interest payments have been made in accordance with the terms of the agreements.

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Basis of Presentation (Policies)

3 Months Ended

Mar. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU replaces most existing revenue recognition guidance in GAAP. The new standard was effective for the Company on January 1, 2018. Adoption of ASU 2014-09 did not have a material impact on the Company’s consolidated financial statements and related disclosures as the Company’s primary sources of revenues are derived from interest earned on loans, investment securities, and other financial instruments that are not within the scope of ASU 2014-09. The Company’s revenue recognition pattern for revenue streams within the scope of ASU 2014-09, including but not limited to service charges on deposit accounts and gains/losses on the sale of OREO, did not change significantly from current practice. The standard permits the use of either the full retrospective or modified retrospective transition method. The Company elected to use the modified retrospective transition method which requires application of ASU 2014-09 to uncompleted contracts at the date of adoption. The impact on uncompleted contracts at the date of adoption of this Update was not considered material.

The Company has identified the contract with a customer, identified the performance obligations in the contract, determined the transaction price, allocated the transaction price to the performance obligations in the contract, and recognized revenue when (or as) the Company satisfied a performance obligation. Significant revenue has not been recognized in the current reporting period that results from performance obligations satisfied in previous periods. The Company’s primary sources of revenue are derived from interest and dividends earned on loans, investment securities, and other financial instruments that are not impacted by the new standard. The Company has evaluated the nature of its contracts with customers and determined that further disaggregation of revenue from contracts with customers into more granular categories beyond what is presented in the Consolidated Statements of Income was not necessary. The Company generally fully satisfies its performance obligations on its contracts with customers as services are rendered and the transaction prices are typically fixed; charged either on a periodic basis or based on activity. Because performance obligations are satisfied as services are rendered and the transaction prices are fixed, there is little judgment involved in applying the new standard that significantly affects the determination of the amount and timing of revenue from contracts with customers.

In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”). The guidance affects the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements of financial instruments. ASU 2016-01 was effective for the Company on January 1, 2018 and resulted in the use of an exit price rather than an entrance price to determine the fair value of loans not measured at fair value on a non-recurring basis in the consolidated balance sheets. The Company does not have any equity investments that qualify for consideration under ASU 2016-01. See Note 8, “Fair Value,” for further information regarding the valuation of these loans.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” This Accounting Standards Update addresses the following eight specific cash flow issues: debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (COLIs) (including bank-owned life insurance policies (BOLIs)); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. The amendments in this Update became effective for the Company on January 1, 2018. The adoption of this ASU did not have a material impact on the Company’s financial statements.

In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business,” (“ASU 2017-01”) to improve such definition and, as a result, assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or as business combinations. The definition of a business impacts many areas of accounting including acquisitions, disposals, goodwill and consolidation. ASU 2017-01 was effective for the Company on January 1, 2018 and is to be applied under a prospective approach. The Company expects the adoption of this new guidance to impact the determination of whether future acquisitions are considered business combinations.

In May 2017, the FASB issued ASU 2017-09, “Compensation—Stock Compensation (Subtopic 718): Scope of Modification Accounting.” ASU 2017-09 clarifies when changes to terms or conditions of a share-based payment award must be accounted for as a modification. Under the new guidance, an entity will not apply modification accounting to a share-based payment award if all of the following are the same immediately before and after the change: (i) the fair value of the award, (ii) the vesting conditions of the award, and (iii) the classification of the award as either an equity or liability instrument. ASU 2017-09 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The guidance requires companies to apply the requirements prospectively to awards modified on or after the adoption date. The adoption of ASU 2017-09 did not have a significant impact on the Company’s consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

Recent Accounting Pronouncements Not Yet Adopted

In February 2016, the FASB issued ASU 2016-02 which creates Topic 842, “Leases” and supersedes Topic 840, “Leases.” ASU 2016-02 is intended to improve financial reporting about leasing transactions, by increasing transparency and comparability among organizations. Under the new guidance, a lessee will be required to record all leases with lease terms of more than 12 months on their balance sheet as lease liabilities with a corresponding right-of-use asset. ASU 2016-02 maintains the dual model for lease accounting, requiring leases to be classified as either operating or finance, with lease classification determined in a manner similar to existing lease guidance. The new guidance will be effective for the Company for fiscal years beginning on or after December 15, 2018. Early adoption is permitted for all entities. At the time this ASU is adopted, the Company will recognize a right-of-use asset, and a lease liability for all leases, which will initially be measured at the present value of lease payments, and a single lease cost calculated so that the costs of the leases are allocated over the terms of the Company’s leases on a generally straight-line basis. Since an asset will be recognized at the time of adoption, the Company’s regulatory capital ratios will be impacted. Management is evaluating the impact ASU 2016-02 will have on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The ASU requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. The ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The ASU is effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 (i.e., January 1, 2020, for calendar year entities). Early application will be permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently gathering information, reviewing possible vendors and has formed a committee to formulate the methodology to be used. Most importantly, the Company is gathering data to enable review scenarios and to determine which calculations will produce the most reliable results. The impact of adopting ASU 2016-13 is not currently known.

In January 2017, the FASB issued ASU 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance will remain largely unchanged. ASU 2017-04 is effective for interim and annual reporting periods beginning after December 15, 2019, applied prospectively. Early adoption is permitted for any impairment tests performed after January 1, 2017. Adoption of ASU 2017-04 is not expected to have a material impact on the Company’s consolidated financial statements.

In March 2017, the FASB issued ASU 2017-08, “Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.” This Update shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date. The new guidance does not change the accounting for purchased callable debt securities held at a discount; the discount continues to be amortized to maturity. ASU 2017-08 is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. The guidance calls for a modified retrospective transition approach under which a cumulative-effect adjustment will be made to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. The Company is currently evaluating the provisions of ASU 2017-08 to determine the potential impact the new standard will have on the Company’s consolidated financial statements.

Acquisition of Civic Bank & Trust

Acquisition of Civic Bank & Trust

Effective April 1, 2018, the Company acquired Civic Bank & Trust, which was located in Nashville, Tennessee. Effective with the acquisition, Dr. Anil Patel, who was the chairman of the Civic Bank & Trust board of directors, was added to the Company’s board of directors for a term expiring at the Company’s 2018 annual meeting of shareholders.

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Securities (Tables)

3 Months Ended

Mar. 31, 2018

Investments, Debt and Equity Securities [Abstract]

Summary of Amortized Cost and Fair Value of Available for Sale Securities

The following table summarizes the amortized cost and fair value of the securities available for sale portfolio at March 31, 2018 and December 31, 2017 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income.

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
March 31, 2018
U.S. Treasury securities	$	289,086	$	—	$	(515	)	$	288,571
U.S. government sponsored entities and agencies		20,103		—		(209	)		19,894
Mortgage-backed securities: residential		782,579		45		(19,496	)		763,128
Mortgage-backed securities: commercial		5,123		—		(112	)		5,011
State and political subdivisions		113,295		404		(3,883	)		109,816
Total	$	1,210,186	$	449	$	(24,215	)	$	1,186,420

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
December 31, 2017
U.S. Treasury securities	$	229,119	$	—	$	(210	)	$	228,909
U.S. government sponsored entities and agencies		20,125		—		(164	)		19,961
Mortgage-backed securities: residential		641,225		102		(8,761	)		632,566
Mortgage-backed securities: commercial		5,133		—		(59	)		5,074
State and political subdivisions		113,468		1,787		(1,884	)		113,371
Total	$	1,009,070	$	1,889	$	(11,078	)	$	999,881

Schedule of Amortized Cost and Fair Value of Held to Maturity Securities Portfolio

The amortized cost and fair value of the securities held to maturity portfolio at March 31, 2018 and December 31, 2017 and the corresponding amounts of gross unrecognized gains and losses were as follows:

	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Fair Value
March 31, 2018
Mortgage backed securities: residential	$	92,152	$	111	$	(3,495	)	$	88,768
State and political subdivisions		121,229		1,064		(173	)		122,120
Total	$	213,381	$	1,175	$	(3,668	)	$	210,888
December 31, 2017
Mortgage backed securities: residential	$	93,366	$	207	$	(1,796	)	$	91,777
State and political subdivisions		121,490		4,379		(38	)		125,831
Total	$	214,856	$	4,586	$	(1,834	)	$	217,608

Summary of Proceeds from Sales and Calls of Securities Available for Sale and Associated Gains and Losses

The proceeds from sales and calls of securities available for sale and the associated gains and losses were as follows:

	Three Months Ended March 31,
	2018		2017
Proceeds	$	—	$	—
Gross gains		—		—
Gross losses		—		—

Schedule of Amortized Cost and Fair Value of Investment Securities Portfolio by Contractual Maturity

The amortized cost and fair value of the investment securities portfolio are shown by contractual maturity. Securities not due at a single maturity date, primarily mortgage-backed securities, are shown separately.

