0001606440-18-000007.txt : 20180809 0001606440-18-000007.hdr.sgml : 20180809 20180809120350 ACCESSION NUMBER: 0001606440-18-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 81 CONFORMED PERIOD OF REPORT: 20180630 FILED AS OF DATE: 20180809 DATE AS OF CHANGE: 20180809 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Reliant Bancorp, Inc. CENTRAL INDEX KEY: 0001606440 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 371641316 STATE OF INCORPORATION: TN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-37391 FILM NUMBER: 181004135 BUSINESS ADDRESS: STREET 1: 1736 CAROTHERS PARKWAY STREET 2: SUITE 100 CITY: BRENTWOOD STATE: TN ZIP: 37027 BUSINESS PHONE: 615-221-2020 MAIL ADDRESS: STREET 1: 1736 CAROTHERS PARKWAY STREET 2: SUITE 100 CITY: BRENTWOOD STATE: TN ZIP: 37027 FORMER COMPANY: FORMER CONFORMED NAME: Commerce Union Bancshares, Inc. DATE OF NAME CHANGE: 20140424 10-Q 1 rbnc-063018x10q.htm 10-Q Document


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________
FORM 10-Q
_______________________________

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2018
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______

Commission File Number: 001-37391
_______________________________
Reliant Bancorp, Inc.
(Exact name of registrant as specified in its charter)
_______________________________
Tennessee
37-1641316
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
 
 
1736 Carothers Parkway, Suite 100
Brentwood, Tennessee
37027
(Address of principal executive offices)
(Zip Code)
 
 
(615) 221-2020
(Registrant’s telephone number, including area code)

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 ý No ¨

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

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:
Large Accelerated Filer ¨
Accelerated Filer ý
Non-Accelerated Filer ¨
Smaller Reporting Company ¨
Emerging growth company ý
 

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

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

The number of shares outstanding of the registrant’s common stock, par value $1.00 per share, as of August 7, 2018 was 11,527,094.
 




TABLE OF CONTENTS



2




FORWARD-LOOKING STATEMENTS

Reliant Bancorp, Inc. (Reliant Bancorp) may from time to time make written or oral statements, including statements contained in this report (including, without limitation, certain statements in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2), that constitute forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 (the Exchange Act). The words “believe,” “anticipate,” “expect,” “may,” “will,” “assume,” “should,” “predict,” “could,” “would,” “intend,” “targets,” “estimates,” “projects,” “plans,” “potential” and other similar words and expressions of the future are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking, including statements about the benefits to Reliant Bancorp of the merger with Community First, Inc. (Community First), Reliant Bancorp’s future financial and operating results and Reliant Bancorp’s plans, objectives and intentions. All forward-looking statements are subject to risks, uncertainties and other factors that may cause the actual results, performance or achievements of Reliant Bancorp to differ materially from any results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others:  

(i)
the effect of interest rate increases on the cost of deposits;
(ii)
unanticipated weakness in loan demand or loan pricing;
(iii)
greater than anticipated adverse conditions in the national or local economies in which we operate, including Middle Tennessee;
(iv)
our ability to successfully integrate Community First’s business and operations with that of Reliant Bank;
(v)
lack of strategic growth opportunities or our failure to execute on those opportunities;
(vi)
deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses;
(vii)
the ability to grow and retain low-cost core deposits and retain large, uninsured deposits;
(viii)
the impact of competition with other financial institutions, including pricing pressures and the resulting impact on Reliant Bancorp’s results, including as a result of compression to net interest margin;
(ix)
our ability to effectively manage problem credits;
(x)
our ability to successfully implement efficiency initiatives on time and in amounts projected;
(xi)
our ability to successfully develop and market new products and technology;
(xii)
the vulnerability of Reliant Bank’s network and online banking portals, and the systems of parties with whom we contract, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss, and other security breaches; and
(xiii)
changes in laws or regulations.

You should also consider carefully the risk factors discussed in Part I of our most recent Form 10-K, which address additional factors that could cause our actual results to differ from those set forth in the forward-looking statements and could materially and adversely affect our business, operating results and financial condition. The risks discussed in this quarterly report are factors that, individually or in the aggregate, management believes could cause our actual results to differ materially from expected and historical results. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider such disclosures to be a complete discussion of all potential risks or uncertainties. Factors not here or there listed may develop or, if currently extant, we may not have yet recognized them.

