10-Q

United States Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

(Mark One) 

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2017

¨ TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________to

Commission File Number:333-203449

(Exact name of small business issuer as specified in its charter) 

Tennessee	62-1173944
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
5401 Kingston Pike, Suite 600 Knoxville, Tennessee	37919
(Address of principal executive offices)	(Zip Code)
865-453-2650
(Registrant’s telephone number, including area code)	(Former name, former address and former fiscal
	year, if changes since last report)

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

Yes  x   No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such period that the registrant was required to submit and post such files).

Yes  x    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. (Check one):

Large accelerated filer  ¨ Accelerated filer  ¨ Non-accelerated filer  ¨ Smaller reporting company  x Emerging growth company ¨

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

Yes  ¨    No  x

As of May 12, 2017 there were 8,212,602 shares of common stock, $1.00 par value per share, issued and outstanding.

1

TABLE OF CONTENTS

	PART I –FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3.	Defaults Upon Senior Securities	42
Item 4.	Mine Safety Disclosures	42
Item 5.	Other Information	42
Item 6.	Exhibits	42

2

FORWARD-LOOKING STATEMENTS

SmartFinancial, Inc. (“SmartFinancial”) 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 “expect,” “anticipate,” “intend,” “consider,” “plan,” “believe,” “seek,” “should,” “estimate,” and similar expressions are intended to identify such forward-looking statements, but other statements may constitute forward-looking statements. These statements should be considered subject to various risks and uncertainties. Such forward-looking statements are made based upon management’s belief as well as assumptions made by, and information currently available to, management pursuant to “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. SmartFinancial’s actual results may differ materially from the results anticipated in forward-looking statements due to a variety of factors. Such factors include, without limitation, those specifically described in Item 1A of Part I of the Company’s 2016 Annual Report on Form 10-K, as well as the following:  (i) the possibility that our asset quality would 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) competition from financial institutions and other financial service providers, (v) economic conditions in the local markets where we operate, (vi) our ability to realize all of the anticipated benefits of the merger between Cornerstone Community Bank and SmartBank, (vii) the impact of negative developments in the financial industry and U.S. and global capital and credit markets, (viii) the impact of recently enacted legislation on our business, (ix) the relatively greater credit risk of commercial real estate loans and construction and land development loans in our loan portfolio, (x) adverse impact on operations and financial condition of changes in interest rates, (xi) the impact of recently enacted legislation on our business, (xii) the impact of federal and state regulations on our operations and financial performance, (xiii) our ability to retain the services of key personnel, (xiv) the impact of Tennessee’s anti-takeover statutes and certain charter provisions on potential acquisitions of the holding company, and (xv) our ability to adapt to technological changes. Many of such factors are beyond SmartFinancial’s ability to control or predict, and readers are cautioned not to put undue reliance on such forward-looking statements. SmartFinancial does not intend to update or reissue any forward-looking statements contained in this report as a result of new information or other circumstances that may become known to SmartFinancial.

Non-GAAP Financial Measures

Under SEC Regulation G, public companies making disclosures containing financial measures that are not in accordance with GAAP must also disclose, along with each non-GAAP financial measure, certain additional information, including a reconciliation of the non-GAAP financial measure to the closest comparable GAAP financial measure, as well as a statement of the company’s reasons for utilizing the non-GAAP financial measure. The SEC has exempted from the definition of non-GAAP financial measures certain commonly used financial measures that are not based on GAAP. However, two non-GAAP financial measures commonly used by financial institutions, namely tax-equivalent net interest income and tax-equivalent net interest margin (as presented in the tables in the section labeled “Net Interest Income and Yield Analysis”), have not been specifically exempted by the SEC, and may therefore constitute non-GAAP financial measures under Regulation G. We are unable to state with certainty whether the SEC would regard those measures as subject to Regulation G. Management believes that these non-GAAP financial measures are useful in evaluating the Company’s financial performance and facilitate comparisons with the performance of other financial institutions. However, that information should be considered supplemental in nature and not as a substitute for related financial information prepared in accordance with GAAP.

3

PART I –FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SMARTFINANCIAL, INC. AND SUBSIDIARY 

CONSOLIDATED BALANCE SHEETS 

	Unaudited March 31, 2017			December 31, 2016
ASSETS
Cash and due from banks	$	22,093,186		$	34,290,617
Interest-bearing deposits at other financial institutions	33,454,535			34,457,691
Total cash and cash equivalents	55,547,721			68,748,308
Securities available for sale	137,132,626			129,421,914
Restricted investments, at cost	5,627,950			5,627,950
Loans, net of allowance for loan losses of $5,152,261 at March 31, 2017 and $5,105,255 at December 31, 2016	802,387,400			808,271,003
Bank premises and equipment, net	30,802,210			30,535,594
Foreclosed assets	2,370,556			2,386,239
Goodwill and core deposit intangible, net	6,583,077			6,635,655
Other assets	10,634,241			10,829,622
Total assets	$	1,051,085,781		$	1,062,456,285
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand deposits	$	160,672,567		$	153,482,650
Interest-bearing demand deposits	167,433,130			162,702,457
Money market and savings deposits	274,993,376			274,604,724
Time deposits	286,600,177			316,275,340
Total deposits	889,699,250			907,065,171
Securities sold under agreement to repurchase	23,153,397			26,621,984
Federal Home Loan Bank advances and other borrowings	60,000			18,505,390
Accrued expenses and other liabilities	5,622,319			5,023,600
Total liabilities	918,534,966			957,216,145
Stockholders' equity:
Preferred stock - $1 par value; 2,000,000 shares authorized; None issued and outstanding in 2017. 12,000 issued and outstanding in 2016.	—			12,000
Common stock - $1 par value; 40,000,000 shares authorized; 8,211,102 and 5,896,033 shares issued and outstanding  in 2017 and 2016, respectively	8,211,102			5,896,033
Additional paid-in capital	106,702,972			83,463,051
Retained earnings	18,320,147			16,871,296
Accumulated other comprehensive loss	(683,406		)	(1,002,240		)
Total stockholders' equity	132,550,815			105,240,140
Total liabilities and stockholders' equity	$	1,051,085,781		$	1,062,456,285

The Notes to Consolidated Financial Statements are an integral part of these statements.

4

SMARTFINANCIAL, INC. AND SUBSIDIARY 

CONSOLIDATED STATEMENTS OF INCOME 

	Unaudited Three Months Ended March 31,
	2017			2016
INTEREST INCOME
Loans, including fees	$	10,215,607		$	9,374,457
Securities and interest-bearing deposits at other financial institutions	660,819			716,580
Federal funds sold and other earning assets	72,897			63,309
Total interest income	10,949,323			10,154,346
INTEREST EXPENSE
Deposits	1,097,538			961,268
Securities sold under agreements to repurchase	15,951			16,460
Federal Home Loan Bank advances and other borrowings	15,475			45,286
Total interest expense	1,128,964			1,023,014
Net interest income before provision for loan losses	9,820,359			9,131,332
Provision for loan losses	12,450			137,557
Net interest income after provision for loan losses	9,807,909			8,993,775
NONINTEREST INCOME
Customer service fees	264,673			295,803
Gain on sale of securities	—			83,263
Gain on sale of loans and other assets	275,165			221,925
(Loss) gain on sale of foreclosed assets	(15,564		)	57,977
Other noninterest income	402,434			411,864
Total noninterest income	926,708			1,070,832
NONINTEREST EXPENSES
Salaries and employee benefits	4,646,749			4,495,008
Net occupancy and equipment expense	978,459			1,018,428
Depository insurance	153,299			135,803
Foreclosed assets	—			56,658
Advertising	164,262			173,447
Data processing	339,815			341,380
Professional services	569,841			455,173
Amortization of intangible assets	52,578			93,353
Service contracts	295,629			285,627
Other operating expenses	944,280			897,021
Total noninterest expenses	8,144,912			7,951,898
Income before income tax expense	2,589,705			2,112,709
Income tax expense	945,854			763,846
Net income	1,643,851			1,348,863
Preferred stock dividends	195,000			212,000
Net income available to common stockholders	$	1,448,851		$	1,136,863
EARNINGS PER COMMON SHARE
Basic	$	0.19		$	0.20
Diluted	0.19			0.19
Weighted average common shares outstanding
Basic	7,524,830			5,807,488
Diluted	7,631,219			6,108,087
Dividends per share	—			—

The Notes to Consolidated Financial Statements are an integral part of these statements.

5

SMARTFINANCIAL, INC. AND SUBSIDIARY 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Unaudited Three Months Ended March 31,
	2017		2016
Net income	$	1,643,851	$	1,348,863
Other comprehensive income, net of tax:
Unrealized holding gains arising during the period, net of tax expense of $197,831 and $381,291 in 2017 and 2016, respectively	318,834		614,708
Reclassification adjustment for gains included in net income, net of tax expense of $- and $31,640 in 2017 and  2016, respectively	—		(51,623		)
Total other comprehensive income	318,834		563,085
Comprehensive income	$	1,962,685	$	1,911,948

The Notes to Consolidated Financial Statements are an integral part of these statements.

6

SMARTFINANCIAL, INC. AND SUBSIDIARY 

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - UNAUDITED

For the Three Months Ended March 31, 2017

	Preferred Shares		Common Shares	Preferred Stock			Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Stockholders' Equity
BALANCE, December 31, 2016	12,000		5,896,033	$	12,000		$	5,896,033	$	83,463,051		$	16,871,296		$	(1,002,240	)	$	105,240,140
Net income	—		—	—			—		—			1,643,851			—			1,643,851
Other comprehensive income	—		—	—			—		—			—			318,834			318,834
Issuance of common stock	—		1,840,000	—			1,840,000		31,383,653			—			—			33,223,653
Issuance of stock grants	—		1,511	—			1,511		30,280			—			—			31,791
Exercise of stock options	—		473,558	—			473,558		3,787,176			—			—			4,260,734
Cash dividend on preferred stock	—		—	—			—		—			(195,000		)	—			(195,000		)
Redemption of preferred stock	(12,000	)		(12,000		)			(11,988,000		)							(12,000,000		)
Stock compensation expense	—		—	—			—		26,812			—			—			26,812
BALANCE, March 31, 2017	—		8,211,102	$	—		$	8,211,102	$	106,702,972		$	18,320,147		$	(683,406	)	$	132,550,815

The Notes to Consolidated Financial Statements are an integral part of these statements.

7

SMARTFINANICAL, INC. AND SUBSIDIARY 

CONSOLIDATED STATEMENTS OF CASH FLOWS 

	Unaudited Three Months Ended March 31,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,643,851		$	1,348,863
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	549,186			525,809
Provision for loan losses	12,450			137,557
Stock compensation expense	26,812			33,635
Gains from sale of securities	—			(83,263		)
Net gains from sale of loans and other assets	(275,165		)	(221,925		)
Net loss (gains) from sale of foreclosed assets	15,564			(57,977		)
Changes in other assets and liabilities:
Accrued interest receivable	160,042			106,932
Accrued interest payable	2,373			10,061
Other assets and liabilities	486,433			2,061,243
Net cash provided by operating activities	2,621,546			3,860,935
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from security sales, maturities, and paydowns	5,152,054			9,652,595
Purchase of securities	(12,507,860		)	—
Purchase of restricted investments	—			(200		)
Loan originations and principal collections, net	6,106,801			(12,967,236		)
Purchase of bank premises and equipment	(654,044		)	(971,967		)
Proceeds from sale of foreclosed assets	39,636			283,221
Net cash used in investing activities	(1,863,413		)	(4,003,587		)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits	(17,365,921		)	628,670
Net decrease in securities sold under agreements to repurchase	(3,468,587		)	(7,321,193		)
Issuance of common stock	37,516,178			77,707
Redemption of preferred stock	(12,000,000		)	—
Payment of dividends on preferred stock	(195,000		)	(212,000		)
Proceeds from Federal Home Loan Bank advances and other borrowings	60,375			18,000,000
Repayment of Federal Home Loan Bank advances and other borrowings	(18,505,765		)	(22,062,293		)
Net cash used in financing activities	(13,958,720		)	(10,889,109		)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(13,200,587		)	(11,031,761		)
CASH AND CASH EQUIVALENTS, beginning of year	68,748,308			79,964,633
CASH AND CASH EQUIVALENTS, end of period	$	55,547,721		$	68,932,872
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for interest	$	1,126,591		$	1,012,953
Cash paid during the period for taxes	—			—
NONCASH INVESTING AND FINANCING ACTIVITIES
Change in unrealized losses on securities available for sale	$	(516,665	)	$	(912,736	)
Acquisition of real estate through foreclosure	39,517			—
Financed sales of foreclosed assets	—			—

The Notes to Consolidated Financial Statements are an integral part of these statements.

8

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1. Presentation of Financial Information

Nature of Business:

SmartFinancial, Inc. (the “Company”) is a bank holding company whose principal activity is the ownership and management of its wholly-owned subsidiary, SmartBank (the “Bank”). The Company provides a variety of financial services to individuals and corporate customers through its offices in eastern Tennessee, northwest Florida, and north Georgia. The Company’s primary deposit products are interest-bearing demand deposits and certificates of deposit. Its primary lending products are commercial, residential, and consumer loans.

Interim Financial Information (Unaudited):

The financial information in this report for March 31, 2017 and March 31, 2016 has not been audited. The information included herein should be read in conjunction with the Company’s 2016 annual consolidated financial statements and footnotes included elsewhere. The consolidated financial statements presented herein conform to U.S. generally accepted accounting principles and to general industry practices. In the opinion of SmartFinancial’s management, the accompanying interim financial statements contain all material adjustments necessary to present fairly the financial condition, the results of operations, and cash flows for the interim period. Results for interim periods are not necessarily indicative of the results to be expected for a full year.

Basis of Presentation and Accounting Estimates:

All adjustments consisting of normal recurring accruals, that in the opinion of management, are necessary for a fair presentation of the financial position and the results of operations for the periods covered by the report have been included. The accompanying unaudited consolidated financial statements and related notes should be read in conjunction with those appearing the in the 2016 Annual Report previously filed on Form 10-K.

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation.

In preparing the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet, and 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 the determination of the allowance for loan losses, the valuation of foreclosed assets and deferred taxes, other-than-temporary impairments of securities, and the fair value of financial instruments.

The determination of the adequacy of the allowance for loan losses is based on estimates that are particularly susceptible to significant changes in the economic environment and market conditions. In connection with the determination of the estimated losses on loans, management obtains independent appraisals for significant collateral.

The Company’s loans are generally secured by specific items of collateral including real property, consumer assets, and business assets. Although the Company has a diversified loan portfolio, a substantial portion of its debtors’ ability to honor their contracts is dependent on local economic conditions.

While management uses available information to recognize losses on loans, further reductions in the carrying amounts of loans may be necessary based on changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the estimated losses on loans. Such agencies may require the Company to recognize additional losses based on their judgments about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the estimated losses on loans may change materially in the near term. However, the amount of the change that is reasonably possible cannot be estimated.

9

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1. Presentation of Financial Information, Continued

Recently Issued Accounting Pronouncements:

During interim periods, the Company follows the accounting policies set forth in its annual audited financial statements for the year ended December 31, 2016 as filed with the Securities and Exchange Commission. The following is a summary of recent authoritative pronouncements not yet effective that could impact the accounting, reporting, and/or disclosure of financial information by the Company issued since December 31, 2016.

In January 2017, FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The ASU clarifies the definition of a business to assist with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company does not expect these amendments to have a material effect on its financial statements.

In January 2017, FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The ASU simplifies the subsequent measurement of goodwill and eliminates Step 2 from the goodwill impairment test. The Company should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value. The impairment charge is limited to the amount of goodwill allocated to that reporting unit. The amendments in this update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect these amendments to have a material effect on its financial statements.

In March 2017, FASB issued ASU No. 2017-08, Receivables - Nonrefundable Fees and Other Costs (Topic 310-20): Premium Amortization on Purchased Callable Debt Securities. The ASU shortens the amortization period for certain callable debt securities held at a premium. The premium on individual callable debt securities shall be amortized to the earliest call date. This guidance does not apply to securities for which prepayments are estimated on a large number of similar loans where prepayments are probable and reasonably estimable. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. This update should be adopted on a modified retrospective basis with a cumulative-effect adjustment to retained earnings on the date of adoption. The Company does not expect these amendments to have a material effect on its financial statements.

Earnings per common share:

Basic earnings per common share represents income available to common stockholders divided by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate solely to outstanding stock options and are determined using the treasury stock method.

Note 2. Earnings per share

The following is a summary of the basic and diluted earnings per share for the three month periods ended March 31, 2017 and March 31, 2016.

	Three Months Ended March 31,
	2017		2016
Net income available to common shareholders	$	1,448,851	$	1,136,863
Weighted average common shares outstanding	7,524,830		5,807,488
Effect of dilutive stock options	106,389		300,599
Diluted shares	7,631,219		6,108,087
Basic earnings per common share	$	0.19	$	0.20
Diluted earnings per common share	$	0.19	$	0.19

10

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 2. Earnings per share, Continued

For the three months ended March 31, 2017 and 2016, the effects of outstanding antidilutive stock options are excluded from the computation of diluted earnings per common share because the exercise price of such options is higher than the market price. There were 14,604 and 18,100 antidilutive stock options as of March 31, 2017 and 2016, respectively.

Note 3. Securities

The amortized cost and fair value of securities available-for-sale at March 31, 2017 and December 31, 2016 are summarized as follows (in thousands):

	March 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government-sponsored enterprises (GSEs)	$	18,261	$	5	$	(468	)	$	17,798
Municipal securities	8,434		23		(119		)	8,338
Other debt securities	972		—		(26		)	946
Mortgage-backed securities	110,573		228		(750		)	110,051
	$	138,240	$	256	$	(1,363	)	$	137,133

	December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government-sponsored enterprises (GSEs)	$	18,279	$	8	$	(564	)	$	17,723
Municipal securities	8,182		16		(179		)	8,019
Mortgage-backed securities	104,585		185		(1,090		)	103,680
	$	131,046	$	209	$	(1,833	)	$	129,422

At March 31, 2017, securities with a fair value totaling approximately $81,068,000 were pledged to secure public funds and securities sold under agreements to repurchase.

For the three months ended March 31, 2017, there were no available-for-sale securities sold. For the three months ended March 31, 2016 there were available-for-sale securities sold with proceeds totaling $5,072,500 which resulted in gross gains realized of $83,263 and gross losses of $-.