	March 31, 2018
	Amortized Cost		Fair Value
Available for sale
One year or less	$	289,086	$	288,571
Over one year through five years		20,103		19,894
Over five years through ten years		410		406
Over ten years		112,885		109,410
Mortgage-backed securities: residential		782,579		763,128
Mortgage-backed securities: commercial		5,123		5,011
Total	$	1,210,186	$	1,186,420
Held to maturity
One year or less	$	501	$	511
Over one year through five years		1,106		1,121
Over five years through ten years		11,875		11,907
Over ten years		107,747		108,581
Mortgage-backed securities: residential		92,152		88,768
Total	$	213,381	$	210,888

Schedule of Unrealized Losses and Fair Value by Major Security Type

The following table summarizes the securities with unrealized and unrecognized losses at March 31, 2018 and December 31, 2017, aggregated by major security type and length of time in a continuous unrealized loss position:

	Less Than 12 Months					12 Months or Longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
March 31, 2018
Available for sale
U.S. Treasury securities	$	288,571	$	(515	)	$	—	$	—		$	288,571	$	(515	)
U.S. government sponsored entities and agencies		—		—			19,894		(209	)		19,894		(209	)
Mortgage-backed securities: residential		436,263		(7,882	)		295,862		(11,614	)		732,125		(19,496	)
Mortgage-backed securities: commercial		5,011		(112	)		—		—			5,011		(112	)
State and political subdivisions		11,409		(164	)		60,804		(3,719	)		72,213		(3,883	)
Total available for sale	$	741,254	$	(8,673	)	$	376,560	$	(15,542	)	$	1,117,814	$	(24,215	)
	Less Than 12 Months					12 Months or Longer					Total
	Fair Value		Unrecognized Losses			Fair Value		Unrecognized Losses			Fair Value		Unrecognized Losses
Held to maturity
Mortgage-backed securities: residential	$	13,636	$	(306	)	$	68,768	$	(3,189	)	$	82,404	$	(3,495	)
State and political subdivisions		22,825		(127	)		1,137		(46	)		23,962		(173	)
Total held to maturity	$	36,461	$	(433	)	$	69,905	$	(3,235	)	$	106,366	$	(3,668	)
	Less Than 12 Months					12 Months or Longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
December 31, 2017
Available for sale
U.S. Treasury securities	$	228,909	$	(210	)	$	—	$	—		$	228,909	$	(210	)
U.S. government sponsored entities and agencies		19,961		(164	)		—		—			19,961		(164	)
Mortgage-backed securities: residential		301,158		(2,447	)		311,366		(6,314	)		612,524		(8,761	)
Mortgage-backed securities: commercial		5,074		(59	)		—		—			5,074		(59	)
State and political subdivisions		1,298		(2	)		62,725		(1,882	)		64,023		(1,884	)
Total available for sale	$	556,400	$	(2,882	)	$	374,091	$	(8,196	)	$	930,491	$	(11,078	)
	Less Than 12 Months					12 Months or Longer					Total
	Fair Value		Unrecognized Losses			Fair Value		Unrecognized Losses			Fair Value		Unrecognized Losses
Held to maturity
Mortgage-backed securities: residential	$	11,191	$	(69	)	$	72,582	$	(1,727	)	$	83,773	$	(1,796	)
State and political subdivisions		262		(2	)		1,148		(36	)		1,410		(38	)
Total held to maturity	$	11,453	$	(71	)	$	73,730	$	(1,763	)	$	85,183	$	(1,834	)

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Loans (Tables)

3 Months Ended

Mar. 31, 2018

Receivables [Abstract]

Summary of Loans

Loans at March 31, 2018 and December 31, 2017 were as follows:

	March 31, 2018			December 31, 2017
Loans that are not PCI loans
Construction and land development	$	523,660		$	494,818
Commercial real estate:
Nonfarm, nonresidential		673,497			628,554
Other		43,110			49,684
Residential real estate:
Closed-end 1-4 family		430,467			407,695
Other		172,216			169,640
Commercial and industrial		462,954			502,006
Consumer and other		3,899			3,781
Loans before net deferred loan fees		2,309,803			2,256,178
Deferred loan fees, net		(2,225	)		(1,963	)
Total loans that are not PCI loans		2,307,578			2,254,215
Total PCI loans		2,440			2,393
Allowance for loan losses		(21,738	)		(21,247	)
Total loans, net of allowance for loan losses	$	2,288,280		$	2,235,361

Activity in Allowance for Loan Losses by Portfolio Segment

The following table presents the activity in the allowance for loan losses by portfolio segment for the three month periods ended March 31, 2018 and 2017:

	Construction and Land Development			Commercial Real Estate			Residential Real Estate			Commercial and Industrial			Consumer and Other			Total
Three Months Ended March 31, 2018
Allowance for loan losses:
Beginning balance	$	3,802		$	5,981		$	3,834		$	7,587		$	43		$	21,247
Provision for loan losses		582			(106	)		(241	)		328			10			573
Loans charged-off		(39	)		—			(7	)		(49	)		(11	)		(106	)
Recoveries		—			—			19			—			5			24
Total ending allowance balance	$	4,345		$	5,875		$	3,605		$	7,866		$	47		$	21,738
Three Months Ended March 31, 2017
Allowance for loan losses:
Beginning balance	$	3,776		$	4,266		$	2,398		$	6,068		$	45		$	16,553
Provision for loan losses		61			393			262			1,117			22			1,855
Loans charged-off		—			—			—			(300	)		(23	)		(323	)
Recoveries		—			—			12			—			8			20
Total ending allowance balance	$	3,837		$	4,659		$	2,672		$	6,885		$	52		$	18,105

Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment and Based on Impairment Method

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of March 31, 2018 and December 31, 2017. For purposes of this disclosure, recorded investment in loans excludes accrued interest receivable and deferred loan fees, net due to immateriality.

	Construction and Land Development		Commercial Real Estate		Residential Real Estate		Commercial and Industrial		Consumer and Other		Total
March 31, 2018
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	—	$	—	$	—	$	543	$	—	$	543
Collectively evaluated for impairment		4,345		5,875		3,605		7,317		47		21,189

	Construction and Land Development		Commercial Real Estate		Residential Real Estate		Commercial and Industrial		Consumer and Other		Total
Purchased credit-impaired loans		—		—		—		6		—		6
Total ending allowance balance	$	4,345	$	5,875	$	3,605	$	7,866	$	47	$	21,738
Loans:
Individually evaluated for impairment	$	165	$	—	$	694	$	2,466	$	—	$	3,325
Collectively evaluated for impairment		523,495		716,607		601,989		460,488		3,899		2,306,478
Purchased credit-impaired loans		—		371		96		1,973		—		2,440
Total ending loans balance	$	523,660	$	716,978	$	602,779	$	464,927	$	3,899	$	2,312,243
December 31, 2017
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	—	$	—	$	—	$	879	$	—	$	879
Collectively evaluated for impairment		3,802		5,981		3,834		6,708		43		20,368
Purchased credit-impaired loans		—		—		—		—		—		—
Total ending allowance balance	$	3,802	$	5,981	$	3,834	$	7,587	$	43	$	21,247
Loans:
Individually evaluated for impairment	$	217	$	—	$	834	$	3,090	$	—	$	4,141
Collectively evaluated for impairment		494,601		678,238		576,501		498,916		3,781		2,252,037
Purchased credit-impaired loans		—		380		105		1,908		—		2,393
Total ending loans balance	$	494,818	$	678,618	$	577,440	$	503,914	$	3,781	$	2,258,571

Summary of Impaired Loans by Class of Loans

The following table presents information related to impaired loans by class of loans as of March 31, 2018 and December 31, 2017:

	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
March 31, 2018
With no allowance recorded:
Construction and land development	$	203	$	165	$	—
Commercial real estate:
Nonfarm, nonresidential		—		—		—
Residential real estate:
Closed-end 1-4 family		581		581		—
Other		113		113		—
Commercial and industrial		92		92		—
Consumer and other		—		—		—
Subtotal		989		951		—
With an allowance recorded:
Commercial and industrial		2,374		2,374		543
Subtotal		2,374		2,374		543
Total	$	3,363	$	3,325	$	543
December 31, 2017
With no allowance recorded:
Construction and land development	$	217	$	217	$	—

	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
Residential real estate:
Closed-end 1-4 family		14		14		—
Other		820		820		—
Commercial and industrial		108		108		—
Subtotal		1,159		1,159		—
With an allowance recorded:
Commercial and industrial		2,982		2,982		879
Subtotal		2,982		2,982		879
Total	$	4,141	$	4,141	$	879

The following table presents the average recorded investment of impaired loans by class of loans for the three months ended March 31, 2018 and 2017:

	Three Months Ended March 31,
Average Recorded Investment	2018		2017
With no allowance recorded:
Construction and land development	$	367	$	—
Commercial real estate:
Nonfarm, nonresidential		—		4,128
Residential real estate:
Closed-end 1-4 family		420		1,799
Other		372		120
Commercial and industrial		626		—
Subtotal		1,785		6,047
With an allowance recorded:
Commercial and industrial	$	1,785	$	2,585
Subtotal		1,785		2,585
Total	$	3,570	$	8,632

Schedule of Recorded Investment in Nonaccrual and Loans Past Due Over 90 Days on Accrual by Class of Loans

The following table presents the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of March 31, 2018 and December 31, 2017:

	Nonaccrual		Loans Past Due Over 90 Days
March 31, 2018
Construction and land development	$	165	$	—
Residential real estate:
Closed-end 1-4 family		581		—
Other		113		12
Commercial and industrial		2,466		166
Total	$	3,325	$	178
December 31, 2017
Residential real estate:
Closed-end 1-4 family	$	257	$	14
Other		114		—
Commercial and industrial		2,466		191
Total	$	2,837	$	205

Schedule of Aging of Recorded Investment in Past Due Loans by Class of Loans

The following table presents the aging of the recorded investment in past due loans as of March 31, 2018 and December 31, 2017 by class of loans:

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 89 Days Past Due		Nonaccrual		Total Past Due and Nonaccrual		Loans Not Past Due		PCI Loans		Total
March 31, 2018
Construction and land development	$	473	$	—	$	—	$	165	$	638	$	523,022	$	—	$	523,660
Commercial real estate:
Nonfarm, nonresidential		—		—		—		—		—		673,497		371		673,868
Other		5		—		—		—		5		43,105		—		43,110
Residential real estate:
Closed-end 1-4 family		610		1,060		—		581		2,251		428,216		96		430,563
Other		116		—		12		113		241		171,975		—		172,216
Commercial and industrial		440		195		166		2,466		3,267		459,687		1,973		464,927
Consumer and other		—		200		—		—		200		3,699		—		3,899
	$	1,644	$	1,455	$	178	$	3,325	$	6,602	$	2,303,201	$	2,440	$	2,312,243
December 31, 2017
Construction and land development	$	1,918	$	136	$	—	$	—	$	2,054	$	492,764	$	—	$	494,818
Commercial real estate:
Nonfarm, nonresidential		—		—		—		—		—		628,554		380		628,934
Other		—		—		—		—		—		49,681		—		49,684
Residential real estate:
Closed-end 1-4 family		—		—		14		257		271		407,424		105		407,800
Other		146		719		—		114		979		168,661		—		169,640
Commercial and industrial		532		27		191		2,466		3,216		498,790		1,908		503,914
Consumer and other		—		—		—		—		—		3,781		—		3,781
	$	2,596	$	882	$	205	$	2,837	$	6,520	$	2,249,658	$	2,393	$	2,258,571