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







3



PART I – FINANCIAL INFORMATION

Item 1.    Consolidated Financial Statements (Unaudited)


4



RELIANT BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2018 (UNAUDITED) AND DECEMBER 31, 2017
(Dollar amounts in thousands except per share amounts)
 
June 30,
2018
 
December 31, 2017
 
Unaudited
 
Audited
ASSETS
 
 
 
Cash and due from banks
$
32,321

 
$
20,497

Federal funds sold
381

 
171

Total cash and cash equivalents
32,702

 
20,668

Securities available for sale
308,069

 
220,201

Loans, net
1,132,290

 
762,488

Mortgage loans held for sale, net
31,163

 
45,322

Accrued interest receivable
7,474

 
5,744

Premises and equipment, net
19,955

 
9,790

Restricted equity securities, at cost
11,677

 
7,774

Other real estate, net
2,060

 

Cash surrender value of life insurance contracts
44,927

 
33,663

Deferred tax assets, net
7,913

 
1,099

Goodwill
43,627

 
11,404

Core deposit intangibles
8,693

 
1,280

Other assets
9,108

 
5,601

 
 
 
 
TOTAL ASSETS
$
1,659,658

 
$
1,125,034

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
LIABILITIES
 
 
 
Deposits
 
 
 
Demand
$
225,360

 
$
131,996

Interest-bearing demand
140,201

 
88,230

Savings and money market deposit accounts
352,724

 
205,230

Time
615,990

 
458,063

Total deposits
1,334,275

 
883,519

Accrued interest payable
801

 
305

Subordinated debentures
11,562

 

Federal Home Loan Bank advances
102,874

 
96,747

Dividends payable
919

 
542

Other liabilities
6,887

 
3,784

 
 
 
 
TOTAL LIABILITIES
1,457,318

 
984,897

STOCKHOLDERS’ EQUITY
 
 
 
Preferred stock, $1 par value; 10,000,000 shares authorized; no shares issued to date

 

Common stock, $1 par value; 30,000,000 shares authorized; 11,482,965 and 9,034,439 shares issued and outstanding at June 30, 2018, and December 31, 2017, respectively
11,483

 
9,034

Additional paid-in capital
172,686

 
112,437

Retained earnings
21,090

 
17,189

Accumulated other comprehensive gain (loss)
(2,919
)
 
1,477

 
 
 
 
TOTAL STOCKHOLDERS’ EQUITY
202,340

 
140,137

 
 
 
 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
1,659,658

 
$
1,125,034

See accompanying notes to consolidated financial statements

5



RELIANT BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
(Dollar amounts in thousands except per share amounts)
(Unaudited)

 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2018
 
2017
 
2018
 
2017
INTEREST INCOME
 
 
 
 
 
 
 
Interest and fees on loans
$
14,066

 
$
8,333

 
$
27,624

 
$
16,115

Interest and fees on loans held for sale
326

 
115

 
807

 
209

Interest on investment securities, taxable
453

 
186

 
960

 
335

Interest on investment securities, nontaxable
1,708

 
946

 
3,212

 
1,774

Federal funds sold and other
277

 
124

 
589

 
244

 
 
 
 
 
 
 
 
TOTAL INTEREST INCOME
16,830

 
9,704

 
33,192

 
18,677

 
 
 
 
 
 
 
 
INTEREST EXPENSE
 
 
 
 
 
 
 
Deposits
 
 
 
 
 
 
 
Demand
84

 
46

 
161

 
89

Savings and money market deposit accounts
574

 
200

 
1,052

 
350

Time
2,199

 
853

 
4,195

 
1,546

Federal Home Loan Bank advances and other
397

 
102

 
669

 
218

Subordinated debentures
172

 

 
329

 

 
 
 
 
 
 
 
 
TOTAL INTEREST EXPENSE
3,426

 
1,201

 
6,406

 
2,203

 
 
 
 
 
 
 
 
NET INTEREST INCOME
13,404

 
8,503

 
26,786

 
16,474

 
 
 
 
 
 
 
 
PROVISION FOR LOAN LOSSES
300

 
245

 
437

 
655

 
 
 
 
 
 
 
 
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
13,104

 
8,258

 
26,349

 
15,819

 
 
 
 
 
 
 
 
NONINTEREST INCOME
 
 
 
 
 
 
 
Service charges on deposit accounts
900

 
317

 
1,671

 
627

Gains on mortgage loans sold, net
957

 
638

 
2,662

 
1,180

Gain on securities transactions, net
25

 
23

 
25

 
59

Gain on sale of other real estate
20

 
1

 
109

 
25

Other
352

 
252

 
778

 
479

 
 
 
 
 
 
 
 
