Company Quick10K Filing
Quick10K
Reliant Bancorp
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$22.57 11 $259
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
8-K 2019-07-26 Regulation FD, Exhibits
8-K 2019-07-23 Earnings, Officers, Regulation FD, Exhibits
8-K 2019-07-03 Regulation FD, Exhibits
8-K 2019-06-25 Other Events, Exhibits
8-K 2019-05-23 Shareholder Vote, Regulation FD, Other Events, Exhibits
8-K 2019-05-03 Regulation FD, Exhibits
8-K 2019-04-24 Earnings, Exhibits
8-K 2019-04-03 Regulation FD, Exhibits
8-K 2019-04-03 Other Events, Exhibits
8-K 2019-02-19 Officers
8-K 2019-01-23 Earnings
8-K 2019-01-23 Earnings
8-K 2019-01-04 Regulation FD, Exhibits
8-K 2018-12-19 Other Events
8-K 2018-12-18 Other Events, Exhibits
8-K 2018-12-11 Regulation FD, Exhibits
8-K 2018-12-04 Other Events, Exhibits
8-K 2018-10-24 Earnings
8-K 2018-10-03 Exhibits
8-K 2018-09-25 Other Events, Exhibits
8-K 2018-07-27 Regulation FD, Exhibits
8-K 2018-07-25 Earnings, Exhibits
8-K 2018-07-02 Exhibits
8-K 2018-06-26 Other Events, Exhibits
8-K 2018-06-15 Amend Bylaw, Exhibits
8-K 2018-06-04 Earnings, Exhibits
8-K 2018-05-17 Shareholder Vote, Other Events, Exhibits
8-K 2018-04-26 Earnings, Exhibits
8-K 2018-04-15 Officers, Exhibits
8-K 2018-04-11 Exhibits
8-K 2018-03-27 Other Events, Exhibits
8-K 2018-02-26 Other Events
8-K 2018-01-25 Earnings
8-K 2018-01-23 Amend Bylaw, Exhibits
8-K 2017-12-31 M&A, Off-BS Arrangement, Officers, Amend Bylaw, Other Events, Exhibits
JOBS 51Job 5,210
VNOM Viper Energy Partners 2,040
KFRC Kforce 898
MTLS Materialise 812
EACQ Easterly Acquisition 0
ZIVO Zivo Bioscience 0
CRDX Credex 0
BKGMF Bankguam Holding 0
TFLG Trafalgar Resources 0
GNBC Green Bancorp 0
RBNC 2019-06-30
Part I - Financial Information
Item 1. Consolidated Financial Statements (Unaudited)
Note 1 - Summary of Significant Accounting Policies
Note 2 - Securities
Note 3 - Loans and Allowance for Loan Losses
Note 4 - Other Real Estate
Note 5 - Fair Values of Assets and Liabilities
Note 6 - Stock-Based Compensation
Note 7 - Regulatory Capital Requirements
Note 8 - Earnings per Share
Note 9 - Segment Reporting
Note 10 - Derivatives
Note 11 - Income Taxes
Note 12 - Business Combination
Note 13 - Recent Accounting Pronouncements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part II - Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
Item 5. Other Information.
Item 6. Exhibits.
EX-10.2 a102formrestrictedstockawa.htm
EX-10.3 exhibit103-formofdirectors.htm
EX-31.1 ex311q22019.htm
EX-31.2 ex312q22019.htm
EX-32.1 ex321q22019.htm

Reliant Bancorp Earnings 2019-06-30

RBNC 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 rbnc-063019x10q.htm 10-Q Document


 
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 June 30, 2019
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)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which
registered
Common Stock, $1.00 par value per share
RBNC
The Nasdaq Capital Market

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files): Yes No

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

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

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

The number of shares outstanding of the registrant’s common stock, par value $1.00 per share, as of August 2, 2019 was 11,195,062.
 