Summary of Risk Category of Loans by Class of Loans

Based on the most recent analysis performed, the risk category of loans by class of loans is as follows as of March 31, 2018 and December 31, 2017:

	Pass		Special Mention		Substandard		Total
March 31, 2018
Construction and land development	$	519,831	$	3,664	$	165	$	523,660
Commercial real estate:
Nonfarm, nonresidential		658,683		11,098		4,087		673,868
Other		42,730		—		380		43,110
Residential real estate:
Closed-end 1-4 family		426,856		—		3,707		430,563
Other		170,467		—		1,749		172,216
Commercial and industrial		448,395		9,003		7,529		464,927
Consumer and other		3,896		3		—		3,899
	$	2,270,858	$	23,768	$	17,617	$	2,312,243
	Pass		Special Mention		Substandard		Total
December 31, 2017
Construction and land development	$	494,601	$	—	$	217	$	494,818
Commercial real estate:
Nonfarm, nonresidential		609,458		12,602		6,874		628,934
Other		49,303		—		381		49,684
Residential real estate:
1-4 family		404,832		615		2,353		407,800
Other		167,886		—		1,754		169,640
Commercial and industrial		485,363		10,350		8,201		503,914
Consumer and other		3,777		4		—		3,781
	$	2,215,220	$	23,571	$	19,780	$	2,258,571

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Loan Servicing (Tables)

3 Months Ended

Mar. 31, 2018

Text Block [Abstract]

Schedule of Loans Serviced Not Reported as Assets

Loans serviced for others are not reported as assets. The principal balances of these loans at March 31, 2018 and December 31, 2017 are as follows:

	March 31, 2018		December 31, 2017
Loan portfolios serviced for:
Federal Home Loan Mortgage Corporation	$	507,375	$	507,233
Other		4,589		4,626

Components of Net Loan Servicing Fees

The components of net loan servicing fees for the three months ended March 31, 2018 and 2017 were as follows:

	Three Months Ended March 31,
	2018			2017
Loan servicing fees, net:
Loan servicing fees	$	333		$	320
Amortization of loan servicing fees		(214	)		(213	)
Change in impairment		—			—
Total	$	119		$	107

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Securities Sold Under Agreement to Repurchase (Tables)

3 Months Ended

Mar. 31, 2018

Brokers and Dealers [Abstract]

Additional Details of Securities Sold under Agreement to Repurchase

The following table provides additional details as of March 31, 2018:

As of March 31, 2018	Mortgage- Backed Securities: Residential			State and Political Subdivisions			Total
Market value of securities pledged	$	919		$	40,845		$	41,764
Borrowings related to pledged amounts	$	—		$	36,071		$	36,071
Market value pledged as a % of borrowings		—	%		113	%		116	%

The following table provides additional details as of December 31, 2017:

As of December 31, 2017	Mortgage- Backed Securities: Residential			State and Political Subdivisions			Total
Market value of securities pledged	$	1,004		$	42,109		$	43,113
Borrowings related to pledged amounts	$	—		$	31,004		$	31,004
Market value pledged as a % of borrowings		—	%		136	%		139	%

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Share-Based Payments (Tables)

3 Months Ended

Mar. 31, 2018

Equity [Abstract]

Summary of Stock Warrant Activity

A summary of the stock warrant activity for the three months ended March 31, 2018 and 2017 follows:

	March 31, 2018		March 31, 2017
Stock warrants exercised:
Intrinsic value of warrants exercised	$	—	$	291
Cash received from warrants exercised		—		132

Fair Value Assumptions of Stock Options

The fair value of options granted was determined using the following weighted-average assumptions as of grant date.

	March 31, 2018			March 31, 2017
Risk-free interest rate		2.49	%		2.28	%
Expected term		7.5 years			7.4 years
Expected stock price volatility		32.48	%		34.20	%
Dividend yield		0.00	%		0.04	%

Summary of Company's Stock Option Activities

A summary of the activity in the plans for the three months ended March 31, 2018 follows:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at beginning of year		1,507,168		$	21.37		6.55	$	19,180
Granted		28,125			36.40
Exercised		(21,348	)		10.32
Forfeited, expired, or cancelled		(11,754	)		29.37
Outstanding at period end		1,502,191		$	21.75		6.41	$	16,299
Vested or expected to vest		1,427,082		$	21.75		6.41	$	15,484
Exercisable at period end		760,955		$	14.17		4.75	$	14,022

Summary of Stock Options Exercised

	For the three months ended March 31,
	2018		2017
Stock options exercised:
Intrinsic value of options exercised	$	511	$	610
Cash received from options exercised		220		177
Tax benefit realized from option exercises		63		93

Summary of Activity for Nonvested Restricted Share Awards

A summary of activity for non-vested restricted share awards for the three months ended March 31, 2018 is as follows:

Non-vested Shares	Shares			Weighted- Average Grant- Date Fair Value
Non-vested at December 31, 2017		94,181		$	25.42
Granted		—			—
Vested		—			—
Forfeited		(334	)		37.35
Non-vested at March 31, 2018		96,409		$	25.38

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Regulatory Capital Matters (Tables)

3 Months Ended

Mar. 31, 2018

Banking and Thrift [Abstract]

Actual and Required Capital Amounts and Ratios

Actual and required capital amounts and ratios are presented below as of March 31, 2018 and December 31, 2017 for the Company and Bank:

	Actual					Required For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Regulations
	Amount		Ratio			Amount		Ratio			Amount		Ratio
March 31, 2018
Company common equity Tier 1 capital to risk-weighted assets	$	310,218		11.45	%	$	121,874		4.50	%		N/A		N/A
Company Total Capital to risk weighted assets	$	390,600		14.42	%	$	216,665		8.00	%		N/A		N/A
Company Tier 1 (Core) Capital to risk weighted assets	$	310,218		11.45	%	$	162,499		6.00	%		N/A		N/A
Company Tier 1 (Core) Capital to average assets	$	310,218		7.80	%	$	158,986		4.00	%		N/A		N/A
Bank common equity Tier 1 capital to risk-weighted assets	$	365,295		13.49	%	$	121,874		4.50	%	$	176,040		6.50	%
Bank Total Capital to risk weighted assets	$	387,126		14.29	%	$	216,665		8.00	%	$	270,831		10.00	%
Bank Tier 1 (Core) Capital to risk weighted assets	$	365,295		13.49	%	$	162,499		6.00	%	$	216,665		8.00	%
Bank Tier 1 (Core) Capital to average assets	$	365,295		9.19	%	$	158,857		4.00	%	$	198,572		5.00	%
December 31, 2017
Company common equity Tier 1 capital to risk-weighted assets	$	299,229		11.37	%	$	118,479		4.50	%		N/A		N/A
Company Total Capital to risk weighted assets	$	379,083		14.40	%	$	210,629		8.00	%		N/A		N/A
Company Tier 1 (Core) Capital to risk weighted assets	$	299,229		11.37	%	$	157,972		6.00	%		N/A		N/A
Company Tier 1 (Core) Capital to average assets	$	299,229		8.25	%	$	145,100		4.00	%		N/A		N/A
Bank common equity Tier 1 capital to risk-weighted assets	$	353,512		13.43	%	$	118,489		4.50	%	$	171,151		6.50	%
Bank Total Capital to risk weighted assets	$	374,851		14.24	%	$	210,647		8.00	%	$	263,309		10.00	%
Bank Tier 1 (Core) Capital to risk weighted assets	$	353,512		13.43	%	$	157,985		6.00	%	$	210,647		8.00	%
Bank Tier 1 (Core) Capital to average assets	$	353,512		9.75	%	$	145,003		4.00	%	$	181,253		5.00	%

Note: Minimum ratios presented exclude the capital conservation buffer

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Fair Value (Tables)

3 Months Ended

Mar. 31, 2018

Fair Value Disclosures [Abstract]

Assets and Liabilities Measured at Fair Value on Recurring Basis

Assets and liabilities measured at fair value on a recurring basis, including financial assets and liabilities for which the Company has elected the fair value option, are summarized below:

	Fair Value Measurements at March 31, 2018 Using:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets
Securities available for sale
U.S. Treasury securities	$	—	$	288,571	$	—
U.S. government sponsored entities and agencies		—		19,894		—
Mortgage-backed securities-residential		—		763,128		—
Mortgage-backed securities-commercial		—		5,011		—
State and political subdivisions		—		109,816		—
Total securities available for sale	$	—	$	1,186,420	$	—
Loans held for sale	$	—	$	12,871	$	—
Mortgage banking derivatives	$	—	$	382	$	—
Financial Liabilities
Mortgage banking derivatives	$	—	$	45	$	—
	Fair Value Measurements at December 31, 2017 Using:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets
Securities available for sale
U.S. Treasury securities	$	—	$	228,909	$	—
U.S. government sponsored entities and agencies		—		19,961		—
Mortgage-backed securities-residential		—		632,566		—
Mortgage-backed securities-commercial		—		5,074		—
State and political subdivisions		—		113,371		—
Total securities available for sale	$	—	$	999,881	$	—
Loans held for sale	$	—	$	12,024	$	—
Mortgage banking derivatives	$	—	$	175	$	—
Financial Liabilities
Mortgage banking derivatives	$	—	$	35	$	—

Carrying Amount and Estimated Fair Value of Financial Instruments

The carrying amounts and estimated fair values of financial instruments at March 31, 2018 and December 31, 2017 are as follows:

	Carrying Amount		Fair Value Measurements at March 31, 2018 Using:
			Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	246,164	$	246,164	$	—	$	—	$	246,164
Certificates of deposit held at other financial institutions		2,855		—		2,855		—		2,855
Securities available for sale		1,186,420		—		1,186,420		—		1,186,420
Securities held to maturity		213,381		—		210,888		—		210,888
Loans held for sale		12,871		—		12,871		—		12,871
Net loans		2,288,280		—		—		2,295,275		2,295,275
Restricted equity securities		19,606		n/a		n/a		n/a		n/a
Servicing rights, net		3,602		—		—		5,305		5,305
Mortgage banking derivative assets		382		—		382		—		382
Accrued interest receivable		12,937		182		6,400		6,355		12,937
Financial liabilities
Deposits	$	3,355,153	$	2,026,994	$	1,284,426	$	—	$	3,311,420
Repurchase agreements		36,071		—		36,071		—		36,071
Federal Home Loan Bank advances		317,000		—		314,341		—		314,341
Subordinated notes, net		58,559		—		—		62,259		62,259
Mortgage banking derivative liabilities		45		—		45		—		45
Accrued interest payable		2,775		93		2,332		350		2,775
	Carrying Amount		Fair Value Measurements at December 31, 2017 Using:
			Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	251,543	$	251,543	$	—	$	—	$	251,543
Certificates of deposit held at other financial institutions		2,855		—		2,855		—		2,855
Securities available for sale		999,881		—		999,881		—		999,881
Securities held to maturity		214,856		—		217,608		—		217,608
Loans held for sale		12,024		—		12,024		—		12,024
Net loans		2,235,361		—		—		2,230,607		2,230,607
Restricted equity securities		18,492		n/a		n/a		n/a		n/a
Servicing rights, net		3,620		—		—		5,089		5,089
Mortgage banking derivative assets		175		—		175		—		175
Accrued interest receivable		11,947		73		5,724		6,150		11,947
Financial liabilities
Deposits	$	3,167,228	$	1,911,928	$	1,224,041	$	—	$	3,135,969
Federal funds purchased and repurchase agreements		31,004		—		31,004		—		31,004
Federal Home Loan Bank advances		272,000		—		270,311		—		270,311
Subordinated notes, net		58,515		—		—		59,951		59,951
Mortgage banking derivative liabilities		35		—		35		—		35
Accrued interest payable		2,769		51		2,030		688		2,769

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Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2018

Earnings Per Share [Abstract]

Computation of Earnings per Share

The factors used in the earnings per share computation follow:

	Three Months Ended March 31,
	2018			2017
Basic
Net income available to common shareholders	$	10,052		$	7,934
Less: earnings allocated to participating securities		(71	)		(65	)
Net income allocated to common shareholders	$	9,981		$	7,869
Weighted average common shares outstanding including participating securities		13,249,728			13,049,012
Less: Participating securities		(94,010	)		(106,323	)
Average shares		13,155,718			12,942,689
Basic earnings per common share	$	0.76		$	0.61
Diluted
Net income allocated to common shareholders	$	9,981		$	7,869
Weighted average common shares outstanding for basic earnings per common share		13,155,718			12,942,689
Add: Dilutive effects of assumed exercises of stock options		516,666			708,694
Add: Dilutive effects of assumed exercises of stock warrants		—			5,974
Average shares and dilutive potential common shares		13,672,384			13,657,357
Diluted earnings per common share	$	0.73		$	0.58

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Subordinated Debt Issuance (Tables)

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

Summary of Terms of Each Subordinated Note offering

The following table summarizes the terms of each subordinated note offering:

	March 2016 Subordinated Notes	June 2016 Subordinated Notes
Principal amount issued	$40,000	$20,000
Maturity date	March 30, 2026	July 1, 2026
Initial fixed interest rate	6.875%	7.00%
Initial interest rate period	5 years	5 years
First interest rate change date	March 30, 2021	July 1, 2021
Interest payment frequency through year five*	Semiannually	Semiannually
Interest payment frequency after five years*	Quarterly	Quarterly
Interest repricing index and margin	3-month LIBOR plus 5.636%	3-month LIBOR plus 6.04%
Repricing frequency after five years	Quarterly	Quarterly

* Through March 31, 2018 all interest payments have been made in accordance with the terms of the agreements.

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Securities - Summary of Amortized Cost and Fair Value of Securities Available for Sale (Detail) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 1,210,186	$ 1,009,070
Gross Unrealized Gains	449	1,889
Gross Unrealized Losses	(24,215)	(11,078)
Fair Value	1,186,420	999,881
U.S. Treasury Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	289,086	229,119
Gross Unrealized Losses	(515)	(210)
Fair Value	288,571	228,909
U.S. Government Sponsored Entities and Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	20,103	20,125
Gross Unrealized Losses	(209)	(164)
Fair Value	19,894	19,961
Mortgage-Backed Securities: Residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	782,579	641,225
Gross Unrealized Gains	45	102
Gross Unrealized Losses	(19,496)	(8,761)
Fair Value	763,128	632,566
Mortgage-Backed Securities: Commercial [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	5,123	5,133
Gross Unrealized Losses	(112)	(59)
Fair Value	5,011	5,074
State and Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	113,295	113,468
Gross Unrealized Gains	404	1,787
Gross Unrealized Losses	(3,883)	(1,884)
Fair Value	$ 109,816	$ 113,371

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Securities - Schedule of Amortized Cost and Fair Value of Securities Held to Maturity Portfolio (Detail) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	$ 213,381	$ 214,856
Gross Unrecognized Gains	1,175	4,586
Gross Unrecognized Losses	(3,668)	(1,834)
Fair Value	210,888	217,608
Mortgage-Backed Securities: Residential [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	92,152	93,366
Gross Unrecognized Gains	111	207
Gross Unrecognized Losses	(3,495)	(1,796)
Fair Value	88,768	91,777
State and Political Subdivisions [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	121,229	121,490
Gross Unrecognized Gains	1,064	4,379
Gross Unrecognized Losses	(173)	(38)
Fair Value	$ 122,120	$ 125,831

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Securities - Summary of Proceeds from Sales and Calls of Securities Available for Sale and Associated Gains and Losses (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Available-for-sale Securities [Abstract]
Proceeds	$ 0	$ 0
Gross gains	0	0
Gross losses	$ 0	$ 0

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Securities - Schedule of Amortized Cost and Fair Value of Investment Securities Portfolio by Contractual Maturity (Detail) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Available for sale
Amortized Cost, One year or less	$ 289,086
Amortized Cost, Over one year through five years	20,103
Amortized Cost, Over five years through ten years	410
Amortized Cost, Over ten years	112,885
Amortized Cost, Total	1,210,186	$ 1,009,070
Held to maturity
Amortized Cost,One year or less	501
Amortized Cost, Over one year through five years	1,106
Amortized Cost, Over five years through ten years	11,875
Amortized Cost, Over ten years	107,747
Amortized Cost, Total	213,381	214,856
Available for sale
Fair Value, One year or less	288,571
Fair Value, Over one year through five years	19,894
Fair Value, Over five years through ten years	406
Fair Value, Over ten years	109,410
Fair Value, Total	1,186,420	999,881
Held to maturity
Fair Value, One year or less	511
Fair Value, Over one year through five years	1,121
Fair Value, Over five years through ten years	11,907
Fair Value, Over ten years	108,581
Fair Value, Total	210,888	217,608
Mortgage-Backed Securities: Residential [Member]
Available for sale
Amortized Cost, Mortgage-backed securities not due at a single maturity date	782,579
Amortized Cost, Total	782,579	641,225
Held to maturity
Amortized Cost, Mortgage-backed securities not due at a single maturity date	92,152
Amortized Cost, Total	92,152	93,366
Available for sale
Fair Value, Mortgage-backed securities not due at a single maturity date	763,128
Fair Value, Total	763,128	632,566
Held to maturity
Fair Value, Mortgage-backed securities not due at a single maturity date	88,768
Fair Value, Total	88,768	91,777
Mortgage-Backed Securities: Commercial [Member]
Available for sale
Amortized Cost, Mortgage-backed securities not due at a single maturity date	5,123
Amortized Cost, Total	5,123	5,133
Available for sale
Fair Value, Mortgage-backed securities not due at a single maturity date	5,011
Fair Value, Total	$ 5,011	$ 5,074

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Securities - Additional Information (Detail) $ in Thousands	Mar. 31, 2018 USD ($) Securities	Dec. 31, 2017 USD ($) Securities
Marketable Securities [Line Items]
Carrying value of pledged securities | $	$ 1,168,275	$ 975,518
Other than US Government Sponsored Entities and Agencies [Member]
Marketable Securities [Line Items]
Amount of holdings of securities of any one issuer | Securities	0	0