TOTAL NONINTEREST INCOME
2,254

 
1,231

 
5,245

 
2,370

 
 
 
 
 
 
 
 
NONINTEREST EXPENSE
 
 
 
 
 
 
 
Salaries and employee benefits
6,613

 
4,485

 
13,567

 
8,754

Occupancy
1,210

 
870

 
2,439

 
1,632

Information technology
1,249

 
679

 
2,598

 
1,192

Advertising and public relations
141

 
48

 
230

 
123

Audit, legal and consulting
816

 
308

 
1,439

 
601

Federal deposit insurance
224

 
121

 
420

 
220

Merger expenses
2,483

 

 
2,660

 

Other operating
1,305

 
757

 
2,850

 
1,615

 
 
 
 
 
 
 
 
TOTAL NONINTEREST EXPENSE
14,041

 
7,268

 
26,203

 
14,137

 
 
 
 
 
 
 
 
INCOME BEFORE PROVISION FOR INCOME TAXES
1,317

 
2,221

 
5,391

 
4,052

 
 
 
 
 
 
 
 
INCOME TAX EXPENSE
115

 
427

 
912

 
699

 
 
 
 
 
 
 
 
CONSOLIDATED NET INCOME
1,202

 
1,794

 
4,479

 
3,353

 
 
 
 
 
 
 
 
NONCONTROLLING INTEREST IN NET LOSS OF SUBSIDIARY
937

 
393

 
1,401

 
892

 
 
 
 
 
 
 
 
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS
$
2,139

 
$
2,187

 
$
5,880

 
$
4,245

 
 
 
 
 
 
 
 
Basic net income attributable to common shareholders, per share
$
0.19

 
$
0.28

 
$
0.52

 
$
0.55

Diluted net income attributable to common shareholders, per share
$
0.19

 
$
0.28

 
$
0.51

 
$
0.54


See accompanying notes to consolidated financial statements

6



RELIANT BANCORP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
(Dollar amounts in thousands except per share amounts)
(Unaudited)

 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2018
 
2017
 
2018
 
2017
Consolidated net income
$
1,202

 
$
1,794

 
$
4,479

 
$
3,353

Other comprehensive income (loss)
 
 
 
 
 
 
 
Net unrealized gains (losses) on available-for-sale securities, net of tax of ($31) and ($871) for the three months ended June 30, 2018 and 2017, respectively, and $1,548 and ($1,016) for the six months ended June 30, 2018 and 2017, respectively
36

 
1,499

 
(4,378
)
 
1,639

Reclassification adjustment for gains included in net income, net of tax of ($7) and ($9) for the three months ended June 30, 2018 and 2017, respectively, and ($7) and ($23) for the six months ended June 30, 2018 and 2017, respectively
(18
)
 
(14
)
 
(18
)
 
(36
)
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)
18

 
1,485

 
(4,396
)
 
1,603

TOTAL COMPREHENSIVE INCOME
$
1,220

 
$
3,279

 
$
83

 
$
4,956


See accompanying notes to consolidated financial statements

7



RELIANT BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2018 AND 2017
(Dollar amounts in thousands except per share amounts)
(Unaudited)
 
 
COMMON STOCK
 
ADDITIONAL
PAID-IN
CAPITAL
 
RETAINED
EARNINGS
 
ACCUMULATED
OTHER
COMPREHENSIVE
INCOME (LOSS)
 
NONCONTROLLING
INTEREST
 
TOTAL
 
SHARES
 
AMOUNT
 
 
 
 
 
BALANCE - JANUARY 1, 2017
7,778,309

 
$
7,778

 
$
89,045

 
$
12,212

 
$
(2,116
)
 
$

 
$
106,919

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock based compensation expense

 

 
195

 

 

 

 
195

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercise of stock options
49,253

 
50

 
518

 

 

 

 
568

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Restricted stock awards
15,000

 
15

 
(15
)
 

 

 

 

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

 

 

 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noncontrolling interest contributions

 

 

 

 

 
892

 
892

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash dividend declared to common shareholders

 

 

 
(941
)
 

 

 
(941
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)

 

 

 
4,245

 

 
(892
)
 
3,353

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive income

 

 

 

 
1,603

 

 
1,603

 
 
 
 
 
 
 
 
 
 
 
 
 
 
BALANCE - JUNE 30, 2017
7,839,562

 
$
7,840

 
$
89,746

 
$
15,516

 
$
(513
)
 
$

 
$
112,589

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BALANCE - JANUARY 1, 2018
9,034,439