The amortized cost and estimated fair value of securities at March 31, 2017, by contractual maturity, are shown below (in thousands). Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost		Fair Value
Due in one year or less	$	3,011	$	3,011
Due from one year to five years	12,391		12,048
Due from five years to ten years	8,543		8,341
Due after ten years	3,722		3,682
	27,667		27,082
Mortgage-backed securities	110,573		110,051
	$	138,240	$	137,133

11

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 3. Securities, Continued

The following tables present the gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities available-for-sale have been in a continuous unrealized loss position, as of March 31, 2017 and December 31, 2016 (in thousands):

	As of March 31, 2017
	Less than 12 Months			12 Months or Greater			Total
	Fair Value	Gross Unrealized Losses		Fair Value	Gross Unrealized Losses		Fair Value	Gross Unrealized Losses
U.S. Government- sponsored enterprises (GSEs)	14,379	(468	)	—	—		14,379	(468	)
Municipal securities	5,115	(118	)	254	(1	)	5,369	(119	)
Other debt securities	945	(26	)	—	—		945	(26	)
Mortgage-backed securities	62,827	(380	)	12,129	(370	)	74,956	(750	)
	83,266	(992	)	12,383	(371	)	95,649	(1,363	)

	As of December 31, 2016
	Less than 12 Months					12 Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. Government- sponsored enterprises (GSEs)	$	14,702	$	(564	)	$	—	$	—		$	14,702	$	(564	)
Municipal securities	6,368		(179		)	—		—			6,368		(179		)
Mortgage-backed securities	67,063		(690		)	8,948		(400		)	76,011		(1,090		)
	$	88,133	$	(1,433	)	$	8,948	$	(400	)	$	97,081	$	(1,833	)

At March 31, 2017, the categories of temporarily impaired securities, and management’s evaluation of those securities, are as follows:

U.S. Government-sponsored enterprises: At March 31, 2017, 5 (or five) investment in U.S. GSE securities had unrealized losses. These unrealized losses related principally to changes in market interest rates. The contractual terms of the investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. Because the Bank does not intend to sell the investments and it is more likely than not that the Bank will not be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Bank does not consider these investments to be other-than temporarily impaired at March 31, 2017.

Municipal securities: At March 31, 2017, 13 (or thirteen) investments in obligations of municipal securities had unrealized losses. The Bank believes the unrealized losses on those investments were caused by the interest rate environment and do not relate to the underlying credit quality of the issuers. Because the Bank does not intend to sell the investments and it is not more likely than not that the Bank will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Bank does not consider these investments to be other-than temporarily impaired at March 31, 2017.

Other debt securities: At March 31, 2017, 1 (or one) investment in other debt securities had unrealized losses. The Bank believes the unrealized loss on this investment was caused by the interest rate environment and does not relate to the underlying credit quality of the issuer. Because the Bank does not intend to sell the investment and it is not more likely than not that the Bank will be required to sell the investment before recovery of its amortized cost bases, which may be maturity, the Bank does not consider this investment to be other-than temporarily impaired at March 31, 2017.

12

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 3. Securities, Continued

Mortgage-backed securities: At March 31, 2017, 57 (or fifty seven) investments in residential mortgage-backed securities had unrealized losses.  This impairment is believed to be caused by the current interest rate environment.  The contractual cash flows of those investments are guaranteed by an agency of the U.S. Government.  Because the decline in market value is attributable to the current interest rate environment and not credit quality, and because the Bank does not intend to sell the investments and it is not more likely than not that the Bank will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Bank does not deem these investments to be other-than-temporarily impaired at March 31, 2017.

Note 4. Loans and Allowance for Loan Losses

Portfolio Segmentation:

At March 31, 2017 and December 31, 2016, loans are summarized as follows (in thousands):

	March 31, 2017								December 31, 2016
	PCI Loans		All Other Loans			Total			PCI  Loans		All Other Loans			Total
Commercial real estate	$	14,683	$	393,216		$	407,899		$	14,943	$	400,265		$	415,208
Consumer real estate	8,874		177,471			186,345			9,004		178,798			187,802
Construction and land development	1,506		114,168			115,674			1,678		116,191			117,869
Commercial and industrial	1,538		89,169			90,707			1,568		83,454			85,022
Consumer and other	—		6,914			6,914			—		7,475			7,475
Total loans	26,601		780,938			807,539			27,193		786,183			813,376
Less:  Allowance for loan losses	—		(5,152		)	(5,152		)	—		(5,105		)	(5,105		)
Loans, net	$	26,601	$	775,786		$	802,387		$	27,193	$	781,078		$	808,271

For purposes of the disclosures required pursuant to the adoption of ASC 310, the loan portfolio was disaggregated into segments. A portfolio segment is defined as the level at which an entity develops and documents a systematic method for determining its allowance for credit losses. There are five loan portfolio segments that include commercial real estate, consumer real estate, construction and land development, commercial and industrial, and consumer and other.

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

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

Consumer Real Estate: Consumer real estate loans include real estate loans secured by first liens, second liens, or open end real estate loans, such as home equity lines. These are repaid by various means such as a borrower's income, sale of the property, or rental income derived from the property. One to four family first mortgage loans are repaid by various means such as a borrower's income, sale of the property, or rental income derived from the property. Loans within this portfolio segment are particularly sensitive to the valuation of real estate.

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

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

13

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 4. Loans and Allowance for Loan Losses, Continued

Portfolio Segmentation (continued):

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

Credit Risk Management:

The Company employs a credit risk management process with defined policies, accountability and routine reporting to manage credit risk in the loan portfolio segments. Credit risk management is guided by credit policies that provide for a consistent and prudent approach to underwriting and approvals of credits. Within the Credit Policy, procedures exist that elevate the approval requirements as credits become larger and more complex. All loans are individually underwritten, risk-rated, approved, and monitored.

Responsibility and accountability for adherence to underwriting policies and accurate risk ratings lies in each portfolio segment. For the consumer real estate and consumer and other portfolio segments, the risk management process focuses on managing customers who become delinquent in their payments. For the other portfolio segments, the risk management process focuses on underwriting new business and, on an ongoing basis, monitoring the credit of the portfolios, including a third party review of the largest credits on an annual basis or more frequently as needed. To ensure problem credits are identified on a timely basis, several specific portfolio reviews occur periodically to assess the larger adversely rated credits for proper risk rating and accrual status.

Credit quality and trends in the loan portfolio segments are measured and monitored regularly. Detailed reports, by product, collateral, accrual status, etc., are reviewed by the Senior Credit Officer and the Directors Loan Committee.

The allowance for loan losses is a valuation reserve allowance established through provisions for loan losses charged against income. The allowance for loan losses, which is evaluated quarterly, is maintained at a level that management deems sufficient to absorb probable losses inherent in the loan portfolio. Loans deemed to be uncollectible are charged against the allowance for loan losses, while recoveries of previously charged-off amounts are credited to the allowance for loan losses. The allowance for loan losses is comprised of specific valuation allowances for loans evaluated individually for impairment and general allocations for pools of homogeneous loans with similar risk characteristics and trends.

The allowance for loan losses related to specific loans is based on management's estimate of potential losses on impaired loans as determined by (1) the present value of expected future cash flows; (2) the fair value of collateral if the loan is determined to be collateral dependent or (3) the loan's observable market price. The Company's homogeneous loan pools include commercial real estate loans, consumer real estate loans, construction and land development loans, commercial and industrial loans, and consumer and other loans. The general allocations to these loan pools are based on the historical loss rates for specific loan types and the internal risk grade, if applicable, adjusted for both internal and external qualitative risk factors.

The qualitative factors considered by management include, among other factors, (1) changes in local and national economic conditions; (2) changes in asset quality; (3) changes in loan portfolio volume; (4) the composition and concentrations of credit; (5) the impact of competition on loan structuring and pricing; (6) the impact of interest rate changes on portfolio risk and (7) effectiveness of the Company's loan policies, procedures and internal controls. The total allowance established for each homogeneous loan pool represents the product of the historical loss ratio adjusted for qualitative factors and the total dollar amount of the loans in the pool.

14

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 4. Loans and Allowance for Loan Losses, Continued

Credit Risk Management (continued):

The composition of loans by loan classification for impaired and performing loan status at March 31, 2017 and December 31, 2016, is summarized in the tables below (amounts in thousands):

	March 31, 2017
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Performing loans	$	392,978	$	176,478	$	113,534	$	88,960	$	6,914	$	778,864
Impaired loans	238		993		634		209		—		2,074
	393,216		177,471		114,168		89,169		6,914		780,938
PCI loans	14,683		8,874		1,506		1,538		—		26,601
Total	$	407,899	$	186,345	$	115,674	$	90,707	$	6,914	$	807,539

	December 31, 2016
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Performing loans	$	400,146	$	177,977	$	115,326	$	83,244	$	7,475	$	784,168
Impaired loans	119		821		865		210		—		2,015
	400,265		178,798		116,191		83,454		7,475		786,183
PCI loans	14,943		9,004		1,678		1,568		—		27,193
Total loans	$	415,208	$	187,802	$	117,869	$	85,022	$	7,475	$	813,376

The following tables show the allowance for loan losses allocation by loan classification for impaired, PCI, and performing loans as of March 31, 2017 and December 31, 2016 (amounts in thousands):

	March 31, 2017
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Performing loans	$	2,329	$	1,398	$	706	$	554	$	93	$	5,080
Impaired loans	—		68		—		4		—		72
Total	$	2,329	$	1,466	$	706	$	558	$	93	$	5,152

	December 31, 2016
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Performing loans	$	2,369	$	1,382	$	717	$	516	$	117	$	5,101
Impaired loans	—		—		—		4		—		4
Total	$	2,369	$	1,382	$	717	$	520	$	117	$	5,105

There was no allowance for PCI loans at March 31, 2017 or December 31, 2016.

15

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 4. Loans and Allowance for Loan Losses, Continued

Credit Risk Management (continued):

The following tables detail the changes in the allowance for loan losses for the three month period ending March 31, 2017 and year ending December 31, 2016, by loan classification (amounts in thousands):

	March 31, 2017
	Commercial Real Estate			Consumer Real Estate		Construction and Land Development			Commercial and Industrial			Consumer and Other			Total
Beginning balance	$	2,369		$	1,382	$	717		$	520		$	117		$	5,105
Loans charged off	—			—		—			(3		)	(22		)	(25		)
Recoveries of loans charged off	5			17		5			16			17			60
Provision (reallocation) charged to operating expense	(45		)	67		(16		)	25			(19		)	12
Ending balance	$	2,329		$	1,466	$	706		$	558		$	93		$	5,152

	December 31, 2016
	Commercial Real Estate		Consumer Real Estate			Construction and Land Development			Commercial and Industrial			Consumer and Other			Total
Beginning balance	$	1,906	$	1,015		$	627		$	777		$	29		$	4,354
Loans charged off	—		(102		)	(14		)	(35		)	(155		)	(306		)
Recoveries of charge-offs	45		76			22			58			68			269
Provision (reallocation) charged to operating expense	418		393			82			(280		)	175			788
Ending balance	$	2,369	$	1,382		$	717		$	520		$	117		$	5,105

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

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

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

Substandard: Loans in this risk grade are inadequately protected by the borrower's current financial condition and payment capability or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the orderly repayment of debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

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

16

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 4. Loans and Allowance for Loan Losses, Continued

Credit Risk Management (continued):

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

The following tables outline the amount of each loan classification and the amount categorized into each risk rating as of March 31, 2017 and December 31, 2016 (amounts in thousands):

Non PCI Loans

	March 31, 2017
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Pass	$	392,338	$	176,001	$	113,447	$	88,723	$	6,685	$	777,194
Watch	635		514		87		237		—		1,473
Special mention	—		103		—		—		229		332
Substandard	243		853		634		209		—		1,939
Doubtful	—		—		—		—		—		—
Total	$	393,216	$	177,471	$	114,168	$	89,169	$	6,914	$	780,938

PCI Loans

	March 31, 2017
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Pass	$	11,617	$	6,816	$	848	$	1,309	$	—	$	20,590
Watch	890		1,280		645		19		—		2,834
Special mention	—		—		—		183		—		183
Substandard	2,176		778		13		—		—		2,967
Doubtful	—		—		—		27		—		27
Total	$	14,683	$	8,874	$	1,506	$	1,538	$	—	$	26,601
Total loans	$	407,899	$	186,345	$	115,674	$	90,707	$	6,914	$	807,539

Non PCI Loans

	December 31, 2016
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Pass	$	399,505	$	177,466	$	115,237	$	82,992	$	7,238	$	782,438
Watch	640		550		89		252		—		1,531
Special mention	—		104		—		—		237		341
Substandard	120		678		865		210		—		1,873
Doubtful	—		—		—		—		—		—
Total	$	400,265	$	178,798	$	116,191	$	83,454	$	7,475	$	786,183

17

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 4. Loans and Allowance for Loan Losses, Continued

Credit Risk Management (continued):

PCI Loans

	December 31, 2016
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Pass	$	11,836	$	6,811	$	1,019	$	1,507	$	—	$	21,173
Watch	1,045		1,577		645		22		—		3,289
Special mention	—		—		—		12		—		12
Substandard	2,062		616		14		—		—		2,692
Doubtful	—		—		—		27		—		27
Total	$	14,943	$	9,004	$	1,678	$	1,568	$	—	$	27,193
Total loans	$	415,208	$	187,802	$	117,869	$	85,022	$	7,475	$	813,376

Past Due Loans:

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

The following tables present the aging of the recorded investment in loans as of March 31, 2017 and December 31, 2016 (amounts in thousands): 

	March 31, 2017
	30-89 Days  Past Due and Accruing		Past Due 90  Days or More and Accruing		Nonaccrual		Total  Past Due and NonAccrual		PCI Loans		Current Loans		Total Loans
Commercial real estate	$	196	$	—	$	124	$	320	$	14,683	$	392,896	$	407,899
Consumer real estate	1,180		—		523		1,703		8,874		175,768		186,345
Construction and land development	34		—		634		668		1,506		113,500		115,674
Commercial and industrial	359		27		164		550		1,538		88,619		90,707
Consumer and other	20		—		—		20		—		6,894		6,914
Total	$	1,789	$	27	$	1,445	$	3,261	$	26,601	$	777,677	$	807,539

18

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 4. Loans and Allowance for Loan Losses, Continued

Past Due Loans (continued):

	December 31, 2016
	30-89 Days Past Due and Accruing		Past Due 90 Days or More and Accruing		Nonaccrual		Total Past Due and NonAccrual		PCI Loans		Current Loans		Total Loans
Commercial real estate	$	395	$	—	$	—	$	395	$	14,943	$	399,870	$	415,208
Consumer real estate	695		699		386		1,780		9,004		177,018		187,802
Construction and land development	690		—		865		1,555		1,678		114,636		117,869
Commercial and industrial	257		—		164		421		1,568		83,033		85,022
Consumer and other	17		—		—		17		—		7,458		7,475
Total	$	2,054	$	699	$	1,415	$	4,168	$	27,193	$	782,015	$	813,376

Impaired Loans:

The following is an analysis of the impaired loan portfolio, excluding PCI loans, detailing the related allowance recorded as of March 31, 2017 and December 31, 2016 (amounts in thoudands):  

							For the three months ended
	At March 31, 2017						March 31, 2017
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans without a valuation allowance:
Commercial real estate	$	238	$	241	$	—	$	179	$	3
Consumer real estate	368		383		—		595		6
Construction and land development	634		634		—		750		—
Commercial and industrial	45		45		—		46		1
Consumer and other	—		—		—		—		—
	1,285		1,303		—		1,570		10
Impaired loans with a valuation allowance:
Commercial real estate	—		—		—		—		—
Consumer real estate	625		644		68		313		5
Construction and land development	—		—		—		—		—
Commercial and industrial	164		243		4		164		—
Consumer and other	—		—		—		—		—
	789		887		72		477		5
Total impaired loans	$	2,074	$	2,190	$	72	$	2,047	$	15

19

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 4. Loans and Allowance for Loan Losses, Continued

Impaired Loans (continued):

							For the year ended
	At December 31, 2016						December 31, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans without a valuation allowance:
Commercial real estate	$	119	$	119	$	—	$	1,311	$	73
Consumer real estate	821		849		—		2,334		100
Construction and land development	865		865		—		967		3
Commercial and industrial	46		46		—		47		4
Consumer and other	—		—		—		—		—
	1,851		1,879		—		4,659		180
Impaired loans with a valuation allowance:
Commercial real estate	—		—		—		—		—
Consumer real estate	—		—		—		—		—
Construction and land development	—		—		—		—		—
Commercial and industrial	164		243		4		306		70
Consumer and other	—		—		—		—		—
	164		243		4		306		70
Total impaired loans	$	2,015	$	2,122	$	4	$	4,965	$	250

Troubled Debt Restructurings:

At March 31, 2017 and December 31, 2016, impaired loans included loans that were classified as Troubled Debt Restructurings ("TDRs"). The restructuring of a loan is considered a TDR if both (i) the borrower is experiencing financial difficulties and (ii) the creditor has granted a concession.

In assessing whether or not a borrower is experiencing financial difficulties, the Company considers information currently available regarding the financial condition of the borrower. This information includes, but is not limited to, whether (i) the debtor is currently in payment default on any of its debt; (ii) a payment default is probable in the foreseeable future without the modification; (iii) the debtor has declared or is in the process of declaring bankruptcy; and (iv) the debtor's projected cash flow is sufficient to satisfy contractual payments due under the original terms of the loan without a modification.

The Company considers all aspects of the modification to loan terms to determine whether or not a concession has been granted to the borrower. Key factors considered by the Company include the debtor's ability to access funds at a market rate for debt with similar risk characteristics, the significance of the modification relative to unpaid principal balance or collateral value of the debt, and the significance of a delay in the timing of payments relative to the original contractual terms of the loan.

The most common concessions granted by the Company generally include one or more modifications to the terms of the debt, such as (i) a reduction in the interest rate for the remaining life of the debt; (ii) an extension of the maturity date at an interest rate lower than the current market rate for new debt with similar risk; (iii) a temporary period of interest-only payments; and (iv) a reduction in the contractual payment amount for either a short period or remaining term of the loan. As of March 31, 2017 and December 31, 2016, management had approximately, $552,000 and $608,000, respectively, in loans that met the criteria for restructured, which included approximately $251,000 and $442,000, respectively, of loans on nonaccrual. A loan is placed back on accrual status when both principal and interest are current and it is probable that management will be able to collect all amounts due (both principal and interest) according to the terms of the loan agreement.