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Securities - Schedule of Unrealized Losses and Fair Value by Major Security Type (Detail) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Schedule Of Held To Maturity And Available For Sale Securities [Line Items]
Less Than 12 Months Available for Sale Fair Value	$ 741,254	$ 556,400
Less Than 12 Months Available for sale Unrealized Losses	(8,673)	(2,882)
12 Months or Longer Available for sale Fair Value	376,560	374,091
12 Months or Longer Available for sale Unrealized Losses	(15,542)	(8,196)
Available for sale Fair Value, Total	1,117,814	930,491
Available for sale Unrealized Losses, Total	(24,215)	(11,078)
Less Than 12 Months Held to maturity Fair Value	36,461	11,453
Less Than 12 Months Held to maturity Unrealized Losses	(433)	(71)
12 Months or Longer Held to maturity Fair Value	69,905	73,730
12 Months or Longer Held to maturity Unrealized Losses	(3,235)	(1,763)
Held to maturity Fair Value, Total	106,366	85,183
Held to maturity Unrealized Losses, Total	(3,668)	(1,834)
U.S. Government Sponsored Entities and Agencies [Member]
Schedule Of Held To Maturity And Available For Sale Securities [Line Items]
Less Than 12 Months Available for Sale Fair Value		19,961
Less Than 12 Months Available for sale Unrealized Losses		(164)
12 Months or Longer Available for sale Fair Value	19,894
12 Months or Longer Available for sale Unrealized Losses	(209)
Available for sale Fair Value, Total	19,894	19,961
Available for sale Unrealized Losses, Total	(209)	(164)
Mortgage-Backed Securities: Residential [Member]
Schedule Of Held To Maturity And Available For Sale Securities [Line Items]
Less Than 12 Months Available for Sale Fair Value	436,263	301,158
Less Than 12 Months Available for sale Unrealized Losses	(7,882)	(2,447)
12 Months or Longer Available for sale Fair Value	295,862	311,366
12 Months or Longer Available for sale Unrealized Losses	(11,614)	(6,314)
Available for sale Fair Value, Total	732,125	612,524
Available for sale Unrealized Losses, Total	(19,496)	(8,761)
Less Than 12 Months Held to maturity Fair Value	13,636	11,191
Less Than 12 Months Held to maturity Unrealized Losses	(306)	(69)
12 Months or Longer Held to maturity Fair Value	68,768	72,582
12 Months or Longer Held to maturity Unrealized Losses	(3,189)	(1,727)
Held to maturity Fair Value, Total	82,404	83,773
Held to maturity Unrealized Losses, Total	(3,495)	(1,796)
Mortgage-Backed Securities: Commercial [Member]
Schedule Of Held To Maturity And Available For Sale Securities [Line Items]
Less Than 12 Months Available for Sale Fair Value	5,011	5,074
Less Than 12 Months Available for sale Unrealized Losses	(112)	(59)
Available for sale Fair Value, Total	5,011	5,074
Available for sale Unrealized Losses, Total	(112)	(59)
State and Political Subdivisions [Member]
Schedule Of Held To Maturity And Available For Sale Securities [Line Items]
Less Than 12 Months Available for Sale Fair Value	11,409	1,298
Less Than 12 Months Available for sale Unrealized Losses	(164)	(2)
12 Months or Longer Available for sale Fair Value	60,804	62,725
12 Months or Longer Available for sale Unrealized Losses	(3,719)	(1,882)
Available for sale Fair Value, Total	72,213	64,023
Available for sale Unrealized Losses, Total	(3,883)	(1,884)
Less Than 12 Months Held to maturity Fair Value	22,825	262
Less Than 12 Months Held to maturity Unrealized Losses	(127)	(2)
12 Months or Longer Held to maturity Fair Value	1,137	1,148
12 Months or Longer Held to maturity Unrealized Losses	(46)	(36)
Held to maturity Fair Value, Total	23,962	1,410
Held to maturity Unrealized Losses, Total	(173)	(38)
U.S. Treasury Securities [Member]
Schedule Of Held To Maturity And Available For Sale Securities [Line Items]
Less Than 12 Months Available for Sale Fair Value	288,571	228,909
Less Than 12 Months Available for sale Unrealized Losses	(515)	(210)
Available for sale Fair Value, Total	288,571	228,909
Available for sale Unrealized Losses, Total	$ (515)	$ (210)

XML

Loans - Summary of Loans (Detail) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017	Dec. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 2,309,803	$ 2,256,178
Deferred loan fees, net	(2,225)	(1,963)
Total loans that are not PCI loans	2,307,578	2,254,215
Total PCI loans	2,440	2,393
Allowance for loan losses	(21,738)	(21,247)	$ (18,105)	$ (16,553)
Net loans	2,288,280	2,235,361
Construction and Land Development [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Construction and land development	523,660	494,818
Allowance for loan losses	(4,345)	(3,802)	(3,837)	(3,776)
Commercial and Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial and industrial	462,954	502,006
Total PCI loans	1,973	1,908
Allowance for loan losses	(7,866)	(7,587)	(6,885)	(6,068)
Consumer and Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Consumer and other	3,899	3,781
Allowance for loan losses	(47)	(43)	$ (52)	$ (45)
Commercial Real Estate Financing Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonfarm, nonresidential	673,497	628,554
Commercial Real Estate, Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Other	43,110	49,684
Real Estate Residential Closed-end 1-4 Family [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Closed-end 1-4 family	430,467	407,695
Residential Real Estate, Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Other	$ 172,216	$ 169,640

XML

Loans - Activity in Allowance for Loan Losses by Portfolio Segment (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	$ 21,247	$ 16,553
Provision for loan losses	573	1,855
Loans charged-off	(106)	(323)
Recoveries	24	20
Total ending allowance balance	21,738	18,105
Construction and Land Development [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	3,802	3,776
Provision for loan losses	582	61
Loans charged-off	(39)
Total ending allowance balance	4,345	3,837
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	5,981	4,266
Provision for loan losses	(106)	393
Total ending allowance balance	5,875	4,659
Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	3,834	2,398
Provision for loan losses	(241)	262
Loans charged-off	(7)
Recoveries	19	12
Total ending allowance balance	3,605	2,672
Commercial and Industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	7,587	6,068
Provision for loan losses	328	1,117
Loans charged-off	(49)	(300)
Total ending allowance balance	7,866	6,885
Consumer and Other [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	43	45
Provision for loan losses	10	22
Loans charged-off	(11)	(23)
Recoveries	5	8
Total ending allowance balance	$ 47	$ 52

XML

Loans - Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment and Based on Impairment Method (Detail) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017	Dec. 31, 2016
Allowance For Loan Losses And Recorded Investment In Loans [Line Items]
Allowance for loan losses, Individually evaluated for impairment	$ 543	$ 879
Allowance for loan losses, Collectively evaluated for impairment	21,189	20,368
Allowance for loan losses, Purchased credit-impaired loans	6
Total ending allowance balance	21,738	21,247	$ 18,105	$ 16,553
Loans, Individually evaluated for impairment	3,325	4,141
Loans, Collectively evaluated for impairment	2,306,478	2,252,037
Loans, Purchased credit-impaired loans	2,440	2,393
Total ending loans balance	2,312,243	2,258,571
Construction and Land Development [Member]
Allowance For Loan Losses And Recorded Investment In Loans [Line Items]
Allowance for loan losses, Collectively evaluated for impairment	4,345	3,802
Total ending allowance balance	4,345	3,802	3,837	3,776
Loans, Individually evaluated for impairment	165	217
Loans, Collectively evaluated for impairment	523,495	494,601
Total ending loans balance	523,660	494,818
Commercial Real Estate [Member]
Allowance For Loan Losses And Recorded Investment In Loans [Line Items]
Allowance for loan losses, Collectively evaluated for impairment	5,875	5,981
Total ending allowance balance	5,875	5,981	4,659	4,266
Loans, Collectively evaluated for impairment	716,607	678,238
Loans, Purchased credit-impaired loans	371	380
Total ending loans balance	716,978	678,618
Residential Real Estate [Member]
Allowance For Loan Losses And Recorded Investment In Loans [Line Items]
Allowance for loan losses, Collectively evaluated for impairment	3,605	3,834
Total ending allowance balance	3,605	3,834	2,672	2,398
Loans, Individually evaluated for impairment	694	834
Loans, Collectively evaluated for impairment	601,989	576,501
Loans, Purchased credit-impaired loans	96	105
Total ending loans balance	602,779	577,440
Commercial and Industrial [Member]
Allowance For Loan Losses And Recorded Investment In Loans [Line Items]
Allowance for loan losses, Individually evaluated for impairment	543	879
Allowance for loan losses, Collectively evaluated for impairment	7,317	6,708
Allowance for loan losses, Purchased credit-impaired loans	6
Total ending allowance balance	7,866	7,587	6,885	6,068
Loans, Individually evaluated for impairment	2,466	3,090
Loans, Collectively evaluated for impairment	460,488	498,916
Loans, Purchased credit-impaired loans	1,973	1,908
Total ending loans balance	464,927	503,914
Consumer and Other [Member]
Allowance For Loan Losses And Recorded Investment In Loans [Line Items]
Allowance for loan losses, Collectively evaluated for impairment	47	43
Total ending allowance balance	47	43	$ 52	$ 45
Loans, Collectively evaluated for impairment	3,899	3,781
Total ending loans balance	$ 3,899	$ 3,781

XML

Loans - Additional Information (Detail) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Mar. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable carrying amount	$ 2,312,243	$ 2,258,571
Unpaid principal amount	3,363	4,141
Allowance for loan losses	$ 21,738	$ 21,247	$ 18,105	$ 16,553
Number of loans modified as troubled debt restructuring	1	1
Loans modified as troubled debt restructuring, Amount	$ 165	$ 608
Loans modified as troubled debt restructuring, Amount paid out	575
Loans modified as troubled debt restructuring, Amount charged off	33
Non PCI Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable carrying amount	50,759	50,341
Unpaid principal amount	52,121	51,767
Estimated credit discount	1,362	1,426
Allowance for loan losses	$ 10	$ 10

XML

Loans - Summary of Impaired Loans by Class of Loans (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance, With no allowance recorded	$ 989		$ 1,159
Unpaid Principal Balance	3,363		4,141
Recorded Investment, With no allowance recorded	951		1,159
Recorded Investment	3,325		4,141
Unpaid Principal Balance, With an allowance recorded	2,374		2,982
Recorded Investment, With an allowance recorded	2,374		2,982
Allowance for Loan Losses Allocated	543		879
Average Recorded Investment, With no allowance recorded	1,785	$ 6,047
Average Recorded Investment, With an allowance recorded	1,785	2,585
Average Recorded Investment	3,570	8,632
Commercial Real Estate Financing Receivable [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment, With no allowance recorded		4,128
Real Estate Residential Closed-end 1-4 Family [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance, With no allowance recorded	581		14
Recorded Investment, With no allowance recorded	581		14
Average Recorded Investment, With no allowance recorded	420	1,799
Residential Real Estate, Other [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance, With no allowance recorded	113		820
Recorded Investment, With no allowance recorded	113		820
Average Recorded Investment, With no allowance recorded	372	120
Commercial and Industrial [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance, With no allowance recorded	92		108
Recorded Investment, With no allowance recorded	92		108
Unpaid Principal Balance, With an allowance recorded	2,374		2,982
Recorded Investment, With an allowance recorded	2,374		2,982
Allowance for Loan Losses Allocated	543		879
Average Recorded Investment, With no allowance recorded	626
Average Recorded Investment, With an allowance recorded	1,785	$ 2,585
Construction and Land Development [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance, With no allowance recorded	203		217
Recorded Investment, With no allowance recorded	165		$ 217
Average Recorded Investment, With no allowance recorded	$ 367