 
$
9,034

 
$
112,437

 
$
17,189

 
$
1,477

 
$

 
$
140,137

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock based compensation expense

 

 
372

 

 

 

 
372

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercise of stock options
25,582

 
25

 
318

 

 

 

 
343

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Restricted stock awards
7,500

 
8

 
(8
)
 

 

 

 

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

 

 

 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Conversion shares issued to shareholders of Community First, Inc.
2,416,444

 
2,417

 
59,566

 

 

 

 
61,983

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noncontrolling interest contributions

 

 

 

 

 
1,401

 
1,401

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash dividend declared to common shareholders

 

 

 
(1,979
)
 

 

 
(1,979
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)

 

 

 
5,880

 

 
(1,401
)
 
4,479

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive loss

 

 

 

 
(4,396
)
 

 
(4,396
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BALANCE - JUNE 30, 2018
11,482,965

 
$
11,483

 
$
172,686

 
$
21,090

 
$
(2,919
)
 
$

 
$
202,340


See accompanying notes to consolidated financial statements

8



RELIANT BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2018 AND 2017
(Dollar amounts in thousands except per share amounts)
(Unaudited)

 
2018
 
2017
OPERATING ACTIVITIES
 
 
 
Consolidated net income
$
4,479

 
$
3,353

Adjustments to reconcile consolidated net income to net cash provided by (used in) operating activities
 
 
 
Provision for loan losses
437

 
655

Deferred income taxes (benefit)
(374
)
 
(54
)
Depreciation and amortization of premises and equipment
792

 
513

Net amortization of securities
1,515

 
959

Other amortization (accretion)
40

 

Net realized (gains) losses on sales of securities
(25
)
 
(59
)
Gains on mortgage loans sold, net
(2,662
)
 
(1,180
)
Stock-based compensation expense
372

 
195

Realization of gain on other real estate
(109
)
 
(25
)
Increase in cash surrender value of life insurance contracts
(600
)
 
(376
)
Mortgage loans originated for resale
(70,064
)
 
(28,207
)
Proceeds from sale of mortgage loans
87,795

 
29,187

Amortization of core deposit intangible
475

 
178

Change in
 
 
 
Accrued interest receivable
(565
)
 
(512
)
Other assets
(856
)
 
5,534

Accrued interest payable
496

 
60

Other liabilities
(1,321
)
 
1,407

 
 
 
 
TOTAL ADJUSTMENTS
15,346

 
8,275

 
 
 
 
NET CASH PROVIDED BY OPERATING ACTIVITIES
19,825

 
11,628

 
 
 
 
INVESTING ACTIVITIES
 
 
 
Cash received from merger
33,128

 

Activities in available for sale securities
 
 
 
Purchases
(103,323
)
 
(58,778
)
Sales
92,991

 
18,688

Maturities, prepayments and calls
6,862

 
4,302

Purchases of restricted equity securities
(2,177
)
 
(22
)
Loan originations and payments, net
(58,259
)
 
(53,403
)
Purchase of buildings, leasehold improvements, and equipment
(1,372
)
 
(1,141
)
Proceeds from sale of other real estate
670

 

Purchase of life insurance contracts

 
(4,000
)
 
 
 
 
NET CASH USED IN INVESTING ACTIVITIES
(31,480
)
 
(94,354
)
 
 
 
 
FINANCING ACTIVITIES
 
 
 
Net change in deposits
18,261

 
76,180

Net change in federal funds purchased

 
(3,671
)
Net change in advances from Federal Home Loan Bank
6,127

 
12,623

Issuance of common stock
343

 
568

Noncontrolling interest contributions received
560

 
1,045

Cash dividends paid on common stock
(1,602
)
 
(1,711
)
 
 
 
 
NET CASH PROVIDED BY FINANCING ACTIVITIES
23,689

 
85,034

 
 
 
 
NET CHANGE IN CASH AND CASH EQUIVALENTS
12,034

 
2,308

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD
20,668

 
24,243

CASH AND CASH EQUIVALENTS - END OF PERIOD
$
32,702

 
$
26,551

 
 
 
 
 
 
 
 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
 
 
 
Cash paid during the period for
 
 
 
Interest
$
5,910

 
$
2,143

Taxes
$
1,623

 
$
526

 
 
 
 
Non-cash investing and financing activities
 
 
 
Unrealized gain (loss) on securities available-for-sale
$
(6,499
)
 
$
3,088

Unrealized gain (loss) on derivatives
$
598

 
$
(492
)
Change in due to/from noncontrolling interest
$
1,401

 
$
(153
)
Loans foreclosed and transferred to other real estate owned and foreclosed assets
$
1,060