20

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 4. Loans and Allowance for Loan Losses, Continued

Troubled Debt Restructurings (continued):

The following table presents a summary of loans that were modified as troubled debt restructurings during the three month period ended March 31, 2017 (amounts in thousands):

		Pre-Modification Outstanding Recorded		Post-Modification Outstanding Recorded
March 31, 2017	Number of Contracts	Investment		Investment
Consumer real estate	1	$	138	$	138

The following table presents a summary of loans that were modified as troubled debt restructurings during the twelve month period ended December 31, 2016 (amounts in thousands):

		Pre-Modification Outstanding Recorded		Post-Modification Outstanding Recorded
December 31, 2016	Number of Contracts	Investment		Investment
Construction and land development	1	$	278	$	278
Commercial and industrial	1	$	164	$	164

There were no loans that were modified as troubled debt restructurings during the past twelve months and for which there was a subsequent payment default.

Purchased Credit Impaired Loans:

The Company has acquired loans which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of those loans as of is as follows:

	March 31, 2017			December 31, 2016
Commercial real estate	$	18,105		$	18,473
Consumer real estate	11,954			12,111
Construction and land development	2,364			2,553
Commercial and industrial	2,380			2,482
Consumer and other	—			—
Total loans	34,803			35,619
Less remaining purchase discount	(8,202		)	(8,426		)
Total loans, net of purchase discount	26,601			27,193
Less: Allowance for loan losses	—			—
Carrying amount, net of allowance	$	26,601		$	27,193

Activity related to the accretable portion of the purchase discount on loans acquired with deteriorated credit quality is as follows for the three months period ended March 31, 2017 and 2016:

21

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 4. Loans and Allowance for Loan Losses, Continued

Purchased Credit Impaired Loans (continued):

	Three Months Ended March 31, 2017			Three Months Ended March 31, 2016
Accretable yield, beginning of period	$	8,950		$	10,216
Additions	—			—
Accretion income	(697		)	(629		)
Reclassification to accretable	244			(41		)
Other changes, net	(15		)	60
Accretable yield	$	8,482		$	9,606

Note 5. Employee Benefit Plans

401(k) Plan:

The Company provides a deferred salary reduction plan (“Plan”) under Section 401 (k) of the Internal Revenue Code covering substantially all employees. After one year of service the Company matches 100 percent of employee contributions up to 3 percent of compensation and 50 percent of employee contributions on the next 2 percent of compensation. The Company's contribution to the Plan for the three month period ending March 31, 2017 and 2016 respectively was $102,716 and $90,856.

Stock Option Plans:

The Company has one currently active equity incentive plan administered by the Board of Directors, and four plans or programs, pursuant to which the Company has outstanding prior grants. These plans are described below:

Legacy Cornerstone Bancshares, Inc. 2002 Long Term Incentive Plan – The plan provided Cornerstone Bancshares, Inc. officers and employees incentive stock options or non-qualified stock options to purchase shares of common stock. The exercise price for incentive stock options was not less than 100 percent of the fair market value of the common stock on the date of the grant. The exercise price of the non-qualified stock options was equal to or more or less than the fair market value of the common stock on the date of the grant. This plan expired in 2012.

Legacy Cornerstone Non-Qualified Plan Options — During 2013 and 2014, Cornerstone issued non-qualified options to employees and directors. The options were originally documented in 2013 as being issued out of the Cornerstone Bancshares, Inc. 2002 Long Term Incentive Plan but that plan expired in 2012. The non-qualified options are governed by the grant document issued to the holders which incorporate the terms of the plan by reference.

Legacy SmartBank Stock Option Plan – This plan was assumed by the Company on August 31, 2015. The plan provides for incentive stock options and nonqualified stock options. The maximum number of common shares that could be sold or optioned under the plan is 525,000 shares. Under the plan, the exercise price of each option could not be less than 100 percent of the fair market value of the common stock on the date of grant.

Legacy SmartFinancial, Inc. 2010 Incentive Plan - This plan was assumed by the Company on August 31, 2015. This plan provides for incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, performance awards, dividend equivalents and stock or other stock-based awards. The maximum number of common shares that could be sold or optioned under the plan is 525,000 shares. Under the plan, the exercise price of each option could not be less than 100 percent of the fair market value of the common stock on the date of grant.

22

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 5. Employee Benefit Plans, Continued

Stock Option Plans (Continued):

2015 Stock Incentive Plan – This plan provides for incentive stock options, nonqualified stock options, and restricted stock. The maximum number of shares of common stock that can be sold or optioned under the plan is 2,000,000 shares. The term of each option shall be no more than ten years from the date of grant. In the case of an incentive stock option granted to a participant who, at the time the option is granted, owns stock representing more than ten percent of the voting power of all classes of stock of the Company or any parent or subsidiary thereof, the term of the option shall be five years from the date of grant or such shorter term as may be provided in the award agreement.

The per share exercise price for the shares to be issued upon exercise of an option shall be such price as is determined by the plan administrator, subject to the following: In the case of an incentive stock option: (1) granted to an employee who, at the time of grant of such option, owns stock representing more than ten percent of the voting power of all classes of stock of the company or any parent or subsidiary thereof, the exercise price shall be no less than one hundred and ten percent of the fair market value per share on the date of grant; or (2) granted to any other employee, the per share exercise price shall be no less than one hundred percent of the fair market value per share on the date of grant. In the case of a nonstatutory stock option, the per share exercise price shall be no less than one hundred percent of the fair market value per share on the date of grant, unless otherwise determined by the Administrator.

The incentive stock options vest 30% on the second anniversary of the grant date, 30% on the third anniversary of the grant date and 40% on the fourth anniversary of the grant date. Director non-qualified stock options vest 50% on the first anniversary of the grant date and 50% on the second anniversary of the grant date.

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

	Number		Weighted Average Exercisable Price
Outstanding at December 31, 2016	717,524		$	10.57
Exercised	(473,558	)	9.61
Forfeited	(18,524	)	20.27
Outstanding at March 31, 2017	225,442		$	11.78

	Number		Weighted Average Exercisable Price
Outstanding at December 31, 2015	817,414		$	10.62
Exercised	(89,556	)	8.98
Forfeited	(10,334	)	28.49
Outstanding at December 31, 2016	717,524		$	10.57

23

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 5. Employee Benefit Plans, Continued

Stock Option Plans (continued):

Information pertaining to options outstanding at March 31, 2017, is as follows: 

		Options Outstanding				Options Exercisable
			Weighted- Average Remaining	Weighted- Average			Weighted- Average
Exercise		Number	Contractual	Exercise		Number	Exercise
Prices		Outstanding	Life	Price		Exercisable	Price
$	6.20	750	4.0 years	$	6.20	750	$	6.20
6.60		41,500	5.0 years	6.60		41,500	6.60
6.80		19,375	3.9 years	6.80		19,375	6.80
9.48		29,375	5.9 years	9.48		29,375	9.48
9.52		525	0.3 years	9.52		525	9.52
9.60		37,625	6.9 years	9.60		37,625	9.60
10.48		20,513	0.4 years	10.48		20,513	10.48
11.67		3,250	3.8 years	11.67		3,250	11.67
14.40		15,180	1.9 years	14.40		15,180	14.40
15.05		42,745	8.5 years	15.05		4,104	15.05
31.96		13,916	0.9 years	31.96		13,916	31.96
60.80		688	0.1 years	60.80		688	60.80
Outstanding, end of period		225,442	5.1 years	11.78		186,801	11.11

The Company recognized stock-based compensation expense of $26,812 and $33,635 for the three months ended March 31, 2017 and March 31, 2016, respectively. For the three months period ended March 31, 2017, direct stock grant expense issued to local advisory board members of $31,791 was included in professional services. There was no direct grant stock grant expense for the three months period ended March 31, 2016. The total fair value of shares underlying the options which vested during the three months period ended March 31, 2017 and March 31, 2016 was $0 and $19,425 , respectively. There were no income tax benefits recognized for the exercise of options for the periods ended March 31, 2017 and March 31, 2016, respectively.

The intrinsic value of options exercised during the period ended March 31, 2017 was $5,024,759. The aggregate intrinsic value of total options outstanding and exercisable options at March 31, 2017 was $2,266,259 and $2,034,800, respectively. Cash received from options exercised under all share-based payment arrangements for the period ended March 31, 2017 was $4,260,734.

Information related to non-vested options for the period ended March 31, 2017, is as follows: 

	Number		Weighted Average Grant-Date Fair Value
Nonvested at December 31, 2016	47,970		$	12.31
Granted	—		—
Vested	—		—
Forfeited/expired	(9,329	)	12.31
Nonvested at March 31, 2017	38,641		$	12.31

As of March 31, 2017 , there was approximately $340,542 of total unrecognized compensation cost related to nonvested stock-based compensation arrangements granted under the Plans. The cost is expected to be recognized over a weighted-average period of 1.4 years. There were no stock options granted during the three months period ended March 31, 2017 .

24

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 6. Commitments and Contingent Liabilities

Off Balance Sheet Arrangements In the normal course of business, the Bank has entered into off-balance sheet financial instruments which include commitments to extend credit (i.e., including unfunded lines of credit) and standby letters of credit. Commitments to extend credit are usually the result of lines of credit granted to existing borrowers under agreements that the total outstanding indebtedness will not exceed a specific amount during the term of the indebtedness. Typical borrowers are commercial concerns that use lines of credit to supplement their treasury management functions; thus their total outstanding indebtedness may fluctuate during any time period based on the seasonality of their business and the resultant timing of their cash flows. Other typical lines of credit are related to home equity loans granted to consumers. Commitments to extend credit generally have fixed expiration dates or other termination clauses and may require payment of a fee.

Standby letters of credit are generally issued on behalf of an applicant (our client) to a specifically named beneficiary and are the result of a particular business arrangement that exists between the applicant and the beneficiary. Standby letters of credit have fixed expiration dates and are usually for terms of two years or less unless terminated beforehand due to criteria specified in the standby letter of credit. A typical arrangement involves the applicant routinely being indebted to the beneficiary for such items as inventory purchases, insurance, utilities, lease guarantees or other third party commercial transactions. The standby letter of credit would permit the beneficiary to obtain payment from the Bank under certain prescribed circumstances. Subsequently, the Bank would seek reimbursement from the applicant pursuant to the terms of the standby letter of credit.

The Bank follows the same credit policies and underwriting practices when making these commitments as it does for on-balance sheet instruments. Each client’s creditworthiness is evaluated on a case-by-case basis, and the amount of collateral obtained, if any, is based on management’s credit evaluation of the customer. Collateral held varies but may include cash, real estate and improvements, marketable securities, accounts receivable, inventory, equipment and personal property.

The contractual amounts of these commitments are not reflected in the consolidated financial statements and would only be reflected if drawn upon. Since many of the commitments are expected to expire without being drawn upon, the contractual amounts do not necessarily represent future cash requirements. However, should the commitments be drawn upon and should customers default on their resulting obligation to the Bank the maximum exposure to credit loss, without consideration of collateral, is represented by the contractual amount of those instruments.

A summary of the Bank’s total contractual amount for all off-balance sheet commitments at March 31, 2017 is as follows:

Commitments to extend credit	$	133.4	million
Standby letters of credit	$	2.9	million

Various legal claims also arise from time to time in the normal course of business. In the opinion of management, the resolution of claims outstanding at March 31, 2017 will not have a material effect on SmartFinancial’s consolidated financial statements.

Note 7. Fair Value Disclosures

Determination of Fair Value:

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

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

25

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 7. Fair Value Disclosures, Continued

Fair Value Hierarchy:

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

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

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

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

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

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

Cash and Cash Equivalents: For cash and due from banks, interest-bearing deposits, and federal funds sold, the carrying amount is a reasonable estimate of fair value based on the short-term nature of the assets and are considered Level 1 inputs.

Securities Available for Sale: Where quoted prices are available in an active market, management classifies the securities within Level 1 of the valuation hierarchy. If quoted market prices are not available, management estimates fair values using pricing models and discounted cash flows that consider standard input factors such as observable market data, benchmark yields, interest rate volatilities, broker/dealer quotes, and credit spreads. Examples of such instruments, which would generally be classified within Level 2 of the valuation hierarchy, including GSE obligations, corporate bonds, and other securities. Mortgage-backed securities are included in Level 2 if observable inputs are available. In certain cases where there is limited activity or less transparency around inputs to the valuation, management classifies those securities in Level 3.

Restricted Investments: It is not practicable to determine the fair value of restricted investments due the restrictions placed on its transferability.

Loans:For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. Fair value for fixed rate loans are estimated using discounted cash flow analyses, using market interest rates for comparable loans. Fair values for nonperforming loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable. These methods are considered Level 3 inputs.

Deposits:The fair values disclosed for demand deposits (for example, interest and noninterest checking, savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (that is, their carrying amounts) and are considered Level 1 inputs. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies market interest rates on comparable instruments to a schedule of aggregated expected monthly maturities on time deposits, and are considered Level 2 inputs.

Securities Sold Under Agreement to Repurchase: The carrying value of these liabilities approximates their fair value, and are considered Level 1 inputs.

Federal Home Loan Bank Advances and Other Borrowings: The fair value of the FHLB fixed rate borrowings are estimated using discounted cash flows, based on the current incremental borrowing rates for similar types of borrowing arrangements, and are considered Level 2 inputs.

26

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 7. Fair Value Disclosures, Continued

Fair Value Hierarchy (continued):

Commitments to Extend Credit and Standby Letters of Credit: Because commitments to extend credit and standby letters of credit are made using variable rates and have short maturities, the carrying value and the fair value are immaterial for disclosure.

Measurements of Fair Value:

Assets and liabilities recorded at fair value on a recurring basis are as follows (in thousands): 

	Balance as of March 31, 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Debt securities available-for-sale:
U.S. Government-sponsored enterprises (GSEs)	$	17,798	$	—	$	17,798	$	—
Mortgage-backed securities	110,051		—		110,051		—
Other debt securities	946				946
Municipal securities	8,338		—		8,338		—
Total securities available-for-sale	$	137,133	$	—	$	137,133	$	—

	Balance as of December 31, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Debt securities available-for-sale:
U.S. Government-sponsored enterprises (GSEs)	$	17,723	$	—	$	17,723	$	—
Mortgage-backed securities:	103,680		—		103,680		—
Municipal securities	8,019		—		8,019		—
Total securities available-for-sale	$	129,422	$	—	$	129,422	$	—

The Company has no assets or liabilities whose fair values are measured on a recurring basis using Level 3 inputs. Additionally, there were no transfers between Level 1 and Level 2 in the fair value hierarchy.

Assets Measured at Fair Value on a Nonrecurring Basis:

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

	Balance as of March 31, 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Impaired loans	$	717	$	—	$	—	$	717
Foreclosed assets	2,371		—		—		2,371

27

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 7. Fair Value Disclosures, Continued

Assets Measured at Fair Value on a Nonrecurring Basis (continued):

	Balance as of December 31, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Impaired loans	$	239	$	—	$	—	$	239
Foreclosed assets	2,386		—		—		2,386

For Level 3 assets measured at fair value on a non-recurring basis as of March 31, 2017 and December 31, 2016 a, the significant unobservable inputs used in the fair value measurements are presented below (in thousands).

	Balance as of March 31, 2017		Valuation Technique	Significant Other Unobservable Input	Weighted Average of Input
Impaired loans	$	717	Appraisal	Discounted Cash Flow / Appraisal Discounts	9.1	%
Foreclosed assets	2,371		Appraisal	Appraisal Discounts	22.5	%

	Balance as of December 31, 2016 (in thousands)		Valuation Technique	Significant Other Unobservable Input	Weighted Average of Input
Impaired loans	$	239	Cash Flow	Discounted Cash Flow / Appraisal Discounts	2.4	%
Foreclosed assets	2,386		Appraisal	Appraisal Discounts	12.2	%

Impaired Loans: Loans considered impaired under ASC 310-10-35, Receivables, are loans for which, based on current information and events, it is probable that the Company will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement. Impaired loans can be measured based on the present value of expected payments using the loan’s original effective rate as the discount rate, the loan’s observable market price, or the fair value of the collateral less selling costs if the loan is collateral dependent.

The fair value of impaired loans were measured based on the value of the collateral securing these loans or the discounted cash flows of the loans, as applicable. Impaired loans are classified within Level 3 of the fair value hierarchy. Collateral may be real

estate and/or business assets including equipment, inventory, and/or accounts receivable. The Company determines the value of the collateral based on independent appraisals performed by qualified licensed appraisers. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Appraised values are

discounted for costs to sell and may be discounted further based on management’s historical knowledge, changes in market conditions from the date of the most recent appraisal, and/or management’s expertise and knowledge of the customer and the customer’s business. Such discounts by management are subjective and are typically significant unobservable inputs for determining fair value. Impaired loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on the same factors discussed above.

28

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 7. Fair Value Disclosures, Continued

Assets Measured at Fair Value on a Nonrecurring Basis(continued):

Foreclosed assets: Foreclosed assets, consisting of properties obtained through foreclosure or in satisfaction of loans, are initially recorded at fair value less estimated costs to sell upon transfer of the loans to other real estate. Subsequently, other real estate is carried at the lower of carrying value or fair value less costs to sell. Fair values are generally based on third party appraisals of the property and are classified within Level 3 of the fair value hierarchy. The appraisals are sometimes further discounted based on management’s historical knowledge, and/or changes in market conditions from the date of the most recent appraisal, and/or management’s expertise and knowledge of the customer and the customer’s business. Such discounts are typically significant unobservable inputs for determining fair value. In cases where the carrying amount exceeds the fair value, less estimated costs to sell, a loss is recognized in noninterest expense.

Carrying value and estimated fair value:

The carrying amount and estimated fair value of the Company’s financial instruments at March 31, 2017 and December 31, 2016 are as follows (in thousands):

	March 31, 2017				December 31, 2016
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Cash and cash equivalents	$	55,548	$	55,548	$	68,748	$	68,748
Securities available for sale	137,133		137,133		129,422		129,422
Restricted investments	5,628		N/A		5,628		N/A
Loans, net	802,387		795,077		808,271		803,057
Liabilities:
Noninterest-bearing demand deposits	160,673		160,673		153,483		153,483
Interest-bearing demand deposits	167,433		167,433		162,702		162,702
Money Market and Savings deposits	274,993		274,993		274,605		274,605
Time deposits	286,600		286,414		316,275		316,734
Securities sold under agreements to repurchase	23,153		23,153		26,622		26,622
Federal Home Loan Bank advances and other borrowings	60		60		18,505		18,505

Limitations

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on many judgments. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets and liabilities that are not considered financial instruments include deferred income taxes and premises and equipment. In addition,

the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

29

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 8.    Small Business Lending Fund

During 2011, the Company issued to the Secretary of the Treasury 12,000 shares of preferred stock at $1,000 per share under the Small Business Lending Fund Program (the "SBLF Program"). Subject to regulatory approval, the Company may redeem the preferred stock for $1,000 per share, plus accrued and unpaid dividends, in whole or in part at any time. The SBLF Program is a voluntary program authorized under the Business Jobs Acts of 2010, whereby the United States Treasury can make capital investments in eligible institutions; the capital investments, in turn, are designed to increase the availability of credit for small businesses and promote economic growth by providing capital to qualified community banks at favorable rates. The Company paid cash dividends at a one percent rate or $120,000 for the year ended December 31, 2015. On February 4, 2016 the dividend rate for the preferred shares increased to nine percent and as a result the company incurred preferred stock dividends of $1,022,000 for the year ended December 31, 2016 .