XML

Loans - Schedule of Recorded Investment in Nonaccrual and Loans Past Due Over 90 Days on Accrual by Class of Loans (Detail) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Financing Receivable, Recorded Investment, Past Due [Line Items]
Recorded Investment, Nonaccrual	$ 3,325	$ 2,837
Recorded Investment, Loans Past Due Over 90 Days	178	205
Construction and Land Development [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Recorded Investment, Nonaccrual	165
Real Estate Residential Closed-end 1-4 Family [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Recorded Investment, Nonaccrual	581	257
Recorded Investment, Loans Past Due Over 90 Days		14
Commercial and Industrial Financing Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Recorded Investment, Nonaccrual	2,466	2,466
Recorded Investment, Loans Past Due Over 90 Days	166	191
Residential Real Estate, Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Recorded Investment, Nonaccrual	113	$ 114
Recorded Investment, Loans Past Due Over 90 Days	$ 12

XML

Loans - Schedule of Aging of Recorded Investment in Past Due Loans by Class of Loans (Detail) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Financing Receivable, Recorded Investment, Past Due [Line Items]
Aging of Recorded Investment, Nonaccrual	$ 3,325	$ 2,837
Aging of Recorded Investment, Total Past Due	6,602	6,520
Aging of Recorded Investment, Loans Not Past Due	2,303,201	2,249,658
Aging of Recorded Investment, Total	2,312,243	2,258,571
Construction and Land Development [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Aging of Recorded Investment, Nonaccrual	165
Aging of Recorded Investment, Total Past Due	638	2,054
Aging of Recorded Investment, Loans Not Past Due	523,022	492,764
Aging of Recorded Investment, Total	523,660	494,818
Commercial and Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Aging of Recorded Investment, Nonaccrual	2,466	2,466
Aging of Recorded Investment, Total Past Due	3,267	3,216
Aging of Recorded Investment, Loans Not Past Due	459,687	498,790
Aging of Recorded Investment, Total	464,927	503,914
Consumer and Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Aging of Recorded Investment, Total Past Due	200
Aging of Recorded Investment, Loans Not Past Due	3,699	3,781
Aging of Recorded Investment, Total	3,899	3,781
PCI Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Aging of Recorded Investment, PCI Loans	2,440	2,393
PCI Loans [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Aging of Recorded Investment, PCI Loans	1,973	1,908
Commercial Real Estate Financing Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Aging of Recorded Investment, Loans Not Past Due	673,497	628,554
Aging of Recorded Investment, Total	673,868	628,934
Commercial Real Estate Financing Receivable [Member] | PCI Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Aging of Recorded Investment, PCI Loans	371	380
Commercial Real Estate, Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Aging of Recorded Investment, Total Past Due	5
Aging of Recorded Investment, Loans Not Past Due	43,105	49,681
Aging of Recorded Investment, Total	43,110	49,684
Real Estate Residential Closed-end 1-4 Family [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Aging of Recorded Investment, Nonaccrual	581	257
Aging of Recorded Investment, Total Past Due	2,251	271
Aging of Recorded Investment, Loans Not Past Due	428,216	407,424
Aging of Recorded Investment, Total	430,563	407,800
Real Estate Residential Closed-end 1-4 Family [Member] | PCI Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Aging of Recorded Investment, PCI Loans	96	105
Residential Real Estate, Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Aging of Recorded Investment, Nonaccrual	113	114
Aging of Recorded Investment, Total Past Due	241	979
Aging of Recorded Investment, Loans Not Past Due	171,975	168,661
Aging of Recorded Investment, Total	172,216	169,640
30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Aging of Recorded Investment, Total Past Due	1,644	2,596
30 to 59 Days Past Due [Member] | Construction and Land Development [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Aging of Recorded Investment, Total Past Due	473	1,918
30 to 59 Days Past Due [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Aging of Recorded Investment, Total Past Due	440	532
30 to 59 Days Past Due [Member] | Commercial Real Estate, Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Aging of Recorded Investment, Total Past Due	5
30 to 59 Days Past Due [Member] | Real Estate Residential Closed-end 1-4 Family [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Aging of Recorded Investment, Total Past Due	610
30 to 59 Days Past Due [Member] | Residential Real Estate, Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Aging of Recorded Investment, Total Past Due	116	146
60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Aging of Recorded Investment, Total Past Due	1,455	882
60 to 89 Days Past Due [Member] | Construction and Land Development [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Aging of Recorded Investment, Total Past Due		136
60 to 89 Days Past Due [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Aging of Recorded Investment, Total Past Due	195	27
60 to 89 Days Past Due [Member] | Consumer and Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Aging of Recorded Investment, Total Past Due	200
60 to 89 Days Past Due [Member] | Real Estate Residential Closed-end 1-4 Family [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Aging of Recorded Investment, Total Past Due	1,060
60 to 89 Days Past Due [Member] | Residential Real Estate, Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Aging of Recorded Investment, Total Past Due		719
Greater Than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Aging of Recorded Investment, Total Past Due	178	205
Greater Than 90 Days Past Due [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Aging of Recorded Investment, Total Past Due	166	191
Greater Than 90 Days Past Due [Member] | Real Estate Residential Closed-end 1-4 Family [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Aging of Recorded Investment, Total Past Due		$ 14
Greater Than 90 Days Past Due [Member] | Residential Real Estate, Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Aging of Recorded Investment, Total Past Due	$ 12

XML

Loans - Summary of Risk Category of Loans by Class of Loans (Detail) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Risk Category Of Loans [Line Items]
Total Loans	$ 2,312,243	$ 2,258,571
Construction and Land Development [Member]
Risk Category Of Loans [Line Items]
Total Loans	523,660	494,818
Commercial and Industrial [Member]
Risk Category Of Loans [Line Items]
Total Loans	464,927	503,914
Consumer and Other [Member]
Risk Category Of Loans [Line Items]
Total Loans	3,899	3,781
Commercial Real Estate Financing Receivable [Member]
Risk Category Of Loans [Line Items]
Total Loans	673,868	628,934
Commercial Real Estate, Other [Member]
Risk Category Of Loans [Line Items]
Total Loans	43,110	49,684
Real Estate Residential Closed-end 1-4 Family [Member]
Risk Category Of Loans [Line Items]
Total Loans	430,563	407,800
Residential Real Estate, Other [Member]
Risk Category Of Loans [Line Items]
Total Loans	172,216	169,640
Pass [Member]
Risk Category Of Loans [Line Items]
Total Loans	2,270,858	2,215,220
Pass [Member] | Construction and Land Development [Member]
Risk Category Of Loans [Line Items]
Total Loans	519,831	494,601
Pass [Member] | Commercial and Industrial [Member]
Risk Category Of Loans [Line Items]
Total Loans	448,395	485,363
Pass [Member] | Consumer and Other [Member]
Risk Category Of Loans [Line Items]
Total Loans	3,896	3,777
Pass [Member] | Commercial Real Estate Financing Receivable [Member]
Risk Category Of Loans [Line Items]
Total Loans	658,683	609,458
Pass [Member] | Commercial Real Estate, Other [Member]
Risk Category Of Loans [Line Items]
Total Loans	42,730	49,303
Pass [Member] | Real Estate Residential Closed-end 1-4 Family [Member]
Risk Category Of Loans [Line Items]
Total Loans	426,856	404,832
Pass [Member] | Residential Real Estate, Other [Member]
Risk Category Of Loans [Line Items]
Total Loans	170,467	167,886
Special Mention [Member]
Risk Category Of Loans [Line Items]
Total Loans	23,768	23,571
Special Mention [Member] | Construction and Land Development [Member]
Risk Category Of Loans [Line Items]
Total Loans	3,664
Special Mention [Member] | Commercial and Industrial [Member]
Risk Category Of Loans [Line Items]
Total Loans	9,003	10,350
Special Mention [Member] | Consumer and Other [Member]
Risk Category Of Loans [Line Items]
Total Loans	3	4
Special Mention [Member] | Commercial Real Estate Financing Receivable [Member]
Risk Category Of Loans [Line Items]
Total Loans	11,098	12,602
Special Mention [Member] | Real Estate Residential Closed-end 1-4 Family [Member]
Risk Category Of Loans [Line Items]
Total Loans		615
Substandard [Member]
Risk Category Of Loans [Line Items]
Total Loans	17,617	19,780
Substandard [Member] | Construction and Land Development [Member]
Risk Category Of Loans [Line Items]
Total Loans	165	217
Substandard [Member] | Commercial and Industrial [Member]
Risk Category Of Loans [Line Items]
Total Loans	7,529	8,201
Substandard [Member] | Commercial Real Estate Financing Receivable [Member]
Risk Category Of Loans [Line Items]
Total Loans	4,087	6,874
Substandard [Member] | Commercial Real Estate, Other [Member]
Risk Category Of Loans [Line Items]
Total Loans	380	381
Substandard [Member] | Real Estate Residential Closed-end 1-4 Family [Member]
Risk Category Of Loans [Line Items]
Total Loans	3,707	2,353
Substandard [Member] | Residential Real Estate, Other [Member]
Risk Category Of Loans [Line Items]
Total Loans	$ 1,749	$ 1,754

XML

Loan Servicing - Schedule of Loans Serviced Not Reported as Assets (Detail) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Federal Home Loan Mortgage Corporation [Member]
Loans Servicing For Institutional Investors [Line Items]
Loans serviced for others	$ 507,375	$ 507,233
Other Serviced Loans [Member]
Loans Servicing For Institutional Investors [Line Items]
Loans serviced for others	$ 4,589	$ 4,626

XML

Loan Servicing - Components of Net Loan Servicing Fees (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Transfers and Servicing [Abstract]
Loan servicing fees	$ 333	$ 320
Amortization of loan servicing fees	(214)	(213)
Change in impairment	0	0
Total	$ 119	$ 107

XML

Loan Servicing - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Transfers and Servicing [Abstract]
Fair value of servicing rights	$ 5,305	$ 5,089
Weighted average discount rate	10.50%	10.50%
Weighted average prepayment speed	9.40%	9.90%

XML

Securities Sold Under Agreement to Repurchase - Additional Information (Detail) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Banking and Thrift [Abstract]
Total short-term borrowings	$ 36,071	$ 31,004
Carrying value of securities used to secure borrowings	$ 41,377	$ 41,618