 
$


See accompanying notes to consolidated financial statements

9

RELIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2018 (UNAUDITED) AND DECEMBER 31, 2017
(Dollar amounts in thousands except per share amounts)



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Nature of Operations

The Company began organizational activities in 2005. The Company provides financial services through its offices in Williamson, Robertson, Davidson, Sumner, Rutherford, Maury, Hickman and Hamilton Counties in Tennessee. Its primary deposit products are checking, savings, and term certificate accounts, and its primary lending products are commercial and residential construction loans, commercial loans, installment loans and lines secured by home equity. Substantially all loans are secured by specific items of collateral including commercial and residential real estate, business assets, and consumer assets. Commercial loans are expected to be repaid from cash flow from operations of businesses. On January 1, 2018, Community First, Inc. (“Community First”) a community banking organization headquartered in Columbia, Tennessee was merged with and into the Company. See Note 12.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with instructions to Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with U.S. generally accepted accounting principles (U.S. GAAP).  All adjustments consisting of normally recurring accruals that, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations for the periods covered by the report have been included.  The accompanying unaudited consolidated financial statements should be read in conjunction with the Reliant Bancorp, Inc.’s consolidated financial statements and related notes appearing in Reliant Bancorp, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2017.

The consolidated financial statements as of and for the periods presented include the accounts of Reliant Bancorp, Inc., its wholly-owned subsidiary, Community First TRUPS Holding Company (“TRUPS”), its second wholly-owned subsidiary, Reliant Bank (the “Bank”), and the Bank’s 51% controlled subsidiary, Reliant Mortgage Ventures, LLC, collectively (the “Company”). As described in the notes to our annual consolidated financial statements, Reliant Mortgage Ventures, LLC is considered a variable interest entity for which the Bank is deemed to be the primary beneficiary. All significant intercompany balances and transactions have been eliminated in consolidation. As described in Note 12, Reliant Bancorp, Inc. and Community First, Inc. merged effective January 1, 2018. The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America ("U.S. GAAP") and to general practices in the banking industry.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions based on available information. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to determination of the allowance for loan losses, the valuation of other real estate, the valuation of debt and equity securities, the valuation of deferred tax assets and fair values of financial instruments.


10

RELIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2018 (UNAUDITED) AND DECEMBER 31, 2017
(Dollar amounts in thousands except per share amounts)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Use of Estimates (Continued)

The consolidated financial statements as of June 30, 2018, and for the three and six months ended June 30, 2018 and 2017, included herein have not been audited. The accounting and reporting policies of the Company conform to U.S. generally accepted accounting principles and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, although the Company believes that the disclosures made are adequate to make the information not misleading.

The accompanying consolidated financial statements reflect all adjustments, which are, in the opinion of management, necessary to present a fair statement of the results for the interim periods presented. Such adjustments are of a normal recurring nature. The Company evaluates subsequent events through the date of filing. Certain prior period amounts have been reclassified to conform to the current period presentation. The results for the three and six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018.


NOTE 2 - SECURITIES

The amortized cost and fair value of available for sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive loss at June 30, 2018 and December 31, 2017 were as follows:

 
June 30, 2018
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
U. S. Treasury and other U. S. government agencies
$
32,617

 
$

 
$
(584
)
 
$
32,033

State and municipal
243,359
 
901

 
(4,284
)
 
239,976

Corporate bonds
3,130
 
3
 
(87
)
 
3,046

Mortgage backed securities
29,938
 
5
 
(429
)
 
29,514

Time deposits
3,500

 

 

 
3,500

 
 
 
 
 
 
 
 
Total
$
312,544

 
$
909

 
$
(5,384
)
 
$
308,069


 
December 31, 2017
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
U. S. Treasury and other U. S. government agencies
$
17,339

 
$
45

 
$
(96
)
 
$
17,288

State and municipal
189,576
 
3,081
 
(905)
 
191,752

Corporate bonds
1,500
 
5
 
(13)
 
1,492

Mortgage backed securities
6,262
 
3
 
(96)
 
6,169

Time deposits
3,500

 

 

 
3,500

 
 
 
 
 
 
 
 
Total
$
218,177

 
$
3,134

 
$
(1,110
)
 
$
220,201


11

RELIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2018 (UNAUDITED) AND DECEMBER 31, 2017
(Dollar amounts in thousands except per share amounts)


NOTE 2 - SECURITIES (CONTINUED)

Securities pledged at June 30, 2018 and December 31, 2017 had a carrying amount of $74,022 and $78,220, respectively, and were pledged to collateralize Federal Home Loan Bank advances, Federal Reserve advances and municipal deposits.