On January 30, 2017, the Company completed a public offering of 2,010,084 million shares of its common stock, par value $1.00 per share, with the net proceeds to the Company of approximately $33.2 million. Subsequent to the public offering the Company used proceeds from the offering to redeem the $12 million of preferred stock and pay the $195 thousand accrued dividend on March 6, 2017.

30

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

SmartFinancial, Inc. (the “Company” or “SmartFinancial”) is a bank holding company incorporated under the laws of Tennessee and headquartered in Knoxville, Tennessee. The Company conducts its business operations primarily through its wholly-owned subsidiary, SmartBank, a Tennessee chartered community bank providing services through thirteen branches, two loan production offices, and one mortgage production office located in East Tennessee, the Florida Panhandle, and North Georgia. On February 26, 2016, the Company merged SmartBank and Cornerstone Community Bank together, with SmartBank surviving the merger. This quarter completes the fourth full quarter’s results of the merged bank.

Executive Summary

The following is a summary of the Company’s financial highlights and significant events during the first quarter of 2017:

• Net income available to common shareholders totaled $1.4 million, or $0.19 per share, during the first quarter of 2017 compared to $1.1 million, or $0.20 per share, during the first quarter of 2016.

• Annualized return on average assets was 0.64 percent in the first quarter of 2017, compared to 0.54 percent a year ago.

• Net interest margin increased compared to a year ago due to increases in average loan balances, increases in yields of the securities portfolio, and reductions in FHLB advances and other borrowings.

• Asset quality was outstanding with nonperforming assets to total assets dropping to just 0.37 percent.

• Dividends on preferred stock dropped to $195 thousand as the company used proceeds from the capital raise to redeem the preferred stock during the quarter.

Analysis of Results of Operations

First quarter of 2017 compared to 2016

Net income was $1.6 million in the first quarter of 2017, which was up from $1.3 million in the first quarter of 2016. Net income available to common shareholders was $1.4 million, or $0.19 per diluted common share, in the first quarter of 2017, an increase from $1.1 million, or $0.19 per diluted common share, in the first quarter of 2016. Net interest income to average assets of 3.81 percent in the first quarter of 2017 was up from 3.65 percent in the first quarter of 2016 primarily due to increases in loan balances. Noninterest income to average assets of 0.36 percent was down from 0.43 percent in the first quarter of 2016 primarily as a result of higher losses on the sale of foreclosed assets and the absence of securities gains. Noninterest expense to average assets decreased from 3.18 percent in the first quarter of 2016 to 3.12 percent in first quarter of 2017 primarily due to increases in average assets as the Company continues to capitalize on efficiencies of scale. The resulting pretax pre-provision income to average assets was 1.05 percent in the first quarter of 2017, an improvement from 0.90 percent in the first quarter of 2016.

Net Interest Income and Yield Analysis

First quarter of 2017 compared to 2016

Net interest income, taxable equivalent, improved to $9.8 million in the first quarter of 2017 from $9.1 million in the first quarter of 2016. The increase in net interest income was primarily due to increases in loan balances. Average earning assets increased from $926.7 million in the first quarter of 2016 to $979.5 million in the first quarter of 2017. Over this period, average loan balances increased by $76.6 million. In addition, average interest-bearing deposits increased by $9.6 million and average noninterest-bearing deposits increased $26.1 million. Net interest income to average assets of 3.81 percent for the first quarter in 2017 was up from 3.65 percent during the same period in 2016. Net interest margin, taxable equivalent, was 4.07 percent in the quarter, compared to 4.01 percent a year ago due to higher yields on earning assets and increases in the balances of noninterest bearing deposits. The yield on earning assets increased from 4.41 percent a year ago to 4.54 percent in the quarter due to higher loan balances and higher yields on securities.

31

The following table summarizes the major components of net interest income and the related yields and costs for the periods presented. 

	Three Months Ended March 31, 2017						Three Months Ended March 31, 2016
	Average				Yield/		Average				Yield/
	Balance		Interest *		Cost*		Balance		Interest *		Cost*
Assets
Loans (1)	$	811,522	$	10,220	5.11	%	$	734,918	$	9,378	5.13	%
Investment securities and interest-bearing due from banks (2)	161,392		677		1.70	%	182,988		730		1.60	%
Federal funds and other	6,621		73		4.47	%	8,817		63		2.87	%
Total interest-earning assets	979,535		10,970		4.54	%	926,723		10,171		4.41	%
Noninterest-earning assets	66,208						74,368
Total assets	$	1,045,743					$	1,001,091
Liabilities and Stockholders’ Equity
Interest-bearing demand deposits	$	159,255	$	93	0.24	%	$	150,538	$	66	0.18	%
Money market and savings deposits	275,576		328		0.48	%	242,125		272		0.45	%
Time deposits	302,256		677		0.91	%	334,782		623		0.75	%
Total interest-bearing deposits	737,087		1,098		0.60	%	727,445		961		0.53	%
Securities sold under agreement to repurchase	18,682		16		0.35	%	21,237		17		0.32	%
Federal Home Loan Bank advances and other borrowings	7,446		15		0.82	%	23,504		45		0.77	%
Total interest-bearing liabilities	763,215		1,129		0.60	%	772,186		1,023		0.53	%
Noninterest-bearing deposits	149,305						123,242
Other liabilities	4,580						4,160
Total liabilities	917,100						899,588
Stockholders’ equity	128,643						101,503
Total liabilities and stockholders’ equity	$	1,045,743					$	1,001,091
Net interest income, taxable equivalent			$	9,841					$	9,148
Interest rate spread (3)					3.94	%					3.88	%
Tax equivalent net interest margin (4)					4.07	%					4.01	%
Percentage of average interest-earning assets to average interest-bearing liabilities					128.34	%					120.0	%
Percentage of  average equity to average assets					12.30	%					10.14	%
* Taxable equivalent basis

(1) Loans include nonaccrual loans. Loan fees included in loan income was $594 thousand and $627 thousand for the quarters ended March 2017 and 2016, respectively. Yields related to loans exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 34.0 percent. The taxable-equivalent adjustment was $5 thousand for the period ended March 31, 2017 and $5 thousand for the period ended March 31, 2016.

(2) Yields related to investment securities exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 34.0 percent. The taxable-equivalent adjustment was $16 thousand for the period ended March 31, 2017 and $13 thousand for the period ended March 31, 2016.

(3) Net interest spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

(4) Net interest margin represents net interest income divided by average interest-earning assets.

32

Rate and Volume Analysis

Changes in net interest income are attributed to changes in average balances (volume change), changes in average rates (rate change), and, when applicable, changes in the number of days (days change) in the period presented ( for earning assets and sources of funds on which interest is received or paid.  Days change is calculated as change in days times current interest per day, volume change is calculated as change in volume times the previous rate, and rate change is change in rate times the previous volume.  The change attributed to rates and volumes (change in rate times change in volume) is considered above as a change in volume.

First quarter of 2017 compared to 2016

Net interest income, taxable equivalent, increased by $0.7 million between the quarters ended March 31, 2017 and 2016. The following is an analysis of the changes in net interest income comparing the changes attributable to days those attributable to rates and those attributable to volumes (in thousands):

	Three Months Ended March 31,
	2017			Compared to						2016
	Increase (decrease) due to
		Days		Rate			Volume				Net
Interest-earning assets:
Loans (1)		$	114	$	(241	)	$	969			$	842
Investment securities and interest-bearing due from banks (2)		8		24			(85		)		(53		)
Federal funds and other		1		25			(16		)		10
Total interest-earning assets		123		(192		)	868				799
Interest-bearing liabilities:
Interest-bearing demand deposits		1		22			4				27
Money market and savings deposits		4		15			37				56
Time deposits		8		106			(60		)		54
Total interest-bearing deposits		13		143			(19		)		137
Securities sold under agreement to repurchase		—		1			(2		)		(1		)
Federal Home Loan Bank advances and other borrowings		—		—			(30		)		(30		)
Total interest-bearing liabilities		13		144			(51		)		106
Net interest income		$	110	$	(336	)	$	919			$	693

(1) Loans include nonaccrual loans.Yields related to loans exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 34.0 percent. The taxable-equivalent adjustment was $5 thousand for the period ended March 31, 2017 and $5 thousand for the period ended March 31, 2016.

(2) Yields related to investment securities exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 34.0 percent. The taxable-equivalent adjustment was $16 thousand for the period ended March 31, 2017 and $13 thousand for the period ended March 31, 2016.

.

33

Noninterest Income

First quarter of 2017 compared to 2016

Noninterest income totaled $0.9 million in the first quarter of 2017, compared to $1.1 million in the first quarter of 2016. Noninterest income to average assets of 0.36 percent for the quarter was down from 0.43 percent in 2016 primarily due to higher losses on the sale of foreclosed assets and the absence of securities gains in the current period. Charges and fees on deposit accounts decreased $31 thousand primarily due to the discontinuation of certain product types at Cornerstone Community Bank and a decrease in overdraft income. Gains on the sale of loans, which includes mortgage and SBA loans, were $275 thousand, up from $222 thousand a year ago.

	Three months ended March 31,
(Dollars in thousands)	2017			2016
Service charges and fees on deposit accounts	$	265		$	296
Gain on sale of  securities	—			83
Gain on sale of loans and other assets	275			222
Gain (loss) on sale of foreclosed assets	(15		)	58
Other noninterest income	402			412
Total noninterest income	$	927		$	1,071

Noninterest Expense

First quarter of 2017 compared to 2016

Noninterest expense totaled $8.1 million in the first quarter of 2017 compared to $8.0 million in the first quarter of 2016. Noninterest expense to average assets decreased from 3.18 percent a year ago to 3.12 percent in the quarter. The increase in noninterest expense compared to the prior year was primarily due to annual merit based salary increases and increases in professional expenses.

	Three months ended March 31,
(Dollars in thousands)	2017		2016
Salaries and employee benefits	$	4,647	$	4,495
Net occupancy and equipment expense	978		1,018
Depository insurance	153		136
Foreclosed assets	—		57
Advertising	164		174
Data processing	340		341
Professional services	570		455
Amortization of intangible assets	53		93
Service contracts	296		286
Other operating expenses	944		897
Total noninterest expense	$	8,145	$	7,952

Taxes

First quarter of 2017 compared to 2016

In the first quarter of 2017 income tax expense totaled $946 thousand compared to $764 thousand thousand a year ago. The effective tax rate was approximately 36.2 percent a year ago compared to approximately 36.5 percent in the first quarter of 2017.

34

Loan Portfolio Composition

The Company had total net loans outstanding, including organic and purchased loans, of approximately $802.4 million at March 31, 2017 and $808.3 million at December 31, 2016. Loans secured by real estate, consisting of commercial or residential property, are the principal component of our loan portfolio. We do not generally originate traditional long-term residential fixed rate mortgages for our portfolio but we do originate and hold traditional second mortgage residential real estate loans, adjustable rate mortgages and home equity lines of credit. Even if the principal purpose of the loan is not to finance real estate, when reasonable, we attempt to obtain a security interest in the real estate in addition to any other available collateral to increase the likelihood of ultimate repayment or collection of the loan.

Organic Loans

Our organic net loans increased by $13.8 million, or 2.2 percent, from December 31, 2016, to $625.7 million at March 31, 2017 as we continue to originate well-underwritten loans. Our goal of streamlining the credit process has improved our efficiency and is a competitive advantage in many of our markets. In addition, the overall business environment continues to rebound from recessionary conditions. Organic loans include loans which were originally purchased non-credit impaired loans but have been renewed since purchase.

Purchased Loans

Purchased non-credit impaired loans of $150.1 million at March 31, 2017 were down from $169.2 million at December 31, 2016 as a result of loan payoffs and renewals. Since December 31, 2015, our net purchased credit impaired (“PCI”) loans decreased by $0.6 million to $26.6 million at March 31, 2017. The activity within the purchased credit impaired loans will be impacted by how quickly these loans are resolved and/or our future acquisition activity.

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

	March 31, 2017
	Organic Loans			Purchased Non-Credit Impaired Loans		Purchased Credit Impaired Loans		Total Amount			% of Gross Total
Commercial real estate-mortgage	$	297,721		$	95,495	$	14,683	$	407,899		50.5	%
Consumer real estate-mortgage	138,860			38,611		8,874		186,345			23.1	%
Construction and land development	109,557			4,611		1,506		115,674			14.3	%
Commercial and industrial	78,428			10,741		1,538		90,707			11.2	%
Consumer and other	6,259			655		—		6,914			0.9	%
Total gross loans receivable, net of deferred fees	630,825			150,113		26,601		807,539			100.0	%
Allowance for loan and lease losses	(5,152		)	—		—		(5,152		)
Total loans, net	$	625,673		$	150,113	$	26,601	$	802,387

	December 31, 2016
	Organic Loans			Purchased Non-Credit Impaired Loans		Purchased Credit Impaired Loans		Total Amount			% of Gross Total
Commercial real estate-mortgage	$	297,689		$	102,576	$	14,943	$	415,208		51.0	%
Consumer real estate-mortgage	135,923			42,875		9,004		187,802			23.1	%
Construction and land development	108,390			7,801		1,678		117,869			14.5	%
Commercial and industrial	68,235			15,219		1,568		85,022			10.5	%
Consumer and other	6,786			689		—		7,475			0.9	%
Total gross loans receivable, net of deferred fees	617,023			169,160		27,193		813,376			100.0	%
Allowance for loan and lease losses	(5,105		)	—		—		(5,105		)
Total loans, net	$	611,918		$	169,160	$	27,193	$	808,271

35

Loan Portfolio Maturities

The following table sets forth the maturity distribution of our loans, including the interest rate sensitivity for loans maturing after one year.

									Rate Structure for Loans
									Maturing Over One Year
	One Year or Less		One through Five Years		Over Five Years		Total		Fixed Rate		Floating Rate
Commercial real estate-mortgage	$	38,431	$	208,476	$	160,992	$	407,899	$	248,896	$	120,572
Consumer real estate-mortgage	21,323		89,247		75,775		186,345		99,501		65,521
Construction and land development	33,179		49,644		32,851		115,674		37,449		45,046
Commercial and industrial	25,854		49,473		15,380		90,707		52,961		11,892
Consumer and other	2,984		3,582		348		6,914		2,018		1,912
Total Loans	$	121,771	$	400,422	$	285,346	$	807,539	$	440,825	$	244,943

Nonaccrual, Past Due, and Restructured Loans

Nonperforming loans as a percentage of total gross loans, net of deferred fees, was 0.18 percent as of March 31, 2017, which was down from 0.26 percent as of December 31, 2016. Total nonperforming assets as a percentage of total assets as of March 31, 2017 totaled 0.37 percent compared to 0.42 percent as of December 31, 2016. Acquired PCI loans that are included in loan pools are reclassified at acquisition to accrual status and thus are not included as nonperforming assets unless they are 90 days or greater past due.

The following table summarizes the Company's nonperforming assets for the periods presented.

(Dollars in thousands)	March 31, 2017		December 31, 2016
Nonaccrual loans	$	1,445	$	1,415
Accruing loans past due 90 days or more (1)	27		699
Total nonperforming loans	1,472		2,114
Foreclosed assets	2,371		2,386
Total nonperforming assets	$	3,843	$	4,500
Restructured loans not included above	$	164	$	166

(1)    Balances include PCI loans past due 90 days or more that are grouped in pools which accrue interest based on pool yields. 

Potential Problem Loans

At March 31, 2017 potential problem loans amounted to approximately $995.1 thousand or 0.12 percent of total loans outstanding. Potential problem loans, which are not included in nonperforming loans, represent those loans with a well-defined weakness and where information about possible credit problems of borrowers has caused management to have doubts about the borrower's ability to comply with present repayment terms. This definition is believed to be substantially consistent with the standards established by the Bank’s primary regulators, for loans classified as substandard or worse, but not considered nonperforming loans.

36

Allocation of the Allowance for Loan Losses

We maintain the allowance at a level that we deem appropriate to adequately cover the probable losses inherent in the loan portfolio. As of March 31, 2017 and December 31, 2016, our allowance for loan losses was $5.2 million and $5.1 million, respectively, which we deemed to be adequate at each of the respective dates. The increase in the allowance for loan losses in 2017 as compared to 2016 is the result of increases in the organic loan portfolio. Our allowance for loan loss as a percentage of total loans has increased slightly from 0.63 percent at December 31, 2016 to 0.64 percent at March 31, 2017. As a percentage of organic loans the allowance for loan losses decreased from 0.83 percent at December 31, 2016 to 0.82 percent at March 31, 2017.

Our purchased loans were recorded at fair value upon acquisition. The fair value adjustments on the performing purchased loans will be accreted into income over the life of the loans. As of March 31, 2017 the balance on PCI loans was $34.8 million while the carrying value was $26.6 million. These loans are subject to the same allowance methodology as our legacy portfolio. The calculated allowance is compared to the remaining fair value discount to determine if additional provisioning should be recognized. At March 31, 2017, there were no allowances on PCI loans.

The following table sets forth, based on our best estimate, the allocation of the allowance to types of loans as of March 31, 2017 and December 31, 2016 and the percentage of loans in each category to total loans (in thousands):

	March 31, 2017				December 31, 2016
	Amount		Percent		Amount		Percent
Commercial real estate-mortgage	$	2,329	45.2	%	$	2,369	46.4	%
Consumer real estate-mortgage	1,466		28.5	%	1,382		27.1	%
Construction and land development	706		13.7	%	717		14.0	%
Commercial and industrial	558		10.8	%	520		10.2	%
Consumer and other	93		1.8	%	117		2.3	%
Total allowance for loan losses	$	5,152	100.0	%	$	5,105	100.0	%

The increase in the overall allowance for loan losses is due to the increased balance of organic loans offset by improvements of our loan portfolio and the reduction of nonperforming loans and net charge-offs, which is largely influenced by the overall improvement in the economies in our market areas. The allocation by category is determined based on the assigned risk rating, if applicable, and environmental factors applicable to each category of loans. For impaired loans, those loans are reviewed for a specific allowance allocation. Specific valuation allowances related to impaired loans were approximately $4 thousand at December 31, 2016 compared to $72 thousand at March 31, 2017.