TABLE OF CONTENTS



2




CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

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

(i)
the possibility that our asset quality will decline or that we experience greater loan losses than anticipated;
(ii)
increased levels of other real estate, primarily as a result of foreclosures;
(iii)
the impact of liquidity needs on our results of operations and financial condition;
(iv)
the effect of interest rate increases on the cost of deposits;
(v)
unanticipated weakness in loan demand or loan pricing;
(vi)
greater than anticipated adverse conditions in the national economy or local economies in which we operate, including Middle Tennessee;
(vii)
lack of strategic growth opportunities or our failure to execute on those opportunities;
(viii)
deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses;
(ix)
the ability to grow and retain low-cost core deposits and retain large, uninsured deposits;
(x)
the impact of competition with other financial institutions and financial services providers, including pricing pressures and the resulting impact on Reliant Bancorp’s results, including as a result of compression to net interest margin;
(xi)
our ability to effectively manage problem credits;
(xii)
our ability to successfully implement efficiency initiatives on time and in amounts projected;
(xiii)
our ability to successfully develop and market new products and technology;
(xiv)
the impact of negative developments in the financial industry and U.S. and global capital and credit markets;
(xv)
our ability to retain the services of key personnel;
(xvi)
our ability to adapt to technological changes;
(xvii)
risks associated with litigation, including the applicability of insurance coverage;
(xviii)
the vulnerability of Reliant Bank’s network and online banking portals, and the systems of parties with whom Reliant Bancorp and Reliant Bank contract, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss, and other security breaches;
(xix)
changes in state and federal laws, rules, regulations or policies applicable to banks or bank or financial holding companies, including regulatory or legislative developments;
(xx)
adverse results (including costs, fines, reputational harm and/or other negative effects) from current or future litigation, regulatory examinations or other legal and/or regulatory actions; and
(xxi)
general competitive, economic, political and market conditions, including economic conditions in the local markets where we operate.

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

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

3



PART I – FINANCIAL INFORMATION

Item 1.    Consolidated Financial Statements (Unaudited)


4



RELIANT BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2019 (UNAUDITED) AND DECEMBER 31, 2018 (AUDITED)
(Dollar amounts in thousands)
 
June 30,
2019
 
December 31, 2018
 
Unaudited
 
Audited
ASSETS
 
 
 
Cash and due from banks
$
35,917

 
$
34,807

Federal funds sold
80

 
371

Total cash and cash equivalents
35,997

 
35,178

Securities available for sale
290,373

 
296,323

Loans, net
1,301,019

 
1,220,184

Mortgage loans held for sale, net
11,571

 
15,823

Accrued interest receivable
7,246

 
8,214

Premises and equipment, net
21,632

 
22,033

Restricted equity securities, at cost
11,488

 
11,690

Other real estate, net
1,848

 
1,000

Cash surrender value of life insurance contracts
46,068

 
45,513

Deferred tax assets, net
3,133

 
7,428

Goodwill
43,642

 
43,642

Core deposit intangibles
7,745

 
8,219

Other assets
12,486

 
9,091

 
 
 
 
TOTAL ASSETS
$
1,794,248

 
$
1,724,338

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
LIABILITIES
 
 
 
Deposits
 
 
 
Demand
$
225,380

 
$
216,937

Interest-bearing demand
144,265

 
154,218

Savings and money market deposit accounts
368,764

 
401,308

Time
811,871

 
665,440

Total deposits
1,550,280

 
1,437,903

Accrued interest payable
967

 
1,063

Subordinated debentures
11,644

 
11,603

Federal Home Loan Bank advances
11,119

 
57,498

Dividends payable
1,008

 
1,036

Other liabilities
5,287

 
6,821

 
 
 
 
TOTAL LIABILITIES
1,580,305

 
1,515,924

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

 

Common stock, $1 par value; 30,000,000 shares authorized; 11,196,563 and 11,530,810 shares issued and outstanding at June 30, 2019, and December 31, 2018, respectively
11,197

 
11,531

Additional paid-in capital
166,252

 
173,238

Retained earnings
33,349

 
27,329

Accumulated other comprehensive income (loss)
3,145

 
(3,684
)
 
 
 
 
TOTAL STOCKHOLDERS’ EQUITY
213,943

 
208,414

 
 
 
 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
1,794,248

 
$
1,724,338

See accompanying notes to consolidated financial statements.