At June 30, 2018 and December 31, 2017, there were no holdings of securities of any one issuer in an amount greater than 10% of stockholders’ equity.

The fair value of available for sale debt securities at June 30, 2018 by contractual maturity are provided below. Securities not due at a single maturity date, primarily mortgage backed securities, are shown separately.

 
Amortized
Cost
 
Estimated
Fair Value
Due within one year
$
3,582

 
$
3,581

Due in one to five years
7,326

 
7,297

Due in five to ten years
15,401

 
15,141

Due after ten years
256,297

 
252,536

Mortgage backed securities
29,938

 
29,514

Total
$
312,544

 
$
308,069


The following table shows available for sale securities with unrealized losses and their estimated fair value aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of June 30, 2018:

 
Less than 12 months
 
12 months or more
 
Total
 
Estimated
Fair Value
 
Unrealized
Loss
 
Estimated
Fair Value
 
Unrealized
Loss
 
Estimated
Fair Value
 
Unrealized
Loss
Description of Securities
 
 
 
 
 
 
 
 
 
 
 
U. S. Treasury and other
U. S. government agencies
$
30,033

 
$
547

 
$
1,654

 
$
37

 
$
31,687

 
$
584

State and municipal
142,013

 
2,555

 
34,667

 
1,729

 
176,680

 
4,284

Corporate bonds
2,051

 
79

 
492

 
8

 
2,543

 
87

Mortgage backed securities
26,874

 
325

 
2,266

 
104

 
29,140

 
429

 
 
 
 
 
 
 
 
 
 
 
 
Total temporarily impaired
$
200,971

 
$
3,506

 
$
39,079

 
$
1,878

 
$
240,050

 
$
5,384



12

RELIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2018 (UNAUDITED) AND DECEMBER 31, 2017
(Dollar amounts in thousands except per share amounts)


NOTE 2 - SECURITIES (CONTINUED)

The following table shows available for sale securities with unrealized losses and their estimated fair value aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2017:

 
Less than 12 months
 
12 months or more
 
Total
 
Estimated
Fair Value
 
Unrealized
Loss
 
Estimated
Fair Value
 
Unrealized
Loss
 
Estimated
Fair Value
 
Unrealized
Loss
Description of Securities
 
 
 
 
 
 
 
 
 
 
 
U. S. Treasury and other
U. S. government agencies
$
9,057

 
$
74

 
$
1,345

 
$
22

 
$
10,402

 
$
96

State and municipal
19,899

 
128

 
34,946

 
777

 
54,845

 
905

Corporate bonds

 

 
487

 
13

 
487

 
13

Mortgage backed securities
2,412

 
14

 
3,349

 
82

 
5,761

 
96

 
 
 
 
 
 
 
 
 
 
 
 
Total temporarily impaired
$
31,368

 
$
216

 
$
40,127

 
$
894

 
$
71,495

 
$
1,110


Management has the intent and ability to hold all securities in an unrealized loss position for the foreseeable future, and the decline in fair value is largely due to changes in interest rates and the change in the federal tax rate. The fair value is expected to recover as the securities approach their maturity date and/or market rates decline. There were 266 and 120 securities in an unrealized loss position as of June 30, 2018 and December 31, 2017, respectively.

NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES

Loans at June 30, 2018 and December 31, 2017 were comprised as follows:

 
June 30, 2018
 
December 31, 2017
Commercial, Industrial and Agricultural
$
186,306

 
$
138,706

Real Estate
 
 
 
1-4 Family Residential
218,849

 
111,932

1-4 Family HELOC
85,585

 
72,017

Multi-family and Commercial
401,548

 
261,044

Construction, Land Development and Farmland
214,462

 
156,452

Consumer
22,155

 
17,605

Other
13,546

 
14,694

 
1,142,451

 
772,450

Less
 
 
 
Deferred loan (fees) costs
(8
)
 
231

Allowance for possible loan losses
10,169

 
9,731

 
 
 
 
Loans, net
$
1,132,290

 
$
762,488







13

RELIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2018 (UNAUDITED) AND DECEMBER 31, 2017
(Dollar amounts in thousands except per share amounts)




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

Activity in the allowance for loan losses by portfolio segment was as follows for the six months ended June 30, 2018:

 
Commercial Industrial and Agricultural
 
Multi-family
and
Commercial
Real Estate
 
Construction
Land
Development
and Farmland
 
1-4 Family
Residential
Real Estate
Beginning balance
$
2,538

 
$
3,166

 
$
2,434

 
$
773

Charge-offs
(308
)
 

 
(140
)
 
(8
)
Recoveries
425

 
3

 
44

 
11

Provision
(970
)
 
692

 
177

 
469

Ending balance
$
1,685

 
$
3,861

 
$
2,515

 
$
1,245


 
1-4 Family
HELOC
 
Consumer
 
Other
 
Total
Beginning balance
$
595

 
$
183

 
$
42

 
$
9,731

Charge-offs
(6
)
 
(24
)
 
(22
)
 
(508
)
Recoveries
5

 
18

 
3

 
509

Provision
42

 
15

 
12

 
437

Ending balance
$
636

 
$
192

 
$
35

 
$
10,169


Activity in the allowance for loan losses by portfolio segment was as follows for the six months ended June 30, 2017:

 
Commercial Industrial and Agricultural
 
Multi-family
and
Commercial
Real Estate
 
Construction
Land
Development
and Farmland
 
1-4 Family
Residential
Real Estate
Beginning balance
$
2,438

 
$
2,731

 
$
1,786

 
$
1,178

Charge-offs
(471
)
 

 

 
(15
)
Recoveries
140

 

 
3

 

Provision
850

 
172

 
131

 
(335
)
Ending balance
$
2,957

 
$
2,903

 
$
1,920

 
$
828


 
1-4 Family
HELOC
 
Consumer
 
Other
 
Total
Beginning balance
$
704

 
$
208

 
$
37

 
$
9,082

Charge-offs

 
(28
)
 

 
(514
)
Recoveries
18

 
1

 

 
162

Provision
(160
)
 
(4
)
 
1

 
655

Ending balance
$
562

 
$
177

 
$
38

 
$
9,385







14

RELIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2018 (UNAUDITED) AND DECEMBER 31, 2017
(Dollar amounts in thousands except per share amounts)




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

The allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of June 30, 2018 was as follows:

 
Commercial Industrial and Agricultural
 
Multi-family
and
Commercial
Real Estate
 
Construction
Land
Development and Farmland
 
1-4 Family
Residential
Real Estate
Allowance for loan losses
 
 
 
 
 
 
 
Individually evaluated for impairment
$
50

 
$

 
$
58

 
$
28

Acquired with credit impairment

 
100

 

 

Collectively evaluated for impairment
1,635

 
3,761

 
2,457

 
1,217

Total
$
1,685

 
$
3,861

 
$
2,515

 
$
1,245

Loans
 
 
 
 
 
 
 
Individually evaluated for impairment
$
1,200

 
$
2,009

 
$
2,237

 
$
2,216

Acquired with credit impairment
42

 
711

 
1,769

 
463

Collectively evaluated for impairment
185,064

 
398,828

 
210,456

 
216,170

Total
$
186,306

 
$
401,548

 
$
214,462

 
$
218,849

 
 
1-4 Family
HELOC
 
Consumer
 
Other
 
Total
Allowance for loan losses
 
 
 
 
 
 
 
Individually evaluated for impairment
$

 
$

 
$

 
$
136

Acquired with credit impairment

 

 

 
100

Collectively evaluated for impairment
636

 
192

 
35

 
9,933

Total
$
636

 
$
192

 
$
35

 
$
10,169

Loans
 
 
 
 
 
 
 
Individually evaluated for impairment
$
90

 
$

 
$

 
$
7,752

Acquired with credit impairment

 
11

 

 
2,996

Collectively evaluated for impairment
85,495

 
22,144

 
13,546

 
1,131,703

Total
$
85,585

 
$
22,155

 
$
13,546

 
$
1,142,451



15

RELIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2018 (UNAUDITED) AND DECEMBER 31, 2017
(Dollar amounts in thousands except per share amounts)


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

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

 
Commercial Industrial and Agricultural
 
Multi-family
and
Commercial
Real Estate
 
Construction
Land
Development and Farmland
 
1-4 Family
Residential
Real Estate
Allowance for loan losses
 
 
 
 
 
 
 
Individually evaluated for impairment
$
606

 
$

 
$
57

 
$

Acquired with credit impairment
2

 

 
2

 

Collectively evaluated for impairment
1,930

 
3,166

 
2,375

 
773

Total
$
2,538

 
$
3,166

 
$
2,434

 
$
773

Loans
 
 
 
 
 
 
 