XML

Securities Sold Under Agreement to Repurchase - Additional Details of Securities Sold under Agreement to Repurchase (Detail) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Assets Sold under Agreements to Repurchase [Line Items]
Market value of securities pledged	$ 41,764	$ 43,113
Borrowings related to pledged amounts	$ 36,071	$ 31,004
Market value pledged as a % of borrowings	116.00%	139.00%
Mortgage-Backed Securities: Residential [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Market value of securities pledged	$ 919	$ 1,004
State and Political Subdivisions [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Market value of securities pledged	40,845	42,109
Borrowings related to pledged amounts	$ 36,071	$ 31,004
Market value pledged as a % of borrowings	113.00%	136.00%

XML

Share-Based Payments - Additional Information (Detail) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2018 USD ($) Plans $ / shares shares	Mar. 31, 2017 USD ($) $ / shares shares	Apr. 12, 2018 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of warrants exercised		11,011
Number of share-based compensation plans | Plans	2
Compensation cost charged against income | $	$ 759	$ 447
Excess tax benefit related to vesting of restricted stock and exercise of stock options | $	$ 63	$ 93
2010 Offering [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Warrant shares issued	32,425
Warrant exercise price per share | $ / shares	$ 12.00
Shares issuable upon exercise of warrants to purchase common stock	20
Warrants exercisable period	7 years
Warrant expiration date	Mar. 30, 2017
Warrants outstanding	0
2017 Omnibus Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized	5,000,000
Number of shares authorized for issuance	4,709,454
Amended and Restated 2017 Plan [Member] | Subsequent Event [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized			3,500,000
Stock Option [Member] | 2007 Omnibus Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized	4,000,000
Options contractual term	10 years
Weighted average fair value of options | $ / shares	$ 14.77	$ 17.25
Unrecognized compensation cost, nonvested stock options | $	$ 5,708
Unrecognized compensation cost, period of recognition	1 year 7 months 6 days
Stock Option [Member] | 2007 Omnibus Equity Incentive Plan [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period of shares	3 years
Stock Option [Member] | 2007 Omnibus Equity Incentive Plan [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period of shares	5 years
Restricted Stock [Member] | 2007 Omnibus Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost, nonvested stock options | $	$ 1,580
Unrecognized compensation cost, period of recognition	3 years 1 month 6 days
Shares, Vested	0	0
Restricted Stock [Member] | 2007 Omnibus Equity Incentive Plan [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period of shares	3 years
Restricted Stock [Member] | 2007 Omnibus Equity Incentive Plan [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period of shares	5 years

XML

Share-Based Payments - Summary of Stock Warrant Activity (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2017 USD ($)
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Intrinsic value of warrants exercised	$ 291
Cash received from warrants exercised	$ 132

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Share-Based Payments - Fair Value Assumptions of Stock Options (Detail)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Risk-free interest rate	2.49%	2.28%
Expected term	7 years 6 months	7 years 4 months 24 days
Expected stock price volatility	32.48%	34.20%
Dividend yield	0.00%	0.04%

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Share-Based Payments - Summary of Company's Stock Option Activities (Detail) - 2007 Omnibus Equity Incentive Plan [Member] - Stock Option [Member] - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares, Outstanding, Beginning Balance	1,507,168
Shares, Granted	28,125
Shares, Exercised	(21,348)
Shares, Forfeited, expired, or canceled	(11,754)
Shares, Outstanding, Ending Balance	1,502,191	1,507,168
Shares, Vested or expected to vest	1,427,082
Shares, Exercisable at period end	760,955
Weighted Average Exercise Price, Outstanding, Beginning Balance	$ 21.37
Weighted Average Exercise Price, Granted	36.40
Weighted Average Exercise Price, Exercised	10.32
Weighted Average Exercise Price, Forfeited, expired, or cancelled	29.37
Weighted Average Exercise Price, Outstanding, Ending Balance	21.75	$ 21.37
Weighted Average Exercise Price, Vested or expected to vest	21.75
Weighted Average Exercise Price, Exercisable at period end	$ 14.17
Weighted Average Remaining Contractual Term, Outstanding at beginning of year	6 years 4 months 28 days	6 years 6 months 18 days
Weighted Average Remaining Contractual Term, Vested or expected to vest	6 years 4 months 28 days
Weighted Average Remaining Contractual Term, Exercisable at period end	4 years 9 months
Aggregate Intrinsic Value, Outstanding at beginning of year	$ 16,299	$ 19,180
Aggregate Intrinsic Value, Vested or expected to vest	15,484
Aggregate Intrinsic Value, Exercisable at period end	$ 14,022

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Share-Based Payments - Summary of Stock Options Exercised (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Stock options exercised:
Cash received from options exercised	$ 220	$ 177
2007 Omnibus Equity Incentive Plan [Member] | Stock Option [Member]
Stock options exercised:
Intrinsic value of options exercised	511	610
Cash received from options exercised	220	177
Tax benefit realized from option exercises	$ 63	$ 93

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Share-Based Payments - Summary of Activity for Nonvested Restricted Share Awards (Detail) - Restricted Stock [Member] - 2007 Omnibus Equity Incentive Plan [Member] - $ / shares	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares, Non-vested, Beginning Balance	94,181
Shares, Granted	0
Shares, Vested	0	0
Shares, Forfeited	(334)
Shares, Non-vested, Ending Balance	96,409
Weighted-Average Grant-Date Fair Value, Non-vested, Beginning Balance	$ 25.42
Weighted-Average Grant-Date Fair Value, Granted	0
Weighted-Average Grant-Date Fair Value, Vested	0
Weighted-Average Grant-Date Fair Value, Forfeited	37.35
Weighted-Average Grant-Date Fair Value, Non-vested, Ending Balance	$ 25.38

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Regulatory Capital Matters - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2018
Banking and Thrift [Abstract]
Capital conservation buffer	2.50%
Capital conservation buffer ratio to be phased in at beginning	0.625%
Capital conservation buffer phase in year	2016
Capital conservation buffer period final year	2019
Capital conservation buffer ratio during period	1.875%

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Regulatory Capital Matters - Actual and Required Capital Amounts and Ratios (Detail) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Common equity Tier 1 capital to risk-weighted assets, Actual Amount	$ 310,218	$ 299,229
Total Capital to risk-weighted assets, Actual Amount	390,600	379,083
Tier 1 (Core) Capital to risk weighted assets, Actual Amount	310,218	299,229
Tier 1 (Core) Capital to average assets, Actual Amount	$ 310,218	$ 299,229
Common equity Tier 1 capital to risk-weighted assets	11.45%	11.37%
Total Capital to risk weighted assets, Actual Ratio	14.42%	14.40%
Tier 1 (Core) Capital to risk weighted assets, Actual Ratio	11.45%	11.37%
Tier 1 (Core) Capital to average assets, Actual Ratio	7.80%	8.25%
Common equity Tier 1 capital to risk-weighted assets	$ 121,874	$ 118,479
Total Capital to risk weighted assets, Required For Capital Adequacy Purposes Amount	216,665	210,629
Tier 1 (Core) Capital to risk weighted assets, Required For Capital Adequacy Purposes Amount	162,499	157,972
Tier 1 (Core) Capital to average assets, Required For Capital Adequacy Purposes Amount	$ 158,986	$ 145,100
Common equity Tier 1 capital to risk-weighted assets	4.50%	4.50%
Total Capital to risk weighted assets, Required For Capital Adequacy Purposes Ratio	8.00%	8.00%
Tier 1 (Core) Capital to risk weighted assets, Required For Capital Adequacy Purposes Ratio	6.00%	6.00%
Tier 1 (Core) Capital to average assets, Required For Capital Adequacy Purposes Ratio	4.00%	4.00%
Bank [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Common equity Tier 1 capital to risk-weighted assets, Actual Amount	$ 365,295	$ 353,512
Total Capital to risk-weighted assets, Actual Amount	387,126	374,851
Tier 1 (Core) Capital to risk weighted assets, Actual Amount	365,295	353,512
Tier 1 (Core) Capital to average assets, Actual Amount	$ 365,295	$ 353,512
Common equity Tier 1 capital to risk-weighted assets	13.49%	13.43%
Total Capital to risk weighted assets, Actual Ratio	14.29%	14.24%
Tier 1 (Core) Capital to risk weighted assets, Actual Ratio	13.49%	13.43%
Tier 1 (Core) Capital to average assets, Actual Ratio	9.19%	9.75%
Common equity Tier 1 capital to risk-weighted assets	$ 121,874	$ 118,489
Total Capital to risk weighted assets, Required For Capital Adequacy Purposes Amount	216,665	210,647
Tier 1 (Core) Capital to risk weighted assets, Required For Capital Adequacy Purposes Amount	162,499	157,985
Tier 1 (Core) Capital to average assets, Required For Capital Adequacy Purposes Amount	$ 158,857	$ 145,003
Common equity Tier 1 capital to risk-weighted assets	4.50%	4.50%
Total Capital to risk weighted assets, Required For Capital Adequacy Purposes Ratio	8.00%	8.00%
Tier 1 (Core) Capital to risk weighted assets, Required For Capital Adequacy Purposes Ratio	6.00%	6.00%
Tier 1 (Core) Capital to average assets, Required For Capital Adequacy Purposes Ratio	4.00%	4.00%
Common equity Tier 1 capital to risk-weighted assets	$ 176,040	$ 171,151
Total Capital to risk weighted assets, To Be Well Capitalized Under Prompt Corrective Action Regulations Amount	270,831	263,309
Tier 1 (Core) Capital to risk weighted assets, To Be Well Capitalized Under Prompt Corrective Action Regulations Amount	216,665	210,647
Tier 1 (Core) Capital to average assets, To Be Well Capitalized Under Prompt Corrective Action Regulations Amount	$ 198,572	$ 181,253
Common equity Tier 1 capital to risk-weighted assets	6.50%	6.50%
Total Capital to risk weighted assets, To Be Well Capitalized Under Prompt Corrective Action Regulations Ratio	10.00%	10.00%
Tier 1 (Core) Capital to risk weighted assets, To Be Well Capitalized Under Prompt Corrective Action Regulations Ratio	8.00%	8.00%
Tier 1 (Core) Capital to average assets, To Be Well Capitalized Under Prompt Corrective Action Regulations Ratio	5.00%	5.00%