37

Analysis of the Allowance for Loan Losses

The following is a summary of changes in the allowance for loan losses for the periods ended March 31, 2017 and December 31, 2016 including the ratio of the allowance for loan losses to total loans as of the end of each period (in thousands):

	March 31, 2017			December 31, 2016
Balance at beginning of period	$	5,105		$	4,354
Provision for loan losses	12			788
Charged-off loans:
Commercial real estate-mortgage	—			—
Consumer real estate-mortgage	—			(102		)
Construction and land development	—			(14		)
Commercial and industrial	(3		)	(35		)
Consumer and other	(22		)	(155		)
Total charged-off loans	(25		)	(306		)
Recoveries of previously charged-off loans:
Commercial real estate-mortgage	5			45
Consumer real estate-mortgage	17			76
Construction and land development	5			22
Commercial and industrial	16			58
Consumer and other	17			68
Total recoveries of previously charged-off loans	60			269
Net charge-offs	35			(37		)
Balance at end of period	$	5,152		$	5,105
Ratio of allowance for loan losses to total loans outstanding at end of period	0.64		%	0.63		%
Ratio of net charge-offs (recoveries) to average loans outstanding for the period	(0.02		)%	0.09		%

We assess the adequacy of the allowance at the end of each calendar quarter. This assessment includes procedures to estimate the allowance and test the adequacy and appropriateness of the resulting balance. The level of the allowance is based upon our evaluation of the loan portfolio, past loan loss experience, known and inherent risks in the portfolio, the views of the Bank’s regulators, adverse situations that may affect the borrower's ability to repay (including the timing of future payments), the estimated value of any underlying collateral, composition of the loan portfolio, economic conditions, industry and peer bank loan quality indications and other pertinent factors. This evaluation is inherently subjective as it requires material estimates including the amounts and timing of future cash flows expected to be received on impaired loans that may be susceptible to significant change.

38

Investment Portfolio

Our investment portfolio, consisting primarily of Federal agency bonds, mortgage-backed securities, and state and municipal securities amounted to $137.1 million and $129.4 million at March 31, 2017 and December 31, 2016, respectively. Our investments to assets ratio has increased from 12.2 percent at December 31, 2016 to 13.0 percent at March 31, 2017 as we reduced the ratio of cash and cash equivalents to total assets on our balance sheet to allocate more funding to investments to take advantage of the increase in interest rates early in the quarter. Our investment portfolio serves many purposes including serving as a potential liquidity source, collateral for public funds, and as a stable source of income.

The following table shows the amortized cost of the Company’s investment securities. In the periods ended March 31, 2017 and December 31, 2016 all investment securities were classified as available for sale.

Book Value of Investment Securities
(in thousands)	March 31, 2017		December 31, 2016
U.S. Government agencies	$	18,261	$	18,279
State and political subdivisions	8,434		8,182
Mortgage-backed securities	110,573		104,585
Other debt securities	972		—
Total securities	$	138,240	$	131,046

The following table presents the contractual maturity of investment securities by contractual maturity date and average yields based on amortized cost (for all obligations on a fully taxable basis).  The composition and maturity / repricing distribution of the securities portfolio is subject to change depending on rate sensitivity, capital and liquidity needs.

Contractual Maturity of Investment Securities
March 31, 2017
(in thousands)	Maturity By Years
	1 or Less			1 to 5			5 to 10			Over 10			Total
Available for Sale
U.S. Government agencies	$	3,011		$	11,993		$	3,257		$	—		$	18,261
State and political subdivisions	—			399			4,314			3,721			8,434
Mortgage-backed securities	—			6,120			28,025			76,428			110,573
Other debt securities	—			—			972			—			972
Total securities available for sale	$	3,011		$	18,512		$	36,568		$	80,149		$	138,240
Weighted average yield (1)	1.00		%	1.70		%	1.91		%	1.99		%	1.93		%

(1)  Based on amortized cost, taxable equivalent basis

39

Deposits

Deposits are the primary source of funds for the Company's lending and investing activities. The Company provides a range of deposit services to businesses and individuals, including noninterest-bearing checking accounts, interest-bearing checking accounts, savings accounts, money market accounts, IRAs and CDs. These accounts generally earn interest at rates the Company establishes based on market factors and the anticipated amount and timing of funding needs. The establishment or continuity of a core deposit relationship can be a factor in loan pricing decisions. While the Company's primary focus is on establishing customer relationships to attract core deposits, at times, the Company uses brokered deposits and other wholesale deposits to supplement its funding sources. As of March 31, 2017, brokered deposits represented approximately 7.6 percent of total deposits.

Following the merger in 2015 the overall mix of average deposits has shifted to a higher percentage of noninterest-bearing and money market and savings deposits, with reductions in the percentage of deposits held in interest-bearing demand accounts. The Company believes its deposit product offerings are properly structured to attract and retain core low-cost deposit relationships. The average cost of interest-bearing deposits for the three months ended March 31, 2017 was 0.60 percent, compared to a 0.53 percent for the same period in 2016. The increase in the costs were due to changes in deposit mix and higher rates on interest-bearing deposit accounts.

Total deposits as of March 31, 2017 were $889.7 million, which was a decrease of $17.4 million from December 31, 2016. As of March 31, 2017 the Company had outstanding time deposits under $100,000 with balances of $121.6 million, time deposits over $100,000 with balances of $164.7 million, and a fair value premium for time deposits of approximately $243 thousand.

The following table summarizes the maturities of time deposits $100,000 or more as of March 31, 2017.

Remaining maturity: (Dollars in thousands)	March 31, 2017
Three months or less	$	35,694
Three to six months	73,657
Six to twelve months	44,569
More than twelve months	10,794
Total	$	164,714

Borrowings

The Company uses short-term borrowings and long-term debt to provide both funding and, to a lesser extent, regulatory capital using debt at the Company level which can be downstreamed as Tier 1 capital to the Bank. Short-term borrowings totaled $0.1 million at March 31, 2017 comprised of Federal Funds purchased. Short-term borrowings totaled $18.5 million at December 31, 2016 comprised of $5 million in FHLB advances maturing within twelve months and the remainder consisted of Federal Funds purchased. There was no long-term debt outstanding at March 31, 2017.

Capital Resources

The Company uses leverage analysis to examine the potential of the institution to increase assets and liabilities using the current capital base. The key measurements included in this analysis are the Bank’s Common Equity Tier 1 capital, Tier 1 capital, leverage and total capital ratios. At March 31, 2017 and December 31, 2016, our capital ratios, including our Bank’s capital ratios, exceeded regulatory minimum capital requirements. From time to time we may be required to support the capital needs of our bank subsidiary. We believe we have various capital raising techniques available to us to provide for the capital needs of our bank, if necessary.

Liquidity and Off-Balance Sheet Arrangements

At March 31, 2017, we had $133.4 million of pre-approved but unused lines of credit and $2.9 million of standby letters of credit. These commitments generally have fixed expiration dates and many will expire without being drawn upon. The total commitment level does not necessarily represent future cash requirements. If needed to fund these outstanding commitments, the Bank has the ability to liquidate Federal funds sold or securities available-for-sale, or on a short-term basis to borrow and purchase Federal funds from other financial institutions.

40

Market Risk and Liquidity Risk Management

The Bank’s Asset Liability Management Committee (“ALCO”) is responsible for making decisions regarding liquidity and funding solutions based upon approved liquidity, loan, capital and investment policies. The ALCO must consider interest rate sensitivity and liquidity risk management when rendering a decision on funding solutions and loan pricing. To assist in this process the Bank has contracted with an independent third party to prepare quarterly reports that summarize several key asset-liability measurements. In addition, the third party will also provide recommendations to the Bank’s ALCO regarding future balance sheet structure, earnings and liquidity strategies. Two critical areas of focus for ALCO are interest rate sensitivity and liquidity risk management. We do not believe there have been any material changes to the Company’s interest rate sensitivity or liquidity risk from December 31, 2016 to the period ended March 31, 2017.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

This Item is not applicable to smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

Under the supervision and with the participation of management, including SmartFinancial’s Chief Executive Officer and Chief Financial Officer, SmartFinancial has evaluated the effectiveness of its disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of March 31, 2017 (the “Evaluation Date”). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, SmartFinancial’s disclosure controls and procedures were effective in alerting them on a timely basis to material information relating to SmartFinancial (including its consolidated subsidiaries) required to be included in SmartFinancial’s periodic filings under the Exchange Act.

There were no changes in SmartFinancial’s internal control over financial reporting during SmartFinancial’s fiscal quarter ended March 31, 2017 that have materially affected, or are reasonably likely to materially affect, SmartFinancial’s internal control over financial reporting.

41

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

There are various claims and lawsuits in which SmartFinancial is periodically involved incidental to the Bank’s business. In the opinion of management, no material loss is expected from any of such pending claims or lawsuits.

SmartFinancial and its wholly owned subsidiary, SmartBank, are periodically involved as a plaintiff or a defendant in various legal actions in the ordinary course of business. While the outcome of these matters is not currently determinable, neither SmartFinancial nor SmartBank is involved in any litigation that is expected to have a material impact on our financial position, results of operations, or cash flow. Management believes that any claims pending against SmartFinancial or SmartBank are without merit or that the ultimate liability, if any, resulting from such claims will not materially affect SmartBank’s financial condition or SmartFinancial’s consolidated financial position.

Item 1A. Risk Factors.

SmartFinancial, as a smaller reporting company, is not required to provide the information required by this Item.

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

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

None.

Item 6. Exhibits

31.1	Certification pursuant to Rule 13a-14(a)/15d-14(a)
31.2	Certification pursuant to Rule 13a-14(a)/15d-14(a)
32.1	Certification pursuant to 18 USC Section 1350 – Sarbanes-Oxley Act of 2002
32.2	Certification pursuant to 18 USC Section 1350 – Sarbanes-Oxley Act of 2002
101	Interactive Data Files

42

SIGNATURES

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

		SmartFinancial, Inc.
Date:	May 15, 2017		/s/ William Y. Carroll, Jr.
			William Y. Carroll, Jr.
			President and Chief Executive Officer
			(principal executive officer)
Date:	May 15, 2017		/s/ Christopher Bryan Johnson
			Christopher Bryan Johnson
			Executive Vice President and Chief Financial Officer
			(principal financial officer and accounting officer)

43

EX-31.1

EXHIBIT 31.1

CERTIFICATION

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

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

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

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

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

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

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

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

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

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

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

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

Date: May 15, 2017	/s/ William Y. Carroll, Jr.
	William Y. Carroll, Jr.
	President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Christopher Bryan Johnson, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: May 15, 2017	/s/ Christopher Bryan Johnson
	Christopher Bryan Johnson
	Chief Financial Officer

EX-32.1

Exhibit 32.1

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

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of SmartFinancial, Inc., (the “Company”), on Form 10-Q for the quarter ended March 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William Y. Carroll, Jr., President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

/s/ William Y. Carroll, Jr.

William Y. Carroll, Jr.

President and Chief Executive Officer

May 15, 2017

EX-32.2

Exhibit 32.2

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

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of SmartFinancial, Inc., (the “Company”), on Form 10-Q for the quarter ended March 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Christopher Bryan Johnson, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

/s/ Christopher Bryan Johnson

Christopher Bryan Johnson

Chief Financial Officer

May 15, 2017

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2017	May 12, 2017
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1
Entity Registrant Name	SMARTFINANCIAL INC.
Entity Central Index Key	0001038773
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	SMBK
Entity Common Stock, Shares Outstanding		8,212,602

XML

CONSOLIDATED BALANCE SHEETS - USD ($)	Mar. 31, 2017	Dec. 31, 2016
ASSETS
Cash and due from banks	$ 22,093,186	$ 34,290,617
Interest-bearing deposits at other financial institutions	33,454,535	34,457,691
Total cash and cash equivalents	55,547,721	68,748,308
Securities available for sale	137,132,626	129,421,914
Restricted investments, at cost	5,627,950	5,627,950
Loans, net of allowance for loan losses of $5,152,261 at March 31, 2017 and $5,105,255 at December 31, 2016	802,387,400	808,271,003
Bank premises and equipment, net	30,802,210	30,535,594
Foreclosed assets	2,370,556	2,386,239
Goodwill and core deposit intangible, net	6,583,077	6,635,655
Other assets	10,634,241	10,829,622
Total assets	1,051,085,781	1,062,456,285
Deposits:
Noninterest-bearing demand deposits	160,672,567	153,482,650
Interest-bearing demand deposits	167,433,130	162,702,457
Money market and savings deposits	274,993,376	274,604,724
Time deposits	286,600,177	316,275,340
Total deposits	889,699,250	907,065,171
Securities sold under agreement to repurchase	23,153,397	26,621,984
Federal Home Loan Bank advances and other borrowings	60,000	18,505,390
Accrued expenses and other liabilities	5,622,319	5,023,600
Total liabilities	918,534,966	957,216,145
Stockholders' equity:
Preferred stock - $1 par value; 2,000,000 shares authorized; None issued and outstanding in 2017. 12,000 issued and outstanding in 2016.	0	12,000
Common stock - $1 par value; 40,000,000 shares authorized; 8,211,102 and 5,896,033 shares issued and outstanding in 2017 and 2016, respectively	8,211,102	5,896,033
Additional paid-in capital	106,702,972	83,463,051
Retained earnings	18,320,147	16,871,296
Accumulated other comprehensive loss	(683,406)	(1,002,240)
Total stockholders' equity	132,550,815	105,240,140
Total liabilities and stockholders' equity	$ 1,051,085,781	$ 1,062,456,285

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Allowance for loan losses (in dollars)	$ 5,152	$ 5,105
Preferred Stock, Par value (in dollars per share)	$ 1	$ 1
Preferred stock, shares authorized	2,000,000	2,000,000
Preferred stock, shares issued	0	12,000
Preferred stock, shares outstanding	0	12,000
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, shares authorized	40,000,000	40,000,000
Common stock, shares issued	8,211,102	5,896,033
Common stock, shares outstanding	8,211,102	5,896,033

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CONSOLIDATED STATEMENTS OF INCOME - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
INTEREST INCOME
Loans, including fees	$ 10,215,607	$ 9,374,457
Securities and interest-bearing deposits at other financial institutions	660,819	716,580
Federal funds sold and other earning assets	72,897	63,309
Total interest income	10,949,323	10,154,346
INTEREST EXPENSE
Deposits	1,097,538	961,268
Securities sold under agreements to repurchase	15,951	16,460
Federal Home Loan Bank advances and other borrowings	15,475	45,286
Total interest expense	1,128,964	1,023,014
Net interest income before provision for loan losses	9,820,359	9,131,332
Provision for loan losses	12,450	137,557
Net interest income after provision for loan losses	9,807,909	8,993,775
NONINTEREST INCOME
Customer service fees	264,673	295,803
Gain on sale of securities	0	83,263
Gain on sale of loans and other assets	275,165	221,925
(Loss) gain on sale of foreclosed assets	(15,564)	57,977
Other noninterest income	402,434	411,864
Total noninterest income	926,708	1,070,832
NONINTEREST EXPENSES
Salaries and employee benefits	4,646,749	4,495,008
Net occupancy and equipment expense	978,459	1,018,428
Depository insurance	153,299	135,803
Foreclosed assets	0	56,658
Advertising	164,262	173,447
Data processing	339,815	341,380
Professional services	569,841	455,173
Amortization of intangible assets	52,578	93,353
Service contracts	295,629	285,627
Other operating expenses	944,280	897,021
Total noninterest expenses	8,144,912	7,951,898
Income before income tax expense	2,589,705	2,112,709
Income tax expense	945,854	763,846
Net income	1,643,851	1,348,863
Preferred stock dividends	195,000	212,000
Net income available to common stockholders	$ 1,448,851	$ 1,136,863
EARNINGS PER COMMON SHARE
Basic (in dollars per share)	$ 0.19	$ 0.20
Diluted (in dollars per share)	$ 0.19	$ 0.19
Weighted average common shares outstanding
Basic (in shares)	7,524,830	5,807,488
Diluted (in shares)	7,631,219	6,108,087
Dividends per share (in dollars per share)	$ 0	$ 0

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Statement of Comprehensive Income [Abstract]
Net income	$ 1,643,851	$ 1,348,863
Other comprehensive income, net of tax:
Unrealized holding gains arising during the period, net of tax expense of $197,831 and $381,291 in 2017 and 2016, respectively	318,834	614,708
Reclassification adjustment for gains included in net income, net of tax expense of $- and $31,640 in 2017 and 2016, respectively	0	(51,623)
Total other comprehensive income	318,834	563,085
Comprehensive income	$ 1,962,685	$ 1,911,948

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Statement of Comprehensive Income [Abstract]
Unrealized holding gains arising during the period, tax expense (benefit)	$ 197,831	$ 381,291
Reclassification adjustment for (gains) losses included in net income, tax expense	$ 0	$ 31,640

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CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) - 3 months ended Mar. 31, 2017 - USD ($)	Total	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
BALANCE at Dec. 31, 2016	$ 105,240,140	$ 12,000	$ 5,896,033	$ 83,463,051	$ 16,871,296	$ (1,002,240)
BALANCE (in shares) at Dec. 31, 2016		12,000	5,896,033
Net income	1,643,851	$ 0	$ 0	0	1,643,851	0
Other comprehensive income	318,834	0	0	0	0	318,834
Issuance of common stock	33,223,653		$ 1,840,000	31,383,653
Issuance of common stock (in shares)			1,840,000
Issuance of stock grants	31,791		$ 1,511	30,280
Issuance of stock grants (in shares)			1,511
Exercise of stock options	4,260,734	$ 0	$ 473,558	3,787,176	0	0
Exercise of stock options (in shares)		0	473,558
Cash dividend on preferred stock	(195,000)	$ 0	$ 0	0	(195,000)	0
Redemption of preferred stock	(12,000,000)	$ (12,000)		(11,988,000)
Redemption of preferred stock (in shares)		(12,000)
Stock compensation expense	26,812	$ 0	0	26,812	0	0
BALANCE at Mar. 31, 2017	$ 132,550,815	$ 0	$ 8,211,102	$ 106,702,972	$ 18,320,147	$ (683,406)
BALANCE (in shares) at Mar. 31, 2017		0	8,211,102

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 1,643,851	$ 1,348,863
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	549,186	525,809
Provision for loan losses	12,450	137,557
Stock compensation expense	26,812	33,635
Gains from sale of securities	0	(83,263)
Net gains from sale of loans and other assets	(275,165)	(221,925)
Net loss (gains) from sale of foreclosed assets	15,564	(57,977)
Changes in other assets and liabilities:
Accrued interest receivable	160,042	106,932
Accrued interest payable	2,373	10,061
Other assets and liabilities	486,433	2,061,243
Net cash provided by operating activities	2,621,546	3,860,935
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from security sales, maturities, and paydowns	5,152,054	9,652,595
Purchase of securities	(12,507,860)	0
Purchase of restricted investments	0	(200)
Loan originations and principal collections, net	6,106,801	(12,967,236)
Purchase of bank premises and equipment	(654,044)	(971,967)
Proceeds from sale of foreclosed assets	39,636	283,221
Net cash used in investing activities	(1,863,413)	(4,003,587)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits	(17,365,921)	628,670
Net decrease in securities sold under agreements to repurchase	(3,468,587)	(7,321,193)
Issuance of common stock	37,516,178	77,707
Redemption of preferred stock	(12,000,000)	0
Payment of dividends on preferred stock	(195,000)	(212,000)
Proceeds from Federal Home Loan Bank advances and other borrowings	60,375	18,000,000
Repayment of Federal Home Loan Bank advances and other borrowings	(18,505,765)	(22,062,293)
Net cash used in financing activities	(13,958,720)	(10,889,109)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(13,200,587)	(11,031,761)
CASH AND CASH EQUIVALENTS, beginning of year	68,748,308	79,964,633
CASH AND CASH EQUIVALENTS, end of period	55,547,721	68,932,872
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for interest	1,126,591	1,012,953
Cash paid during the period for taxes	0	0
NONCASH INVESTING AND FINANCING ACTIVITIES
Change in unrealized losses on securities available for sale	(516,665)	(912,736)
Acquisition of real estate through foreclosure	39,517	0
Financed sales of foreclosed assets	$ 0	$ 0

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Presentation of Financial Information

3 Months Ended

Mar. 31, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Presentation of Financial Information

Presentation of Financial Information

Nature of Business:

SmartFinancial, Inc. (the “Company”) is a bank holding company whose principal activity is the ownership and management of its wholly-owned subsidiary, SmartBank (the “Bank”). The Company provides a variety of financial services to individuals and corporate customers through its offices in eastern Tennessee, northwest Florida, and north Georgia. The Company’s primary deposit products are interest-bearing demand deposits and certificates of deposit. Its primary lending products are commercial, residential, and consumer loans.