Individually evaluated for impairment
$
3,649

 
$
1,921

 
$
3,800

 
$
2,114

Acquired with credit impairment
276

 
1,157

 
1,436

 
45

Collectively evaluated for impairment
134,781

 
257,966

 
151,216

 
109,773

Total
$
138,706

 
$
261,044

 
$
156,452

 
$
111,932


 
1-4 Family
HELOC
 
Consumer
 
Other
 
Total
Allowance for loan losses
 
 
 
 
 
 
 
Individually evaluated for impairment
$

 
$

 
$

 
$
663

Acquired with credit impairment

 

 

 
4

Collectively evaluated for impairment
595

 
183

 
42

 
9,064

Total
$
595

 
$
183

 
$
42

 
$
9,731

Loans
 
 
 
 
 
 
 
Individually evaluated for impairment
$
90

 
$

 
$

 
$
11,574

Acquired with credit impairment

 

 

 
2,914

Collectively evaluated for impairment
71,927

 
17,605

 
14,694

 
757,962

Total
$
72,017

 
$
17,605

 
$
14,694

 
$
772,450


Risk characteristics relevant to each portfolio segment are as follows:

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

16

RELIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2018 (UNAUDITED) AND DECEMBER 31, 2017
(Dollar amounts in thousands except per share amounts)


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

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

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

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

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

17

RELIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2018 (UNAUDITED) AND DECEMBER 31, 2017
(Dollar amounts in thousands except per share amounts)


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

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

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

Non-accrual loans by class of loan were as follows at June 30, 2018 and December 31, 2017:

 
June 30, 2018
 
December 31, 2017
Commercial, Industrial and Agricultural
$
483

 
$
2,110

Multi-family and Commercial Real Estate
471

 

Construction, Land Development and Farmland
1,740

 
2,518

1-4 Family Residential Real Estate
1,575

 
533

1-4 Family HELOC

 

Consumer
91

 

Total
$
4,360

 
$
5,161


Performing non-accrual loans totaled $2,695 and $1,096 at June 30, 2018 and December 31, 2017, respectively.

18

RELIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2018 (UNAUDITED) AND DECEMBER 31, 2017
(Dollar amounts in thousands except per share amounts)


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

Individually impaired loans by class of loans were as follows at June 30, 2018:

 
Unpaid
Principal
Balance
 
Recorded
Investment
with no
Allowance
Recorded
 
Recorded
Investment
with
Allowance
Recorded
 
Total
Recorded
Investment
 
Related
Allowance
Commercial, Industrial and Agricultural
$
1,653

 
$
977

 
$
265

 
$
1,242

 
$
50

Multi-family and Commercial Real Estate
3,842

 
2,516

 
204

 
2,720

 
100

Construction, Land Development and Farmland
4,323

 
3,389

 
617

 
4,006

 
58

1-4 Family Residential Real Estate
3,758

 
2,651

 
28

 
2,679

 
28

1-4 Family HELOC
90

 
90

 

 
90

 

Consumer
17

 
11

 

 
11

 

 
 
 
 
 
 
 
 
 
 
Total
$
13,683

 
$
9,634

 
$
1,114

 
$
10,748

 
$
236


Individually impaired loans by class of loans were as follows at December 31, 2017:
 
Unpaid
Principal
Balance
 
Recorded
Investment
with no
Allowance
Recorded
 
Recorded
Investment
with
Allowance
Recorded
 
Total
Recorded
Investment
 
Related
Allowance
Commercial, Industrial and Agricultural
$
4,398

 
$
2,959

 
$
966

 
$
3,925

 
$
608

Multi-family and Commercial Real Estate
3,427

 
3,078

 

 
3,078

 

Construction, Land Development and Farmland
5,317

 
3,249

 
1,987

 
5,236

 
59

1-4 Family Residential Real Estate
2,857

 
2,159

 

 
2,159

 

1-4 Family HELOC
90

 
90

 

 
90

 

 
 
 
 
 
 
 
 
 
 
Total
$
16,089

 
$
11,535

 
$
2,953

 
$
14,488

 
$
667


The average balances of impaired loans for the six months ended June 30, 2018 and 2017 were as follows:

 
2018
 
2017
Commercial, Industrial and Agricultural
$
3,040

 
$
5,758

Multi-family and Commercial Real Estate
3,010

 
4,832

Construction, Land Development and Farmland
5,083

 
4,192

1-4 Family Residential Real Estate
2,774

 
2,093

1-4 Family HELOC
90

 
1,180

Consumer
88

 

Total
$
14,085

 
$
18,055


19

RELIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 3