5



RELIANT BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2019 AND 2018
(Dollar amounts in thousands except per share amounts)
(Unaudited)

 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2019
 
2018
 
2019
 
2018
INTEREST INCOME
 
 
 
 
 
 
 
Interest and fees on loans
$
16,960

 
$
14,066

 
$
33,129

 
$
27,624

Interest and fees on loans held for sale
198

 
326

 
351

 
807

Interest on investment securities, taxable
587

 
453

 
1,090

 
960

Interest on investment securities, nontaxable
1,650

 
1,708

 
3,368

 
3,212

Federal funds sold and other
297

 
277

 
597

 
589

 
 
 
 
 
 
 
 
TOTAL INTEREST INCOME
19,692

 
16,830

 
38,535

 
33,192

 
 
 
 
 
 
 
 
INTEREST EXPENSE
 
 
 
 
 
 
 
Deposits
 
 
 
 
 
 
 
Demand
86

 
84

 
197

 
161

Savings and money market deposit accounts
1,051

 
574

 
2,181

 
1,052

Time
4,369

 
2,199

 
7,940

 
4,195

Federal Home Loan Bank advances and other
175

 
397

 
552

 
669

Subordinated debentures
198

 
172

 
391

 
329

 
 
 
 
 
 
 
 
TOTAL INTEREST EXPENSE
5,879

 
3,426

 
11,261

 
6,406

 
 
 
 
 
 
 
 
NET INTEREST INCOME
13,813

 
13,404

 
27,274

 
26,786

 
 
 
 
 
 
 
 
PROVISION FOR LOAN LOSSES
200

 
300

 
200

 
437

 
 
 
 
 
 
 
 
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
13,613

 
13,104

 
27,074

 
26,349

 
 
 
 
 
 
 
 
NONINTEREST INCOME
 
 
 
 
 
 
 
Service charges on deposit accounts
936

 
900

 
1,820

 
1,671

Gains on mortgage loans sold, net
1,225

 
957

 
1,785

 
2,662

Gain on securities transactions, net
175

 
25

 
306

 
25

Gain on sale of other real estate

 
20

 

 
109

Other
362

 
352

 
725

 
778

 
 
 
 
 
 
 
 
TOTAL NONINTEREST INCOME
2,698

 
2,254

 
4,636

 
5,245

 
 
 
 
 
 
 
 
NONINTEREST EXPENSE
 
 
 
 
 
 
 
Salaries and employee benefits
7,706

 
6,613

 
14,971

 
13,567

Occupancy
1,358

 
1,210

 
2,710

 
2,439

Information technology
1,575

 
1,249

 
2,985

 
2,598

Advertising and public relations
275

 
141

 
529

 
230

Audit, legal and consulting
690

 
816

 
1,486

 
1,439

Federal deposit insurance
249

 
224

 
444

 
420

Merger expenses
1

 
2,483

 
3

 
2,660

Other operating
1,272

 
1,305

 
2,744

 
2,850

 
 
 
 
 
 
 
 
TOTAL NONINTEREST EXPENSE
13,126

 
14,041

 
25,872

 
26,203

 
 
 
 
 
 
 
 
INCOME BEFORE PROVISION FOR INCOME TAXES
3,185

 
1,317

 
5,838


5,391

 
 
 
 
 
 
 
 
INCOME TAX EXPENSE
501

 
115

 
873

 
912

 
 
 
 
 
 
 
 
CONSOLIDATED NET INCOME
2,684

 
1,202

 
4,965

 
4,479

 
 
 
 
 
 
 
 
NONCONTROLLING INTEREST IN NET LOSS OF SUBSIDIARY
1,555

 
937

 
3,098

 
1,401

 
 
 
 
 
 
 
 
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS
$
4,239

 
$
2,139

 
$
8,063

 
$
5,880

 
 
 
 
 
 
 
 
Basic net income attributable to common shareholders, per share
$
0.38

 
$
0.19

 
$
0.71

 
$
0.52

Diluted net income attributable to common shareholders, per share
$
0.38

 
$
0.19

 
$
0.71

 
$
0.51


See accompanying notes to consolidated financial statements.