Interim Financial Information (Unaudited):

The financial information in this report for March 31, 2017 and March 31, 2016 has not been audited. The information included herein should be read in conjunction with the Company’s 2016 annual consolidated financial statements and footnotes included elsewhere. The consolidated financial statements presented herein conform to U.S. generally accepted accounting principles and to general industry practices. In the opinion of SmartFinancial’s management, the accompanying interim financial statements contain all material adjustments necessary to present fairly the financial condition, the results of operations, and cash flows for the interim period. Results for interim periods are not necessarily indicative of the results to be expected for a full year.

Basis of Presentation and Accounting Estimates:

All adjustments consisting of normal recurring accruals, that in the opinion of management, are necessary for a fair presentation of the financial position and the results of operations for the periods covered by the report have been included. The accompanying unaudited consolidated financial statements and related notes should be read in conjunction with those appearing the in the 2016 Annual Report previously filed on Form 10-K.

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation.

In preparing the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet, and 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 the determination of the allowance for loan losses, the valuation of foreclosed assets and deferred taxes, other-than-temporary impairments of securities, and the fair value of financial instruments.

The determination of the adequacy of the allowance for loan losses is based on estimates that are particularly susceptible to significant changes in the economic environment and market conditions. In connection with the determination of the estimated losses on loans, management obtains independent appraisals for significant collateral.

The Company’s loans are generally secured by specific items of collateral including real property, consumer assets, and business assets. Although the Company has a diversified loan portfolio, a substantial portion of its debtors’ ability to honor their contracts is dependent on local economic conditions.

While management uses available information to recognize losses on loans, further reductions in the carrying amounts of loans may be necessary based on changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the estimated losses on loans. Such agencies may require the Company to recognize additional losses based on their judgments about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the estimated losses on loans may change materially in the near term. However, the amount of the change that is reasonably possible cannot be estimated.

Note 1. Presentation of Financial Information, Continued

Recently Issued Accounting Pronouncements:

During interim periods, the Company follows the accounting policies set forth in its annual audited financial statements for the year ended December 31, 2016 as filed with the Securities and Exchange Commission. The following is a summary of recent authoritative pronouncements not yet effective that could impact the accounting, reporting, and/or disclosure of financial information by the Company issued since December 31, 2016.

In January 2017, FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The ASU clarifies the definition of a business to assist with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company does not expect these amendments to have a material effect on its financial statements.

In January 2017, FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The ASU simplifies the subsequent measurement of goodwill and eliminates Step 2 from the goodwill impairment test. The Company should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value. The impairment charge is limited to the amount of goodwill allocated to that reporting unit. The amendments in this update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect these amendments to have a material effect on its financial statements.

In March 2017, FASB issued ASU No. 2017-08, Receivables - Nonrefundable Fees and Other Costs (Topic 310-20): Premium Amortization on Purchased Callable Debt Securities. The ASU shortens the amortization period for certain callable debt securities held at a premium. The premium on individual callable debt securities shall be amortized to the earliest call date. This guidance does not apply to securities for which prepayments are estimated on a large number of similar loans where prepayments are probable and reasonably estimable. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. This update should be adopted on a modified retrospective basis with a cumulative-effect adjustment to retained earnings on the date of adoption. The Company does not expect these amendments to have a material effect on its financial statements.

Earnings per common share:

Basic earnings per common share represents income available to common stockholders divided by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate solely to outstanding stock options and are determined using the treasury stock method.

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Earnings per share

3 Months Ended

Mar. 31, 2017

Earnings Per Share [Abstract]

Earnings per share

Earnings per share

The following is a summary of the basic and diluted earnings per share for the three month periods ended March 31, 2017 and March 31, 2016.

	Three Months Ended March 31,
	2017		2016
Net income available to common shareholders	$	1,448,851	$	1,136,863
Weighted average common shares outstanding	7,524,830		5,807,488
Effect of dilutive stock options	106,389		300,599
Diluted shares	7,631,219		6,108,087
Basic earnings per common share	$	0.19	$	0.20
Diluted earnings per common share	$	0.19	$	0.19

Note 2. Earnings per share, Continued

For the three months ended March 31, 2017 and 2016, the effects of outstanding antidilutive stock options are excluded from the computation of diluted earnings per common share because the exercise price of such options is higher than the market price. There were 14,604 and 18,100 antidilutive stock options as of March 31, 2017 and 2016, respectively.

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Securities

3 Months Ended

Mar. 31, 2017

Investments, Debt and Equity Securities [Abstract]

Securities

Securities

The amortized cost and fair value of securities available-for-sale at March 31, 2017 and December 31, 2016 are summarized as follows (in thousands):

	March 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government-sponsored enterprises (GSEs)	$	18,261	$	5	$	(468	)	$	17,798
Municipal securities	8,434		23		(119		)	8,338
Other debt securities	972		—		(26		)	946
Mortgage-backed securities	110,573		228		(750		)	110,051
	$	138,240	$	256	$	(1,363	)	$	137,133

	December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government-sponsored enterprises (GSEs)	$	18,279	$	8	$	(564	)	$	17,723
Municipal securities	8,182		16		(179		)	8,019
Mortgage-backed securities	104,585		185		(1,090		)	103,680
	$	131,046	$	209	$	(1,833	)	$	129,422

At March 31, 2017, securities with a fair value totaling approximately $81,068,000 were pledged to secure public funds and securities sold under agreements to repurchase.

For the three months ended March 31, 2017, there were no available-for-sale securities sold. For the three months ended March 31, 2016 there were available-for-sale securities sold with proceeds totaling $5,072,500 which resulted in gross gains realized of $83,263 and gross losses of $-.

The amortized cost and estimated fair value of securities at March 31, 2017, by contractual maturity, are shown below (in thousands). Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost		Fair Value
Due in one year or less	$	3,011	$	3,011
Due from one year to five years	12,391		12,048
Due from five years to ten years	8,543		8,341
Due after ten years	3,722		3,682
	27,667		27,082
Mortgage-backed securities	110,573		110,051
	$	138,240	$	137,133

Note 3. Securities, Continued

The following tables present the gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities available-for-sale have been in a continuous unrealized loss position, as of March 31, 2017 and December 31, 2016 (in thousands):

	As of March 31, 2017
	Less than 12 Months			12 Months or Greater			Total
	Fair Value	Gross Unrealized Losses		Fair Value	Gross Unrealized Losses		Fair Value	Gross Unrealized Losses
U.S. Government- sponsored enterprises (GSEs)	14,379	(468	)	—	—		14,379	(468	)
Municipal securities	5,115	(118	)	254	(1	)	5,369	(119	)
Other debt securities	945	(26	)	—	—		945	(26	)
Mortgage-backed securities	62,827	(380	)	12,129	(370	)	74,956	(750	)
	83,266	(992	)	12,383	(371	)	95,649	(1,363	)

	As of December 31, 2016
	Less than 12 Months					12 Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. Government- sponsored enterprises (GSEs)	$	14,702	$	(564	)	$	—	$	—		$	14,702	$	(564	)
Municipal securities	6,368		(179		)	—		—			6,368		(179		)
Mortgage-backed securities	67,063		(690		)	8,948		(400		)	76,011		(1,090		)
	$	88,133	$	(1,433	)	$	8,948	$	(400	)	$	97,081	$	(1,833	)

At March 31, 2017, the categories of temporarily impaired securities, and management’s evaluation of those securities, are as follows:

U.S. Government-sponsored enterprises: At March 31, 2017, 5 (or five) investment in U.S. GSE securities had unrealized losses. These unrealized losses related principally to changes in market interest rates. The contractual terms of the investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. Because the Bank does not intend to sell the investments and it is more likely than not that the Bank will not be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Bank does not consider these investments to be other-than temporarily impaired at March 31, 2017.

Municipal securities: At March 31, 2017, 13 (or thirteen) investments in obligations of municipal securities had unrealized losses. The Bank believes the unrealized losses on those investments were caused by the interest rate environment and do not relate to the underlying credit quality of the issuers. Because the Bank does not intend to sell the investments and it is not more likely than not that the Bank will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Bank does not consider these investments to be other-than temporarily impaired at March 31, 2017.

Other debt securities: At March 31, 2017, 1 (or one) investment in other debt securities had unrealized losses. The Bank believes the unrealized loss on this investment was caused by the interest rate environment and does not relate to the underlying credit quality of the issuer. Because the Bank does not intend to sell the investment and it is not more likely than not that the Bank will be required to sell the investment before recovery of its amortized cost bases, which may be maturity, the Bank does not consider this investment to be other-than temporarily impaired at March 31, 2017.

Note 3. Securities, Continued

Mortgage-backed securities: At March 31, 2017, 57 (or fifty seven) investments in residential mortgage-backed securities had unrealized losses.  This impairment is believed to be caused by the current interest rate environment.  The contractual cash flows of those investments are guaranteed by an agency of the U.S. Government.  Because the decline in market value is attributable to the current interest rate environment and not credit quality, and because the Bank does not intend to sell the investments and it is not more likely than not that the Bank will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Bank does not deem these investments to be other-than-temporarily impaired at March 31, 2017.

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Loans and Allowance for Loan Losses

3 Months Ended

Mar. 31, 2017

Receivables [Abstract]

Loans and Allowance for Loan Losses

Loans and Allowance for Loan Losses

Portfolio Segmentation:

At March 31, 2017 and December 31, 2016, loans are summarized as follows (in thousands):

	March 31, 2017								December 31, 2016
	PCI Loans		All Other Loans			Total			PCI  Loans		All Other Loans			Total
Commercial real estate	$	14,683	$	393,216		$	407,899		$	14,943	$	400,265		$	415,208
Consumer real estate	8,874		177,471			186,345			9,004		178,798			187,802
Construction and land development	1,506		114,168			115,674			1,678		116,191			117,869
Commercial and industrial	1,538		89,169			90,707			1,568		83,454			85,022
Consumer and other	—		6,914			6,914			—		7,475			7,475
Total loans	26,601		780,938			807,539			27,193		786,183			813,376
Less:  Allowance for loan losses	—		(5,152		)	(5,152		)	—		(5,105		)	(5,105		)
Loans, net	$	26,601	$	775,786		$	802,387		$	27,193	$	781,078		$	808,271

For purposes of the disclosures required pursuant to the adoption of ASC 310, the loan portfolio was disaggregated into segments. A portfolio segment is defined as the level at which an entity develops and documents a systematic method for determining its allowance for credit losses. There are five loan portfolio segments that include commercial real estate, consumer real estate, construction and land development, commercial and industrial, and consumer and other.

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

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

Consumer Real Estate: Consumer real estate loans include real estate loans secured by first liens, second liens, or open end real estate loans, such as home equity lines. These are repaid by various means such as a borrower's income, sale of the property, or rental income derived from the property. One to four family first mortgage loans are repaid by various means such as a borrower's income, sale of the property, or rental income derived from the property. Loans within this portfolio segment are particularly sensitive to the valuation of real estate.

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

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

Note 4. Loans and Allowance for Loan Losses, Continued

Portfolio Segmentation (continued):

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

Credit Risk Management:

The Company employs a credit risk management process with defined policies, accountability and routine reporting to manage credit risk in the loan portfolio segments. Credit risk management is guided by credit policies that provide for a consistent and prudent approach to underwriting and approvals of credits. Within the Credit Policy, procedures exist that elevate the approval requirements as credits become larger and more complex. All loans are individually underwritten, risk-rated, approved, and monitored.

Responsibility and accountability for adherence to underwriting policies and accurate risk ratings lies in each portfolio segment. For the consumer real estate and consumer and other portfolio segments, the risk management process focuses on managing customers who become delinquent in their payments. For the other portfolio segments, the risk management process focuses on underwriting new business and, on an ongoing basis, monitoring the credit of the portfolios, including a third party review of the largest credits on an annual basis or more frequently as needed. To ensure problem credits are identified on a timely basis, several specific portfolio reviews occur periodically to assess the larger adversely rated credits for proper risk rating and accrual status.

Credit quality and trends in the loan portfolio segments are measured and monitored regularly. Detailed reports, by product, collateral, accrual status, etc., are reviewed by the Senior Credit Officer and the Directors Loan Committee.

The allowance for loan losses is a valuation reserve allowance established through provisions for loan losses charged against income. The allowance for loan losses, which is evaluated quarterly, is maintained at a level that management deems sufficient to absorb probable losses inherent in the loan portfolio. Loans deemed to be uncollectible are charged against the allowance for loan losses, while recoveries of previously charged-off amounts are credited to the allowance for loan losses. The allowance for loan losses is comprised of specific valuation allowances for loans evaluated individually for impairment and general allocations for pools of homogeneous loans with similar risk characteristics and trends.

The allowance for loan losses related to specific loans is based on management's estimate of potential losses on impaired loans as determined by (1) the present value of expected future cash flows; (2) the fair value of collateral if the loan is determined to be collateral dependent or (3) the loan's observable market price. The Company's homogeneous loan pools include commercial real estate loans, consumer real estate loans, construction and land development loans, commercial and industrial loans, and consumer and other loans. The general allocations to these loan pools are based on the historical loss rates for specific loan types and the internal risk grade, if applicable, adjusted for both internal and external qualitative risk factors.

The qualitative factors considered by management include, among other factors, (1) changes in local and national economic conditions; (2) changes in asset quality; (3) changes in loan portfolio volume; (4) the composition and concentrations of credit; (5) the impact of competition on loan structuring and pricing; (6) the impact of interest rate changes on portfolio risk and (7) effectiveness of the Company's loan policies, procedures and internal controls. The total allowance established for each homogeneous loan pool represents the product of the historical loss ratio adjusted for qualitative factors and the total dollar amount of the loans in the pool.

Note 4. Loans and Allowance for Loan Losses, Continued

Credit Risk Management (continued):

The composition of loans by loan classification for impaired and performing loan status at March 31, 2017 and December 31, 2016, is summarized in the tables below (amounts in thousands):

	March 31, 2017
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Performing loans	$	392,978	$	176,478	$	113,534	$	88,960	$	6,914	$	778,864
Impaired loans	238		993		634		209		—		2,074
	393,216		177,471		114,168		89,169		6,914		780,938
PCI loans	14,683		8,874		1,506		1,538		—		26,601
Total	$	407,899	$	186,345	$	115,674	$	90,707	$	6,914	$	807,539

	December 31, 2016
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Performing loans	$	400,146	$	177,977	$	115,326	$	83,244	$	7,475	$	784,168
Impaired loans	119		821		865		210		—		2,015
	400,265		178,798		116,191		83,454		7,475		786,183
PCI loans	14,943		9,004		1,678		1,568		—		27,193
Total loans	$	415,208	$	187,802	$	117,869	$	85,022	$	7,475	$	813,376

The following tables show the allowance for loan losses allocation by loan classification for impaired, PCI, and performing loans as of March 31, 2017 and December 31, 2016 (amounts in thousands):

	March 31, 2017
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Performing loans	$	2,329	$	1,398	$	706	$	554	$	93	$	5,080
Impaired loans	—		68		—		4		—		72
Total	$	2,329	$	1,466	$	706	$	558	$	93	$	5,152

	December 31, 2016
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Performing loans	$	2,369	$	1,382	$	717	$	516	$	117	$	5,101
Impaired loans	—		—		—		4		—		4
Total	$	2,369	$	1,382	$	717	$	520	$	117	$	5,105

There was no allowance for PCI loans at March 31, 2017 or December 31, 2016.