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Fair Value - Additional information (Detail) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Fair Value Measurements Of Financial Instruments [Line Items]
Fair value measurements, valuation techniques	For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2), using matrix pricing. Matrix pricing is a mathematical technique commonly used to price debt securities that are not actively traded, values debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities' relationship to other benchmark quoted securities (Level 2 inputs).
Change in fair value related to loans held for sale	$ 1,439,000	$ 2,334,000
Additional provision for loan losses	573,000	1,855,000
Carrying amount of impaired loans with specific allocations	3,325,000		$ 4,141,000
Foreclosed assets	1,503,000		1,503,000
Write-down value during period	0	0
Loans Held for Sale [Member]
Fair Value Measurements Of Financial Instruments [Line Items]
Unpaid principal balance of loans held for sale	12,554,000		11,681,000
Change in fair value related to loans held for sale	317,000		343,000
Change in fair value of loans held for sale	(26,000)	113,000
Changes Measurement [Member]
Fair Value Measurements Of Financial Instruments [Line Items]
Additional provision for loan losses	0	$ 0
Fair Value [Member]
Fair Value Measurements Of Financial Instruments [Line Items]
Carrying amount of impaired loans with specific allocations	$ 1,831,000		$ 1,831,000
Maximum [Member] | Loans Held for Sale [Member]
Fair Value Measurements Of Financial Instruments [Line Items]
Term of loan	90 days		90 days

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Fair Value - Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total securities available for sale	$ 1,186,420	$ 999,881
Loans held for sale	12,871	12,024
U.S. Government Sponsored Entities and Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total securities available for sale	19,894	19,961
Mortgage-Backed Securities: Residential [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total securities available for sale	763,128	632,566
Mortgage-Backed Securities: Commercial [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total securities available for sale	5,011	5,074
State and Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total securities available for sale	109,816	113,371
U.S. Treasury Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total securities available for sale	288,571	228,909
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total securities available for sale	1,186,420	999,881
Loans held for sale	12,871	12,024
Mortgage banking derivatives	382	175
Mortgage banking derivatives	45	35
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | U.S. Government Sponsored Entities and Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total securities available for sale	19,894	19,961
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Mortgage-Backed Securities: Residential [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total securities available for sale	763,128	632,566
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Mortgage-Backed Securities: Commercial [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total securities available for sale	5,011	5,074
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | State and Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total securities available for sale	109,816	113,371
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | U.S. Treasury Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total securities available for sale	$ 288,571	$ 228,909

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Fair Value - Carrying Amount and Estimated Fair Value of Financial Instruments (Detail) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017	Dec. 31, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents, Carrying Amount	$ 246,164	$ 251,543	$ 114,664	$ 90,927
Certificates of deposit held at other financial institutions	2,855	2,855
Securities available for sale	1,186,420	999,881
Securities held to maturity, Carrying Amount	213,381	214,856
Securities held to maturity, Fair Value	210,888	217,608
Loans held for sale, Fair Value	12,871	12,024
Net loans, Carrying Amount	2,288,280	2,235,361
Servicing rights, net, Carrying Amount	3,602	3,620
Servicing rights, net, Fair Value	5,305	5,089
Accrued interest receivable	12,937	11,947
Deposits, Carrying Amount	3,355,153	3,167,228
Federal funds purchased and repurchase agreements, Carrying Amount	36,071	31,004
Federal Home Loan Bank advances, Carrying Amount	317,000	272,000
Subordinated notes, net	58,559	58,515
Accrued interest payable	2,775	2,769
Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents, Fair Value	246,164	251,543
Certificates of deposit held at other financial institutions, Fair Value	2,855	2,855
Securities available for sale	1,186,420	999,881
Securities held to maturity, Fair Value	210,888	217,608
Loans held for sale, Fair Value	12,871	12,024
Net loans, Fair Value	2,295,275	2,230,607
Restricted equity securities, Fair Value	0	0
Servicing rights, net, Fair Value	5,305	5,089
Mortgage banking derivative assets	382	175
Accrued interest receivable	12,937	11,947
Deposits, Fair Value	3,311,420	3,135,969
Federal funds purchased and repurchase agreements, Fair Value	36,071	31,004
Federal Home Loan Bank advances, Fair Value	314,341	270,311
Subordinated notes, net	62,259	59,951
Mortgage banking derivative liabilities	45	35
Accrued interest payable	2,775	2,769
Fair Value [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents, Fair Value	246,164	251,543
Restricted equity securities, Fair Value	0	0
Accrued interest receivable	182	73
Deposits, Fair Value	2,026,994	1,911,928
Accrued interest payable	93	51
Fair Value [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Certificates of deposit held at other financial institutions, Fair Value	2,855	2,855
Securities available for sale	1,186,420	999,881
Securities held to maturity, Fair Value	210,888	217,608
Loans held for sale, Fair Value	12,871	12,024
Restricted equity securities, Fair Value	0	0
Mortgage banking derivative assets	382	175
Accrued interest receivable	6,400	5,724
Deposits, Fair Value	1,284,426	1,224,041
Federal funds purchased and repurchase agreements, Fair Value	36,071	31,004
Federal Home Loan Bank advances, Fair Value	314,341	270,311
Mortgage banking derivative liabilities	45	35
Accrued interest payable	2,332	2,030
Fair Value [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Net loans, Fair Value	2,295,275	2,230,607
Restricted equity securities, Fair Value	0	0
Servicing rights, net, Fair Value	5,305	5,089
Accrued interest receivable	6,355	6,150
Subordinated notes, net	62,259	59,951
Accrued interest payable	350	688
Reported Value Measurement [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents, Carrying Amount	246,164	251,543
Certificates of deposit held at other financial institutions	2,855	2,855
Securities available for sale	1,186,420	999,881
Securities held to maturity, Carrying Amount	213,381	214,856
Loans held for sale, Carrying Amount	12,871	12,024
Net loans, Carrying Amount	2,288,280	2,235,361
Restricted equity securities, Carrying Amount	19,606	18,492
Servicing rights, net, Carrying Amount	3,602	3,620
Mortgage banking derivative assets	382	175
Accrued interest receivable	12,937	11,947
Deposits, Carrying Amount	3,355,153	3,167,228
Federal funds purchased and repurchase agreements, Carrying Amount	36,071	31,004
Federal Home Loan Bank advances, Carrying Amount	317,000	272,000
Subordinated notes, net	58,559	58,515
Mortgage banking derivative liabilities	45	35
Accrued interest payable	$ 2,775	$ 2,769

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Earnings Per Share - Computation of Earnings per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Basic
Net income available to common shareholders	$ 10,052	$ 7,934
Less: earnings allocated to participating securities	(71)	(65)
Net income allocated to common shareholders	$ 9,981	$ 7,869
Weighted average common shares outstanding including participating securities	13,249,728	13,049,012
Less: Participating securities	(94,010)	(106,323)
Average shares	13,155,718	12,942,689
Basic earnings per common share	$ 0.76	$ 0.61
Diluted
Net income allocated to common shareholders	$ 9,981	$ 7,869
Weighted average common shares outstanding for basic earnings per common share	13,155,718	12,942,689
Add: Dilutive effects of assumed exercises of stock options	516,666	708,694
Add: Dilutive effects of assumed exercises of stock warrants		5,974
Average shares and dilutive potential common shares	13,672,384	13,657,357
Diluted earnings per common share	$ 0.73	$ 0.58

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Earnings Per Share - Additional Information (Detail) - shares	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Earnings Per Share [Abstract]
Stock options to purchase shares of the Company's common stock	411,279	108,000

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Subordinated Debt Issuance - Additional Information (Detail) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Jun. 30, 2016	Mar. 31, 2016
Debt Instrument [Line Items]
Subordinated notes, net of issuance costs	$ 58,559,000		$ 58,515,000
Amortization of debt issuance costs	44,000	$ 44,000
Subordinated Debt [Member]
Debt Instrument [Line Items]
Notes, Aggregate principal amount	60,000,000
Amortization of debt issuance costs	45,000	$ 45,000
Subordinated Debt [Member] | March 2016 Subordinated Notes [Member]
Debt Instrument [Line Items]
Notes, Aggregate principal amount					$ 40,000,000
Notes, Interest rate					6.875%
Notes, Issuance cost	$ 1,382,000
Term of notes	10 years
Subordinated Debt [Member] | June 2016 Subordinated Notes [Member]
Debt Instrument [Line Items]
Notes, Aggregate principal amount				$ 20,000,000
Notes, Interest rate				7.00%
Notes, Issuance cost	$ 404,000
Term of notes	10 years

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Subordinated Debt Issuance - Summary of Terms of Each Subordinated Note offering (Detail) - Subordinated Debt [Member] - USD ($)	1 Months Ended		3 Months Ended
	Jun. 30, 2016	Mar. 31, 2016	Mar. 31, 2018
Debt Instrument [Line Items]
Principal amount issued			$ 60,000,000
March 2016 Subordinated Notes [Member]
Debt Instrument [Line Items]
Principal amount issued		$ 40,000,000
Maturity date		Mar. 30, 2026
Initial fixed interest rate		6.875%
Initial interest rate period			10 years
First interest rate change date		Mar. 30, 2021
Interest payment frequency through year five		Semiannually
Interest payment frequency after five years		Quarterly
March 2016 Subordinated Notes [Member] | Initial Term [Member]
Debt Instrument [Line Items]
Initial interest rate period		5 years
June 2016 Subordinated Notes [Member]
Debt Instrument [Line Items]
Principal amount issued	$ 20,000,000
Maturity date	Jul. 01, 2026
Initial fixed interest rate	7.00%
Initial interest rate period			10 years
First interest rate change date	Jul. 01, 2021
Interest payment frequency through year five	Semiannually
Interest payment frequency after five years	Quarterly
June 2016 Subordinated Notes [Member] | Initial Term [Member]
Debt Instrument [Line Items]
Initial interest rate period	5 years
LIBOR [Member] | March 2016 Subordinated Notes [Member]
Debt Instrument [Line Items]
Interest repricing index and margin		3-month LIBOR plus 5.636%
Interest payment frequency through year five		Quarterly
LIBOR [Member] | June 2016 Subordinated Notes [Member]
Debt Instrument [Line Items]
Interest repricing index and margin	3-month LIBOR plus 6.04%
Interest payment frequency through year five	Quarterly