6



RELIANT BANCORP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2019 AND 2018
(Dollar amounts in thousands)
(Unaudited)

 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2019
 
2018
 
2019
 
2018
Consolidated net income
$
2,684

 
$
1,202

 
$
4,965

 
$
4,479

Other comprehensive income (loss)
 
 
 
 
 
 
 
Net unrealized gains (losses) on available-for-sale securities, net of tax of ($1,241) and ($31) for the three months ended June 30, 2019 and 2018, respectively, and ($2,962) and $1,548 for the six months ended June 30, 2019 and 2018, respectively
3,523

 
36

 
8,386

 
(4,378
)
Net unrealized losses on interest rate swap derivatives net of tax of $304 for the three months ended June 30, 2019 and $471 for the six months ended June 30, 2019
(861
)
 

 
(1,331
)
 

Reclassification adjustment for gains included in net income, net of tax of $46 and $7 for the three months ended June 30, 2019 and 2018, respectively, and $80 and $7 for the six months ended June 30, 2019 and 2018, respectively
(129
)
 
(18
)
 
(226
)
 
(18
)
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)
2,533

 
18

 
6,829

 
(4,396
)
TOTAL COMPREHENSIVE INCOME
$
5,217

 
$
1,220

 
$
11,794

 
$
83


See accompanying notes to consolidated financial statements.

7



RELIANT BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2019 AND 2018
(Dollar amounts in thousands)
(Unaudited) 
 
COMMON STOCK
 
ADDITIONAL
PAID-IN
CAPITAL
 
RETAINED
EARNINGS
 
ACCUMULATED
OTHER
COMPREHENSIVE
INCOME (LOSS)
 
NONCONTROLLING
INTEREST
 
TOTAL
 
SHARES
 
AMOUNT
 
 
 
 
 
BALANCE - JANUARY 1, 2019
11,530,810

 
$
11,531

 
$
173,238

 
$
27,329

 
$
(3,684
)
 
$

 
$
208,414

Stock based compensation expense

 

 
250

 

 

 

 
250

Exercise of stock options
2,183

 
2

 
26

 

 

 

 
28

Restricted stock awards
3,000

 
3

 
(3
)
 

 

 

 

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

 
1

 

 

 
1

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

 

 

 
(659
)
Noncontrolling interest contributions

 

 

 

 

 
1,543

 
1,543

Cash dividend declared to common shareholders

 

 

 
(1,035
)
 

 

 
(1,035
)
Net income (loss)

 

 

 
3,824

 

 
(1,543
)
 
2,281

Other comprehensive loss

 

 

 

 
4,296

 

 
4,296

BALANCE - MARCH 31, 2019
11,502,285

 
11,502

 
172,886

 
30,119

 
612

 

 
215,119

Stock based compensation expense

 

 
280

 

 

 

 
280

Exercise of stock options
24,523

 
25

 
298

 

 

 

 
323

Employee Stock Purchase Plan stock issuance
4,728

 
5

 
85

 

 

 

 
90

Restricted stock awards
5,000

 
5

 
(5
)
 

 

 

 

Restricted stock and dividend forfeiture
(4,000
)
 
(4
)
 
4

 

 

 

 

Common stock shares redeemed
(335,973
)
 
(336
)
 
(7,296
)
 

 

 

 
(7,632
)
Noncontrolling interest contributions

 

 

 

 

 
1,555

 
1,555

Cash dividend declared to common shareholders

 

 

 
(1,009
)
 

 

 
(1,009
)
Net income (loss)

 

 

 
4,239

 

 
(1,555
)
 
2,684

Other comprehensive income

 

 

 

 
2,533

 

 
2,533

BALANCE - JUNE 30, 2019
11,196,563

 
$
11,197

 
$
166,252

 
$
33,349

 
$
3,145

 
$

 
$
213,943

See accompanying notes to consolidated financial statements.