Note 4. Loans and Allowance for Loan Losses, Continued

Credit Risk Management (continued):

The following tables detail the changes in the allowance for loan losses for the three month period ending March 31, 2017 and year ending December 31, 2016, by loan classification (amounts in thousands):

	March 31, 2017
	Commercial Real Estate			Consumer Real Estate		Construction and Land Development			Commercial and Industrial			Consumer and Other			Total
Beginning balance	$	2,369		$	1,382	$	717		$	520		$	117		$	5,105
Loans charged off	—			—		—			(3		)	(22		)	(25		)
Recoveries of loans charged off	5			17		5			16			17			60
Provision (reallocation) charged to operating expense	(45		)	67		(16		)	25			(19		)	12
Ending balance	$	2,329		$	1,466	$	706		$	558		$	93		$	5,152

	December 31, 2016
	Commercial Real Estate		Consumer Real Estate			Construction and Land Development			Commercial and Industrial			Consumer and Other			Total
Beginning balance	$	1,906	$	1,015		$	627		$	777		$	29		$	4,354
Loans charged off	—		(102		)	(14		)	(35		)	(155		)	(306		)
Recoveries of charge-offs	45		76			22			58			68			269
Provision (reallocation) charged to operating expense	418		393			82			(280		)	175			788
Ending balance	$	2,369	$	1,382		$	717		$	520		$	117		$	5,105

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

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

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

Substandard: Loans in this risk grade are inadequately protected by the borrower's current financial condition and payment capability or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the orderly repayment of debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

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

Note 4. Loans and Allowance for Loan Losses, Continued

Credit Risk Management (continued):

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

The following tables outline the amount of each loan classification and the amount categorized into each risk rating as of March 31, 2017 and December 31, 2016 (amounts in thousands):

Non PCI Loans

	March 31, 2017
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Pass	$	392,338	$	176,001	$	113,447	$	88,723	$	6,685	$	777,194
Watch	635		514		87		237		—		1,473
Special mention	—		103		—		—		229		332
Substandard	243		853		634		209		—		1,939
Doubtful	—		—		—		—		—		—
Total	$	393,216	$	177,471	$	114,168	$	89,169	$	6,914	$	780,938

PCI Loans

	March 31, 2017
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Pass	$	11,617	$	6,816	$	848	$	1,309	$	—	$	20,590
Watch	890		1,280		645		19		—		2,834
Special mention	—		—		—		183		—		183
Substandard	2,176		778		13		—		—		2,967
Doubtful	—		—		—		27		—		27
Total	$	14,683	$	8,874	$	1,506	$	1,538	$	—	$	26,601
Total loans	$	407,899	$	186,345	$	115,674	$	90,707	$	6,914	$	807,539

Non PCI Loans

	December 31, 2016
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Pass	$	399,505	$	177,466	$	115,237	$	82,992	$	7,238	$	782,438
Watch	640		550		89		252		—		1,531
Special mention	—		104		—		—		237		341
Substandard	120		678		865		210		—		1,873
Doubtful	—		—		—		—		—		—
Total	$	400,265	$	178,798	$	116,191	$	83,454	$	7,475	$	786,183

Note 4. Loans and Allowance for Loan Losses, Continued

Credit Risk Management (continued):

PCI Loans

	December 31, 2016
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Pass	$	11,836	$	6,811	$	1,019	$	1,507	$	—	$	21,173
Watch	1,045		1,577		645		22		—		3,289
Special mention	—		—		—		12		—		12
Substandard	2,062		616		14		—		—		2,692
Doubtful	—		—		—		27		—		27
Total	$	14,943	$	9,004	$	1,678	$	1,568	$	—	$	27,193
Total loans	$	415,208	$	187,802	$	117,869	$	85,022	$	7,475	$	813,376

Past Due Loans:

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

The following tables present the aging of the recorded investment in loans as of March 31, 2017 and December 31, 2016 (amounts in thousands): 

	March 31, 2017
	30-89 Days  Past Due and Accruing		Past Due 90  Days or More and Accruing		Nonaccrual		Total  Past Due and NonAccrual		PCI Loans		Current Loans		Total Loans
Commercial real estate	$	196	$	—	$	124	$	320	$	14,683	$	392,896	$	407,899
Consumer real estate	1,180		—		523		1,703		8,874		175,768		186,345
Construction and land development	34		—		634		668		1,506		113,500		115,674
Commercial and industrial	359		27		164		550		1,538		88,619		90,707
Consumer and other	20		—		—		20		—		6,894		6,914
Total	$	1,789	$	27	$	1,445	$	3,261	$	26,601	$	777,677	$	807,539

Note 4. Loans and Allowance for Loan Losses, Continued

Past Due Loans (continued):

	December 31, 2016
	30-89 Days Past Due and Accruing		Past Due 90 Days or More and Accruing		Nonaccrual		Total Past Due and NonAccrual		PCI Loans		Current Loans		Total Loans
Commercial real estate	$	395	$	—	$	—	$	395	$	14,943	$	399,870	$	415,208
Consumer real estate	695		699		386		1,780		9,004		177,018		187,802
Construction and land development	690		—		865		1,555		1,678		114,636		117,869
Commercial and industrial	257		—		164		421		1,568		83,033		85,022
Consumer and other	17		—		—		17		—		7,458		7,475
Total	$	2,054	$	699	$	1,415	$	4,168	$	27,193	$	782,015	$	813,376

Impaired Loans:

The following is an analysis of the impaired loan portfolio, excluding PCI loans, detailing the related allowance recorded as of March 31, 2017 and December 31, 2016 (amounts in thoudands):  

							For the three months ended
	At March 31, 2017						March 31, 2017
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans without a valuation allowance:
Commercial real estate	$	238	$	241	$	—	$	179	$	3
Consumer real estate	368		383		—		595		6
Construction and land development	634		634		—		750		—
Commercial and industrial	45		45		—		46		1
Consumer and other	—		—		—		—		—
	1,285		1,303		—		1,570		10
Impaired loans with a valuation allowance:
Commercial real estate	—		—		—		—		—
Consumer real estate	625		644		68		313		5
Construction and land development	—		—		—		—		—
Commercial and industrial	164		243		4		164		—
Consumer and other	—		—		—		—		—
	789		887		72		477		5
Total impaired loans	$	2,074	$	2,190	$	72	$	2,047	$	15

Note 4. Loans and Allowance for Loan Losses, Continued

Impaired Loans (continued):

							For the year ended
	At December 31, 2016						December 31, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans without a valuation allowance:
Commercial real estate	$	119	$	119	$	—	$	1,311	$	73
Consumer real estate	821		849		—		2,334		100
Construction and land development	865		865		—		967		3
Commercial and industrial	46		46		—		47		4
Consumer and other	—		—		—		—		—
	1,851		1,879		—		4,659		180
Impaired loans with a valuation allowance:
Commercial real estate	—		—		—		—		—
Consumer real estate	—		—		—		—		—
Construction and land development	—		—		—		—		—
Commercial and industrial	164		243		4		306		70
Consumer and other	—		—		—		—		—
	164		243		4		306		70
Total impaired loans	$	2,015	$	2,122	$	4	$	4,965	$	250

Troubled Debt Restructurings:

At March 31, 2017 and December 31, 2016, impaired loans included loans that were classified as Troubled Debt Restructurings ("TDRs"). The restructuring of a loan is considered a TDR if both (i) the borrower is experiencing financial difficulties and (ii) the creditor has granted a concession.

In assessing whether or not a borrower is experiencing financial difficulties, the Company considers information currently available regarding the financial condition of the borrower. This information includes, but is not limited to, whether (i) the debtor is currently in payment default on any of its debt; (ii) a payment default is probable in the foreseeable future without the modification; (iii) the debtor has declared or is in the process of declaring bankruptcy; and (iv) the debtor's projected cash flow is sufficient to satisfy contractual payments due under the original terms of the loan without a modification.

The Company considers all aspects of the modification to loan terms to determine whether or not a concession has been granted to the borrower. Key factors considered by the Company include the debtor's ability to access funds at a market rate for debt with similar risk characteristics, the significance of the modification relative to unpaid principal balance or collateral value of the debt, and the significance of a delay in the timing of payments relative to the original contractual terms of the loan.

The most common concessions granted by the Company generally include one or more modifications to the terms of the debt, such as (i) a reduction in the interest rate for the remaining life of the debt; (ii) an extension of the maturity date at an interest rate lower than the current market rate for new debt with similar risk; (iii) a temporary period of interest-only payments; and (iv) a reduction in the contractual payment amount for either a short period or remaining term of the loan. As of March 31, 2017 and December 31, 2016, management had approximately, $552,000 and $608,000, respectively, in loans that met the criteria for restructured, which included approximately $251,000 and $442,000, respectively, of loans on nonaccrual. A loan is placed back on accrual status when both principal and interest are current and it is probable that management will be able to collect all amounts due (both principal and interest) according to the terms of the loan agreement.

Note 4. Loans and Allowance for Loan Losses, Continued

Troubled Debt Restructurings (continued):

The following table presents a summary of loans that were modified as troubled debt restructurings during the three month period ended March 31, 2017 (amounts in thousands):

		Pre-Modification Outstanding Recorded		Post-Modification Outstanding Recorded
March 31, 2017	Number of Contracts	Investment		Investment
Consumer real estate	1	$	138	$	138

The following table presents a summary of loans that were modified as troubled debt restructurings during the twelve month period ended December 31, 2016 (amounts in thousands):

		Pre-Modification Outstanding Recorded		Post-Modification Outstanding Recorded
December 31, 2016	Number of Contracts	Investment		Investment
Construction and land development	1	$	278	$	278
Commercial and industrial	1	$	164	$	164

There were no loans that were modified as troubled debt restructurings during the past twelve months and for which there was a subsequent payment default.

Purchased Credit Impaired Loans:

The Company has acquired loans which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of those loans as of is as follows:

	March 31, 2017			December 31, 2016
Commercial real estate	$	18,105		$	18,473
Consumer real estate	11,954			12,111
Construction and land development	2,364			2,553
Commercial and industrial	2,380			2,482
Consumer and other	—			—
Total loans	34,803			35,619
Less remaining purchase discount	(8,202		)	(8,426		)
Total loans, net of purchase discount	26,601			27,193
Less: Allowance for loan losses	—			—
Carrying amount, net of allowance	$	26,601		$	27,193

Activity related to the accretable portion of the purchase discount on loans acquired with deteriorated credit quality is as follows for the three months period ended March 31, 2017 and 2016:

Note 4. Loans and Allowance for Loan Losses, Continued

Purchased Credit Impaired Loans (continued):

	Three Months Ended March 31, 2017			Three Months Ended March 31, 2016
Accretable yield, beginning of period	$	8,950		$	10,216
Additions	—			—
Accretion income	(697		)	(629		)
Reclassification to accretable	244			(41		)
Other changes, net	(15		)	60
Accretable yield	$	8,482		$	9,606

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Employee Benefit Plans

3 Months Ended

Mar. 31, 2017

Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]

Employee Benefit Plans

Employee Benefit Plans

401(k) Plan:

The Company provides a deferred salary reduction plan (“Plan”) under Section 401 (k) of the Internal Revenue Code covering substantially all employees. After one year of service the Company matches 100 percent of employee contributions up to 3 percent of compensation and 50 percent of employee contributions on the next 2 percent of compensation. The Company's contribution to the Plan for the three month period ending March 31, 2017 and 2016 respectively was $102,716 and $90,856.

Stock Option Plans:

The Company has one currently active equity incentive plan administered by the Board of Directors, and four plans or programs, pursuant to which the Company has outstanding prior grants. These plans are described below:

Legacy Cornerstone Bancshares, Inc. 2002 Long Term Incentive Plan – The plan provided Cornerstone Bancshares, Inc. officers and employees incentive stock options or non-qualified stock options to purchase shares of common stock. The exercise price for incentive stock options was not less than 100 percent of the fair market value of the common stock on the date of the grant. The exercise price of the non-qualified stock options was equal to or more or less than the fair market value of the common stock on the date of the grant. This plan expired in 2012.

Legacy Cornerstone Non-Qualified Plan Options — During 2013 and 2014, Cornerstone issued non-qualified options to employees and directors. The options were originally documented in 2013 as being issued out of the Cornerstone Bancshares, Inc. 2002 Long Term Incentive Plan but that plan expired in 2012. The non-qualified options are governed by the grant document issued to the holders which incorporate the terms of the plan by reference.

Legacy SmartBank Stock Option Plan – This plan was assumed by the Company on August 31, 2015. The plan provides for incentive stock options and nonqualified stock options. The maximum number of common shares that could be sold or optioned under the plan is 525,000 shares. Under the plan, the exercise price of each option could not be less than 100 percent of the fair market value of the common stock on the date of grant.

Legacy SmartFinancial, Inc. 2010 Incentive Plan - This plan was assumed by the Company on August 31, 2015. This plan provides for incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, performance awards, dividend equivalents and stock or other stock-based awards. The maximum number of common shares that could be sold or optioned under the plan is 525,000 shares. Under the plan, the exercise price of each option could not be less than 100 percent of the fair market value of the common stock on the date of grant.

Note 5. Employee Benefit Plans, Continued

Stock Option Plans (Continued):

2015 Stock Incentive Plan – This plan provides for incentive stock options, nonqualified stock options, and restricted stock. The maximum number of shares of common stock that can be sold or optioned under the plan is 2,000,000 shares. The term of each option shall be no more than ten years from the date of grant. In the case of an incentive stock option granted to a participant who, at the time the option is granted, owns stock representing more than ten percent of the voting power of all classes of stock of the Company or any parent or subsidiary thereof, the term of the option shall be five years from the date of grant or such shorter term as may be provided in the award agreement.

The per share exercise price for the shares to be issued upon exercise of an option shall be such price as is determined by the plan administrator, subject to the following: In the case of an incentive stock option: (1) granted to an employee who, at the time of grant of such option, owns stock representing more than ten percent of the voting power of all classes of stock of the company or any parent or subsidiary thereof, the exercise price shall be no less than one hundred and ten percent of the fair market value per share on the date of grant; or (2) granted to any other employee, the per share exercise price shall be no less than one hundred percent of the fair market value per share on the date of grant. In the case of a nonstatutory stock option, the per share exercise price shall be no less than one hundred percent of the fair market value per share on the date of grant, unless otherwise determined by the Administrator.

The incentive stock options vest 30% on the second anniversary of the grant date, 30% on the third anniversary of the grant date and 40% on the fourth anniversary of the grant date. Director non-qualified stock options vest 50% on the first anniversary of the grant date and 50% on the second anniversary of the grant date.

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

	Number		Weighted Average Exercisable Price
Outstanding at December 31, 2016	717,524		$	10.57
Exercised	(473,558	)	9.61
Forfeited	(18,524	)	20.27
Outstanding at March 31, 2017	225,442		$	11.78

	Number		Weighted Average Exercisable Price
Outstanding at December 31, 2015	817,414		$	10.62
Exercised	(89,556	)	8.98
Forfeited	(10,334	)	28.49
Outstanding at December 31, 2016	717,524		$	10.57

Note 5. Employee Benefit Plans, Continued

Stock Option Plans (continued):

Information pertaining to options outstanding at March 31, 2017, is as follows: 

		Options Outstanding				Options Exercisable
			Weighted- Average Remaining	Weighted- Average			Weighted- Average
Exercise		Number	Contractual	Exercise		Number	Exercise
Prices		Outstanding	Life	Price		Exercisable	Price
$	6.20	750	4.0 years	$	6.20	750	$	6.20
6.60		41,500	5.0 years	6.60		41,500	6.60
6.80		19,375	3.9 years	6.80		19,375	6.80
9.48		29,375	5.9 years	9.48		29,375	9.48
9.52		525	0.3 years	9.52		525	9.52
9.60		37,625	6.9 years	9.60		37,625	9.60
10.48		20,513	0.4 years	10.48		20,513	10.48
11.67		3,250	3.8 years	11.67		3,250	11.67
14.40		15,180	1.9 years	14.40		15,180	14.40
15.05		42,745	8.5 years	15.05		4,104	15.05
31.96		13,916	0.9 years	31.96		13,916	31.96
60.80		688	0.1 years	60.80		688	60.80
Outstanding, end of period		225,442	5.1 years	11.78		186,801	11.11

The Company recognized stock-based compensation expense of $26,812 and $33,635 for the three months ended March 31, 2017 and March 31, 2016, respectively. For the three months period ended March 31, 2017, direct stock grant expense issued to local advisory board members of $31,791 was included in professional services. There was no direct grant stock grant expense for the three months period ended March 31, 2016. The total fair value of shares underlying the options which vested during the three months period ended March 31, 2017 and March 31, 2016 was $0 and $19,425 , respectively. There were no income tax benefits recognized for the exercise of options for the periods ended March 31, 2017 and March 31, 2016, respectively.

The intrinsic value of options exercised during the period ended March 31, 2017 was $5,024,759. The aggregate intrinsic value of total options outstanding and exercisable options at March 31, 2017 was $2,266,259 and $2,034,800, respectively. Cash received from options exercised under all share-based payment arrangements for the period ended March 31, 2017 was $4,260,734.

Information related to non-vested options for the period ended March 31, 2017, is as follows: 

	Number		Weighted Average Grant-Date Fair Value
Nonvested at December 31, 2016	47,970		$	12.31
Granted	—		—
Vested	—		—
Forfeited/expired	(9,329	)	12.31
Nonvested at March 31, 2017	38,641		$	12.31

As of March 31, 2017 , there was approximately $340,542 of total unrecognized compensation cost related to nonvested stock-based compensation arrangements granted under the Plans. The cost is expected to be recognized over a weighted-average period of 1.4 years. There were no stock options granted during the three months period ended March 31, 2017 .

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Commitments and Contingent Liabilities

3 Months Ended

Mar. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingent Liabilities

Commitments and Contingent Liabilities

Off Balance Sheet Arrangements In the normal course of business, the Bank has entered into off-balance sheet financial instruments which include commitments to extend credit (i.e., including unfunded lines of credit) and standby letters of credit. Commitments to extend credit are usually the result of lines of credit granted to existing borrowers under agreements that the total outstanding indebtedness will not exceed a specific amount during the term of the indebtedness. Typical borrowers are commercial concerns that use lines of credit to supplement their treasury management functions; thus their total outstanding indebtedness may fluctuate during any time period based on the seasonality of their business and the resultant timing of their cash flows. Other typical lines of credit are related to home equity loans granted to consumers. Commitments to extend credit generally have fixed expiration dates or other termination clauses and may require payment of a fee.

Standby letters of credit are generally issued on behalf of an applicant (our client) to a specifically named beneficiary and are the result of a particular business arrangement that exists between the applicant and the beneficiary. Standby letters of credit have fixed expiration dates and are usually for terms of two years or less unless terminated beforehand due to criteria specified in the standby letter of credit. A typical arrangement involves the applicant routinely being indebted to the beneficiary for such items as inventory purchases, insurance, utilities, lease guarantees or other third party commercial transactions. The standby letter of credit would permit the beneficiary to obtain payment from the Bank under certain prescribed circumstances. Subsequently, the Bank would seek reimbursement from the applicant pursuant to the terms of the standby letter of credit.

The Bank follows the same credit policies and underwriting practices when making these commitments as it does for on-balance sheet instruments. Each client’s creditworthiness is evaluated on a case-by-case basis, and the amount of collateral obtained, if any, is based on management’s credit evaluation of the customer. Collateral held varies but may include cash, real estate and improvements, marketable securities, accounts receivable, inventory, equipment and personal property.

The contractual amounts of these commitments are not reflected in the consolidated financial statements and would only be reflected if drawn upon. Since many of the commitments are expected to expire without being drawn upon, the contractual amounts do not necessarily represent future cash requirements. However, should the commitments be drawn upon and should customers default on their resulting obligation to the Bank the maximum exposure to credit loss, without consideration of collateral, is represented by the contractual amount of those instruments.