 
COMMON STOCK
 
ADDITIONAL
PAID-IN
CAPITAL
 
RETAINED
EARNINGS
 
ACCUMULATED
OTHER
COMPREHENSIVE
INCOME (LOSS)
 
NONCONTROLLING
INTEREST
 
TOTAL
 
SHARES
 
AMOUNT
 
 
 
 
 
BALANCE - JANUARY 1, 2018
9,034,439

 
$
9,034

 
$
112,437

 
$
17,189

 
$
1,477

 
$

 
$
140,137

Stock based compensation expense

 

 
224

 

 

 

 
224

Exercise of stock options
25,225

 
25

 
315

 

 

 

 
340

Restricted stock awards
4,500

 
5

 
(5
)
 

 

 

 

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

 

 

 

 

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

 
2,417

 
59,566

 

 

 

 
61,983

Noncontrolling interest contributions

 

 

 

 

 
464

 
464

Cash dividends declared to common shareholders

 

 

 
(1,060
)
 

 

 
(1,060
)
Net income (loss)

 

 

 
3,741

 

 
(464
)
 
3,277

Other comprehensive income

 

 

 

 
(4,414
)
 

 
(4,414
)
BALANCE - MARCH 31, 2018
11,479,608

 
11,480

 
172,538

 
19,870

 
(2,937
)
 

 
200,951

Stock based compensation expense

 

 
148

 

 

 

 
148

Exercise of stock options
357

 

 
3

 

 

 

 
3

Restricted stock awards
3,000

 
3

 
(3
)
 

 

 

 

Noncontrolling interest contributions

 

 

 

 

 
937

 
937

Cash dividend declared to common shareholders

 

 

 
(919
)
 

 

 
(919
)
Net income (loss)

 

 

 
2,139

 

 
(937
)
 
1,202

Other comprehensive income

 

 

 

 
18

 

 
18

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, 2019 AND 2018
(Dollar amounts in thousands)
(Unaudited)

 
Six Months Ended
June 30,
 
2019
 
2018
OPERATING ACTIVITIES
 
 
 
Consolidated net income
$
4,965

 
$
4,479

Adjustments to reconcile consolidated net income to net cash provided by operating activities
 
 
 
Provision for loan losses
200

 
437

Deferred income taxes (benefit)
1,880

 
(374
)
Depreciation and amortization of premises and equipment
991

 
792

Net amortization of securities
1,586

 
1,515

Net realized gains on sales of securities
(306
)
 
(25
)
Gains on mortgage loans sold, net
(1,785
)
 
(2,662
)
Stock-based compensation expense
530

 
372

Realization of gain on other real estate

 
(109
)
Increase in cash surrender value of life insurance contracts
(555
)
 
(600
)
Mortgage loans originated for resale
(57,816
)
 
(70,064
)
Proceeds from sale of mortgage loans
63,853

 
87,795

Other accretion
(380
)
 
(471
)
Change in
 
 
 
Accrued interest receivable
968

 
(565
)
Other assets
(3,202
)
 
(856
)
Accrued interest payable
(96
)
 
496

Other liabilities
(4,389
)
 
(1,321
)
 
 
 
 
TOTAL ADJUSTMENTS
1,479

 
14,360

 
 
 
 
NET CASH PROVIDED BY OPERATING ACTIVITIES
6,444

 
18,839

 
 
 
 
INVESTING ACTIVITIES
 
 
 
Cash received from merger

 
33,128

Activities in available for sale securities
 
 
 
Purchases
(41,083
)
 
(103,323
)
Sales
52,434

 
92,991

Maturities, prepayments and calls
5,418

 
6,862

Purchases of restricted equity securities

 
(2,177
)
Redemption of restricted equity securities
202

 

Net increase in loans
(81,026
)
 
(57,337
)
Purchase of buildings, leasehold improvements, and equipment
(590
)
 
(1,372
)
Proceeds from sale of other real estate

 
670

 
 
 
 
NET CASH USED IN INVESTING ACTIVITIES
(64,645
)
 
(30,558
)
 
Six Months Ended
June 30,
 
2019
 
2018
FINANCING ACTIVITIES
 
 
 
Net change in deposits
112,388

 
18,298

Net change in advances from Federal Home Loan Bank
(46,352
)
 
6,154

Issuance of common stock, net
351

 
343

Issuance of common stock from Employee Stock Purchase Plan
90

 

Redemption of common stock
(8,291
)
 

Noncontrolling interest contributions received
2,905

 
560

Cash dividends paid on common stock
(2,071
)
 
(1,602
)
 
 
 
 
NET CASH PROVIDED BY FINANCING ACTIVITIES
59,020

 
23,753

 
 
 
 
NET CHANGE IN CASH AND CASH EQUIVALENTS
819

 
12,034

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD
35,178

 
20,668

CASH AND CASH EQUIVALENTS - END OF PERIOD
$
35,997

 
$
32,702

 
 
 
 
 
 
 
 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
 
 
 
Cash paid during the period for
 
 
 
Interest
$
11,357

 
$
5,910

Taxes
$
536

 
$
1,623

 
 
 
 
Non-cash investing and financing activities
 
 
 
Unrealized gain (loss) on securities available-for-sale
$
12,099

 
$
(6,499
)
Unrealized gain (loss) on derivatives
$
(2,859
)
 
$
598

Change in due to/from noncontrolling interest
$
3,098

 
$
1,401

Loans foreclosed and transferred to other real estate owned and foreclosed assets
$
848

 
$
1,060


See accompanying notes to consolidated financial statements.

9

RELIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2019 (UNAUDITED)
(Dollar amounts in thousands except per share amounts)



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Nature of Operations

Reliant Bank began organizational activities in 2005. Reliant Bancorp, Inc. provides financial services through its wholly owned bank subsidiary, Reliant Bank, which has 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.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with instructions to Quarterly Report on Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with 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 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, 2018.

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

Use of Estimates

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


10

RELIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED) AND DECEMBER 31, 2018
(Dollar amounts in thousands except per share amounts)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Use of Estimates (Continued)

The consolidated financial statements as of June 30, 2019, and for the three and six months ended June 30, 2019 and 2018, included herein have not been audited. The accounting and reporting policies of the Company conform to U.S. GAAP and Article 8 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, although the Company believes that the disclosures made are adequate to make the information not misleading.

The accompanying consolidated financial statements reflect all adjustments, which 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, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019.

Reclassifications

Certain reclassifications were made to the June 30, 2018 financial statement presentation in order to conform to the June 30, 2019 financial statement presentation. Total stockholders' equity and net income are unchanged due to these reclassifications.

NOTE 2 - SECURITIES

The amortized cost and fair value of available for sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income at June 30, 2019 and December 31, 2018 were as follows:
 
June 30, 2019
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
U. S. Treasury and other U. S. government agencies
$
313

 
$

 
$
(1
)
 
$
312

State and municipal
212,157

 
8,540

 
(83
)
 
220,614

Corporate bonds
3,130

 
2

 
(113
)
 
3,019

Mortgage backed securities
37,515

 
190

 
(197
)
 
37,508

Asset backed securities
29,430

 
12

 
(522
)
 
28,920
Total
$
282,545

 
$
8,744

 
$
(916
)
 
$
290,373

 
December 31, 2018
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
U. S. Treasury and other U. S. government agencies
$
568

 
$

 
$
(14
)
 
$
554

State and municipal
232,589

 
879

 
(4,170
)
 
229,298

Corporate bonds
3,130

 

 
(113
)
 
3,017

Mortgage backed securities
32,172

 
34

 
(248
)
 
31,958

Asset backed securities
28,635

 

 
(639
)
 
27,996
Time deposits
3,500

 

 

 
3,500

Total
$
300,594

 
$
913

 
$
(5,184
)
 
$
296,323


11

RELIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED) AND DECEMBER 31, 2018
(Dollar amounts in thousands except per share amounts)


NOTE 2 - SECURITIES (CONTINUED)

Securities pledged at June 30, 2019 and December 31, 2018 had a carrying amount of $59,682 and $70,097, respectively, and were pledged to collateralize Federal Home Loan Bank advances, Federal Reserve advances and municipal deposits.

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

The fair value of available for sale debt securities at June 30, 2019 by contractual maturity are provided below. Actual maturities may differ from contractual maturities for mortgage and asset backed securities since the underlying asset may be called or prepaid with or without penalty. Securities not due at a single maturity date are shown separately.

 
Amortized
Cost
 
Estimated
Fair Value
Due within one year
$
660

 
$
663

Due in one to five years
938

 
935

Due in five to ten years
7,240

 
7,400

Due after ten years
206,762

 
214,947

Mortgage backed securities
37,515

 
37,508

Asset backed securities
29,430

 
28,920

Total
$
282,545

 
$
290,373


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, 2019:

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

 
$

 
$
249

 
$
1

 
$
249

 
$
1

State and municipal

 

 
9,611

 
83

 
9,611

 
83

Corporate bonds

 

 
2,517

 
113

 
2,517

 
113

Mortgage backed securities
9,706

 
127

 
5,200

 
70

 
14,906

 
197

Asset backed securities
2,100

 
6

 
24,704

 
516

 
26,804

 
522

 
 
 
 
 
 
 
 
 
 
 
 
Total temporarily impaired
$
11,806

 
$
133

 
$
42,281

 
$
783

 
$
54,087

 
$
916



12

RELIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED) AND DECEMBER 31, 2018
(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, 2018:

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

 
$

 
$
555

 
$
14

 
$
555

 
$
14

State and municipal
118,580

 
2,263

 
47,223

 
1,907

 
165,803

 
4,170

Corporate bonds
2,526

 
105

 
492

 
8

 
3,018

 
113

Mortgage backed securities
17,015

 
99

 
5,397

 
149

 
22,412

 
248

Asset backed securities
20,351

 
383

 
7,255

 
256

 
27,606

 
639

 
 
 
 
 
 
 
 
 
 
 
 
Total temporarily impaired
$
158,472

 
$
2,850

 
$
60,922

 
$
2,334

 
$
219,394

 
$
5,184


Management has the intent and ability to hold all securities in an unrealized loss position for the foreseeable future, and the decline in fair value is largely due to changes in interest rates. The fair value is expected to recover as the securities approach their maturity date and/or market rates decline. There were 69 and 242 securities in an unrealized loss position as of June 30, 2019 and December 31, 2018, respectively.

NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES

Loans at June 30, 2019 and December 31, 2018 were comprised as follows:

 
June 30, 2019
 
December 31, 2018
Commercial, Industrial and Agricultural
$
233,312

 
$
213,850

Real Estate
 
 
 
    1-4 Family Residential
233,229

 
225,863

    1-4 Family HELOC
94,436

 
88,112

    Multi-family and Commercial
481,973

 
447,840

    Construction, Land Development and Farmland
237,421

 
220,801

Consumer
18,881

 
20,495

Other
13,338

 
14,106

Total
1,312,590

 
1,231,067

Less
 
 
 
    Deferred loan fees (cost)
(95
)
 
(9
)
    Allowance for possible loan losses
11,666

 
10,892

 
 
 
 
Loans, net
$
1,301,019

 
$
1,220,184






13

RELIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED) AND DECEMBER 31, 2018
(Dollar amounts in thousands except per share amounts)


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

Activity in the allowance for loan losses by portfolio segment was as follows for the six months ended June 30, 2019:

 
Commercial Industrial and Agricultural
 
Multi-family
and
Commercial
Real Estate
 
Construction
Land
Development
and Farmland
 
1-4 Family
Residential
Real Estate
Beginning balance
$
1,751

 
$
4,429

 
$
2,500

 
$
1,333

Charge-offs
(168
)
 

 

 
(17
)
Recoveries
294

 
59

 
201

 
216

Provision
4

 
225

 
6

 
(77
)
Ending balance
$
1,881

 
$
4,713

 
$
2,707

 
$
1,455


 
1-4 Family
HELOC
 
Consumer
 
Other
 
Total
Beginning balance
$
656

 
$
184

 
$
39

 
$
10,892

Charge-offs

 
(21
)
 
(13
)
 
(219
)
Recoveries
11

 
12

 

 
793

Provision
19

 
13

 
10

 
200

Ending balance
$
686

 
$
188

 
$
36

 
$
11,666


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









14

RELIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED) AND DECEMBER 31, 2018
(Dollar amounts in thousands except per share amounts)


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

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

 
Commercial Industrial and Agricultural
 
Multi-family
and
Commercial
Real Estate
 
Construction
Land
Development and Farmland
 
1-4 Family
Residential
Real Estate
Allowance for loan losses
 
 
 
 
 
 
 
Individually evaluated for impairment
$
72

 
$

 
$
17

 
$

Acquired with credit impairment

 

 

 

Collectively evaluated for impairment
1,809

 
4,713

 
2,690

 
1,455

Total
$
1,881

 
$
4,713

 
$
2,707

 
$
1,455

Loans
 
 
 
 
 
 
 
Individually evaluated for impairment
$
903

 
$
3,017

 
$
1,069

 
$
1,218

Acquired with credit impairment

 
222

 
829

 
253

Collectively evaluated for impairment
232,409

 
478,734

 
235,523

 
231,758

Total
$
233,312

 
$
481,973

 
$
237,421

 
$
233,229

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

 
$

 
$

 
$
89

Acquired with credit impairment

 

 

 

Collectively evaluated for impairment
686

 
188

 
36

 
11,577

Total
$
686

 
$
188

 
$
36

 
$
11,666

Loans
 
 
 
 
 
 
 
Individually evaluated for impairment
$
296

 
$

 
$

 
$
6,503

Acquired with credit impairment

 

 

 
1,304

Collectively evaluated for impairment
94,140

 
18,881

 
13,338

 
1,304,783

Total
$
94,436

 
$
18,881

 
$
13,338

 
$
1,312,590



15

RELIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED) AND DECEMBER 31, 2018
(Dollar amounts in thousands except per share amounts)


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

The allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 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
$
38

 
$

 
$
17

 
$

Acquired with credit impairment

 

 

 

Collectively evaluated for impairment
1,713

 
4,429

 
2,483

 
1,333

Total
$
1,751

 
$
4,429

 
$
2,500

 
$
1,333

Loans
 
 
 
 
 
 
 
Individually evaluated for impairment
$
978

 
$
1,160

 
$
1,780

 
$
1,246

Acquired with credit impairment
40

 
232

 
1,751

 
262

Collectively evaluated for impairment
212,832

 
446,448

 
217,270

 
224,355

Total
$
213,850

 
$
447,840

 
$
220,801

 
$
225,863


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

 
$

 
$

 
$
55

Acquired with credit impairment

 

 

 

Collectively evaluated for impairment
656

 
184

 
39

 
10,837

Total
$
656

 
$
184

 
$
39

 
$
10,892

Loans
 
 
 
 
 
 
 
Individually evaluated for impairment
$

 
$
12

 
$

 
$
5,176

Acquired with credit impairment

 
11

 

 
2,296

Collectively evaluated for impairment
88,112

 
20,472

 
14,106

 
1,223,595

Total
$
88,112

 
$
20,495

 
$
14,106

 
$
1,231,067


Risk characteristics relevant to each portfolio segment are as follows:

Commercial, 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.

16

RELIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED) AND DECEMBER 31, 2018
(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, 2019 (UNAUDITED) AND DECEMBER 31, 2018
(Dollar amounts in thousands except per share amounts)


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

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

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 ins