A summary of the Bank’s total contractual amount for all off-balance sheet commitments at March 31, 2017 is as follows:

Commitments to extend credit	$	133.4	million
Standby letters of credit	$	2.9	million

Various legal claims also arise from time to time in the normal course of business. In the opinion of management, the resolution of claims outstanding at March 31, 2017 will not have a material effect on SmartFinancial’s consolidated financial statements.

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Fair Value Disclosures

3 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

Fair Value Disclosures

Fair Value Disclosures

Determination of Fair Value:

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

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

Note 7. Fair Value Disclosures, Continued

Fair Value Hierarchy:

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

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

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

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

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

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

Cash and Cash Equivalents: For cash and due from banks, interest-bearing deposits, and federal funds sold, the carrying amount is a reasonable estimate of fair value based on the short-term nature of the assets and are considered Level 1 inputs.

Securities Available for Sale: Where quoted prices are available in an active market, management classifies the securities within Level 1 of the valuation hierarchy. If quoted market prices are not available, management estimates fair values using pricing models and discounted cash flows that consider standard input factors such as observable market data, benchmark yields, interest rate volatilities, broker/dealer quotes, and credit spreads. Examples of such instruments, which would generally be classified within Level 2 of the valuation hierarchy, including GSE obligations, corporate bonds, and other securities. Mortgage-backed securities are included in Level 2 if observable inputs are available. In certain cases where there is limited activity or less transparency around inputs to the valuation, management classifies those securities in Level 3.

Restricted Investments: It is not practicable to determine the fair value of restricted investments due the restrictions placed on its transferability.

Loans:For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. Fair value for fixed rate loans are estimated using discounted cash flow analyses, using market interest rates for comparable loans. Fair values for nonperforming loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable. These methods are considered Level 3 inputs.

Deposits:The fair values disclosed for demand deposits (for example, interest and noninterest checking, savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (that is, their carrying amounts) and are considered Level 1 inputs. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies market interest rates on comparable instruments to a schedule of aggregated expected monthly maturities on time deposits, and are considered Level 2 inputs.

Securities Sold Under Agreement to Repurchase: The carrying value of these liabilities approximates their fair value, and are considered Level 1 inputs.

Federal Home Loan Bank Advances and Other Borrowings: The fair value of the FHLB fixed rate borrowings are estimated using discounted cash flows, based on the current incremental borrowing rates for similar types of borrowing arrangements, and are considered Level 2 inputs.

Note 7. Fair Value Disclosures, Continued

Fair Value Hierarchy (continued):

Commitments to Extend Credit and Standby Letters of Credit: Because commitments to extend credit and standby letters of credit are made using variable rates and have short maturities, the carrying value and the fair value are immaterial for disclosure.

Measurements of Fair Value:

Assets and liabilities recorded at fair value on a recurring basis are as follows (in thousands): 

	Balance as of March 31, 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Debt securities available-for-sale:
U.S. Government-sponsored enterprises (GSEs)	$	17,798	$	—	$	17,798	$	—
Mortgage-backed securities	110,051		—		110,051		—
Other debt securities	946				946
Municipal securities	8,338		—		8,338		—
Total securities available-for-sale	$	137,133	$	—	$	137,133	$	—

	Balance as of December 31, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Debt securities available-for-sale:
U.S. Government-sponsored enterprises (GSEs)	$	17,723	$	—	$	17,723	$	—
Mortgage-backed securities:	103,680		—		103,680		—
Municipal securities	8,019		—		8,019		—
Total securities available-for-sale	$	129,422	$	—	$	129,422	$	—

The Company has no assets or liabilities whose fair values are measured on a recurring basis using Level 3 inputs. Additionally, there were no transfers between Level 1 and Level 2 in the fair value hierarchy.

Assets Measured at Fair Value on a Nonrecurring Basis:

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

	Balance as of March 31, 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Impaired loans	$	717	$	—	$	—	$	717
Foreclosed assets	2,371		—		—		2,371

Note 7. Fair Value Disclosures, Continued

Assets Measured at Fair Value on a Nonrecurring Basis (continued):

	Balance as of December 31, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Impaired loans	$	239	$	—	$	—	$	239
Foreclosed assets	2,386		—		—		2,386

For Level 3 assets measured at fair value on a non-recurring basis as of March 31, 2017 and December 31, 2016 a, the significant unobservable inputs used in the fair value measurements are presented below (in thousands).

	Balance as of March 31, 2017		Valuation Technique	Significant Other Unobservable Input	Weighted Average of Input
Impaired loans	$	717	Appraisal	Discounted Cash Flow / Appraisal Discounts	9.1	%
Foreclosed assets	2,371		Appraisal	Appraisal Discounts	22.5	%

	Balance as of December 31, 2016 (in thousands)		Valuation Technique	Significant Other Unobservable Input	Weighted Average of Input
Impaired loans	$	239	Cash Flow	Discounted Cash Flow / Appraisal Discounts	2.4	%
Foreclosed assets	2,386		Appraisal	Appraisal Discounts	12.2	%

Impaired Loans: Loans considered impaired under ASC 310-10-35, Receivables, are loans for which, based on current information and events, it is probable that the Company will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement. Impaired loans can be measured based on the present value of expected payments using the loan’s original effective rate as the discount rate, the loan’s observable market price, or the fair value of the collateral less selling costs if the loan is collateral dependent.

The fair value of impaired loans were measured based on the value of the collateral securing these loans or the discounted cash flows of the loans, as applicable. Impaired loans are classified within Level 3 of the fair value hierarchy. Collateral may be real

estate and/or business assets including equipment, inventory, and/or accounts receivable. The Company determines the value of the collateral based on independent appraisals performed by qualified licensed appraisers. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Appraised values are

discounted for costs to sell and may be discounted further based on management’s historical knowledge, changes in market conditions from the date of the most recent appraisal, and/or management’s expertise and knowledge of the customer and the customer’s business. Such discounts by management are subjective and are typically significant unobservable inputs for determining fair value. Impaired loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on the same factors discussed above.

Note 7. Fair Value Disclosures, Continued

Assets Measured at Fair Value on a Nonrecurring Basis(continued):

Foreclosed assets: Foreclosed assets, consisting of properties obtained through foreclosure or in satisfaction of loans, are initially recorded at fair value less estimated costs to sell upon transfer of the loans to other real estate. Subsequently, other real estate is carried at the lower of carrying value or fair value less costs to sell. Fair values are generally based on third party appraisals of the property and are classified within Level 3 of the fair value hierarchy. The appraisals are sometimes further discounted based on management’s historical knowledge, and/or changes in market conditions from the date of the most recent appraisal, and/or management’s expertise and knowledge of the customer and the customer’s business. Such discounts are typically significant unobservable inputs for determining fair value. In cases where the carrying amount exceeds the fair value, less estimated costs to sell, a loss is recognized in noninterest expense.

Carrying value and estimated fair value:

The carrying amount and estimated fair value of the Company’s financial instruments at March 31, 2017 and December 31, 2016 are as follows (in thousands):

	March 31, 2017				December 31, 2016
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Cash and cash equivalents	$	55,548	$	55,548	$	68,748	$	68,748
Securities available for sale	137,133		137,133		129,422		129,422
Restricted investments	5,628		N/A		5,628		N/A
Loans, net	802,387		795,077		808,271		803,057
Liabilities:
Noninterest-bearing demand deposits	160,673		160,673		153,483		153,483
Interest-bearing demand deposits	167,433		167,433		162,702		162,702
Money Market and Savings deposits	274,993		274,993		274,605		274,605
Time deposits	286,600		286,414		316,275		316,734
Securities sold under agreements to repurchase	23,153		23,153		26,622		26,622
Federal Home Loan Bank advances and other borrowings	60		60		18,505		18,505

Limitations

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on many judgments. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets and liabilities that are not considered financial instruments include deferred income taxes and premises and equipment. In addition,

the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

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Small Business Lending Fund

3 Months Ended

Mar. 31, 2017

Small Business Lending Fund [Abstract]

Small Business Lending Fund

Small Business Lending Fund

During 2011, the Company issued to the Secretary of the Treasury 12,000 shares of preferred stock at $1,000 per share under the Small Business Lending Fund Program (the "SBLF Program"). Subject to regulatory approval, the Company may redeem the preferred stock for $1,000 per share, plus accrued and unpaid dividends, in whole or in part at any time. The SBLF Program is a voluntary program authorized under the Business Jobs Acts of 2010, whereby the United States Treasury can make capital investments in eligible institutions; the capital investments, in turn, are designed to increase the availability of credit for small businesses and promote economic growth by providing capital to qualified community banks at favorable rates. The Company paid cash dividends at a one percent rate or $120,000 for the year ended December 31, 2015. On February 4, 2016 the dividend rate for the preferred shares increased to nine percent and as a result the company incurred preferred stock dividends of $1,022,000 for the year ended December 31, 2016 .

On January 30, 2017, the Company completed a public offering of 2,010,084 million shares of its common stock, par value $1.00 per share, with the net proceeds to the Company of approximately $33.2 million. Subsequent to the public offering the Company used proceeds from the offering to redeem the $12 million of preferred stock and pay the $195 thousand accrued dividend on March 6, 2017.

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Presentation of Financial Information (Policies)

3 Months Ended

Mar. 31, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Business

Nature of Business:

SmartFinancial, Inc. (the “Company”) is a bank holding company whose principal activity is the ownership and management of its wholly-owned subsidiary, SmartBank (the “Bank”). The Company provides a variety of financial services to individuals and corporate customers through its offices in eastern Tennessee, northwest Florida, and north Georgia. The Company’s primary deposit products are interest-bearing demand deposits and certificates of deposit. Its primary lending products are commercial, residential, and consumer loans.

Interim Financial Information (Unaudited)

Interim Financial Information (Unaudited):

The financial information in this report for March 31, 2017 and March 31, 2016 has not been audited. The information included herein should be read in conjunction with the Company’s 2016 annual consolidated financial statements and footnotes included elsewhere. The consolidated financial statements presented herein conform to U.S. generally accepted accounting principles and to general industry practices. In the opinion of SmartFinancial’s management, the accompanying interim financial statements contain all material adjustments necessary to present fairly the financial condition, the results of operations, and cash flows for the interim period. Results for interim periods are not necessarily indicative of the results to be expected for a full year.

Basis of Presentation and Accounting Estimates

Basis of Presentation and Accounting Estimates:

All adjustments consisting of normal recurring accruals, that in the opinion of management, are necessary for a fair presentation of the financial position and the results of operations for the periods covered by the report have been included. The accompanying unaudited consolidated financial statements and related notes should be read in conjunction with those appearing the in the 2016 Annual Report previously filed on Form 10-K.

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation.

In preparing the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet, and 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 the determination of the allowance for loan losses, the valuation of foreclosed assets and deferred taxes, other-than-temporary impairments of securities, and the fair value of financial instruments.

The determination of the adequacy of the allowance for loan losses is based on estimates that are particularly susceptible to significant changes in the economic environment and market conditions. In connection with the determination of the estimated losses on loans, management obtains independent appraisals for significant collateral.

The Company’s loans are generally secured by specific items of collateral including real property, consumer assets, and business assets. Although the Company has a diversified loan portfolio, a substantial portion of its debtors’ ability to honor their contracts is dependent on local economic conditions.

While management uses available information to recognize losses on loans, further reductions in the carrying amounts of loans may be necessary based on changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the estimated losses on loans. Such agencies may require the Company to recognize additional losses based on their judgments about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the estimated losses on loans may change materially in the near term. However, the amount of the change that is reasonably possible cannot be estimated.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements:

During interim periods, the Company follows the accounting policies set forth in its annual audited financial statements for the year ended December 31, 2016 as filed with the Securities and Exchange Commission. The following is a summary of recent authoritative pronouncements not yet effective that could impact the accounting, reporting, and/or disclosure of financial information by the Company issued since December 31, 2016.

In January 2017, FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The ASU clarifies the definition of a business to assist with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company does not expect these amendments to have a material effect on its financial statements.

In January 2017, FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The ASU simplifies the subsequent measurement of goodwill and eliminates Step 2 from the goodwill impairment test. The Company should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value. The impairment charge is limited to the amount of goodwill allocated to that reporting unit. The amendments in this update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect these amendments to have a material effect on its financial statements.

In March 2017, FASB issued ASU No. 2017-08, Receivables - Nonrefundable Fees and Other Costs (Topic 310-20): Premium Amortization on Purchased Callable Debt Securities. The ASU shortens the amortization period for certain callable debt securities held at a premium. The premium on individual callable debt securities shall be amortized to the earliest call date. This guidance does not apply to securities for which prepayments are estimated on a large number of similar loans where prepayments are probable and reasonably estimable. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. This update should be adopted on a modified retrospective basis with a cumulative-effect adjustment to retained earnings on the date of adoption. The Company does not expect these amendments to have a material effect on its financial statements.

Earnings Per Common Share

Earnings per common share:

Basic earnings per common share represents income available to common stockholders divided by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate solely to outstanding stock options and are determined using the treasury stock method.

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Earnings per share (Tables)

3 Months Ended

Mar. 31, 2017

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following is a summary of the basic and diluted earnings per share for the three month periods ended March 31, 2017 and March 31, 2016.

	Three Months Ended March 31,
	2017		2016
Net income available to common shareholders	$	1,448,851	$	1,136,863
Weighted average common shares outstanding	7,524,830		5,807,488
Effect of dilutive stock options	106,389		300,599
Diluted shares	7,631,219		6,108,087
Basic earnings per common share	$	0.19	$	0.20
Diluted earnings per common share	$	0.19	$	0.19

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Securities (Tables)

3 Months Ended

Mar. 31, 2017

Investments, Debt and Equity Securities [Abstract]

Schedule of Available-For-Sale Securities Reconciliation

The amortized cost and fair value of securities available-for-sale at March 31, 2017 and December 31, 2016 are summarized as follows (in thousands):

	March 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government-sponsored enterprises (GSEs)	$	18,261	$	5	$	(468	)	$	17,798
Municipal securities	8,434		23		(119		)	8,338
Other debt securities	972		—		(26		)	946
Mortgage-backed securities	110,573		228		(750		)	110,051
	$	138,240	$	256	$	(1,363	)	$	137,133

	December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government-sponsored enterprises (GSEs)	$	18,279	$	8	$	(564	)	$	17,723
Municipal securities	8,182		16		(179		)	8,019
Mortgage-backed securities	104,585		185		(1,090		)	103,680
	$	131,046	$	209	$	(1,833	)	$	129,422

Investments Classified by Contractual Maturity Date

The amortized cost and estimated fair value of securities at March 31, 2017, by contractual maturity, are shown below (in thousands). Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost		Fair Value
Due in one year or less	$	3,011	$	3,011
Due from one year to five years	12,391		12,048
Due from five years to ten years	8,543		8,341
Due after ten years	3,722		3,682
	27,667		27,082
Mortgage-backed securities	110,573		110,051
	$	138,240	$	137,133

Schedule of Unrealized Loss on Investments

The following tables present the gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities available-for-sale have been in a continuous unrealized loss position, as of March 31, 2017 and December 31, 2016 (in thousands):

	As of March 31, 2017
	Less than 12 Months			12 Months or Greater			Total
	Fair Value	Gross Unrealized Losses		Fair Value	Gross Unrealized Losses		Fair Value	Gross Unrealized Losses
U.S. Government- sponsored enterprises (GSEs)	14,379	(468	)	—	—		14,379	(468	)
Municipal securities	5,115	(118	)	254	(1	)	5,369	(119	)
Other debt securities	945	(26	)	—	—		945	(26	)
Mortgage-backed securities	62,827	(380	)	12,129	(370	)	74,956	(750	)
	83,266	(992	)	12,383	(371	)	95,649	(1,363	)

	As of December 31, 2016
	Less than 12 Months					12 Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. Government- sponsored enterprises (GSEs)	$	14,702	$	(564	)	$	—	$	—		$	14,702	$	(564	)
Municipal securities	6,368		(179		)	—		—			6,368		(179		)
Mortgage-backed securities	67,063		(690		)	8,948		(400		)	76,011		(1,090		)
	$	88,133	$	(1,433	)	$	8,948	$	(400	)	$	97,081	$	(1,833	)

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Loans and Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2017

Receivables [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable

At March 31, 2017 and December 31, 2016, loans are summarized as follows (in thousands):

	March 31, 2017								December 31, 2016
	PCI Loans		All Other Loans			Total			PCI  Loans		All Other Loans			Total
Commercial real estate	$	14,683	$	393,216		$	407,899		$	14,943	$	400,265		$	415,208
Consumer real estate	8,874		177,471			186,345			9,004		178,798			187,802
Construction and land development	1,506		114,168			115,674			1,678		116,191			117,869
Commercial and industrial	1,538		89,169			90,707			1,568		83,454			85,022
Consumer and other	—		6,914			6,914			—		7,475			7,475
Total loans	26,601		780,938			807,539			27,193		786,183			813,376
Less:  Allowance for loan losses	—		(5,152		)	(5,152		)	—		(5,105		)	(5,105		)
Loans, net	$	26,601	$	775,786		$	802,387		$	27,193	$	781,078		$	808,271

Schedule of Impaired and Performing Loans Receivable

The composition of loans by loan classification for impaired and performing loan status at March 31, 2017 and December 31, 2016, is summarized in the tables below (amounts in thousands):

	March 31, 2017
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Performing loans	$	392,978	$	176,478	$	113,534	$	88,960	$	6,914	$	778,864
Impaired loans	238		993		634		209		—		2,074
	393,216		177,471		114,168		89,169		6,914		780,938
PCI loans	14,683		8,874		1,506		1,538		—		26,601
Total	$	407,899	$	186,345	$	115,674	$	90,707	$	6,914	$	807,539

	December 31, 2016
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Performing loans	$	400,146	$	177,977	$	115,326	$	83,244	$	7,475	$	784,168
Impaired loans	119		821		865		210		—		2,015
	400,265		178,798		116,191		83,454		7,475		786,183
PCI loans	14,943		9,004		1,678		1,568		—		27,193
Total loans	$	415,208	$	187,802	$	117,869	$	85,022	$	7,475	$	813,376

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

The following tables show the allowance for loan losses allocation by loan classification for impaired, PCI, and performing loans as of March 31, 2017 and December 31, 2016 (amounts in thousands):

	March 31, 2017
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Performing loans	$	2,329	$	1,398	$	706	$	554	$	93	$	5,080
Impaired loans	—		68		—		4		—		72
Total	$	2,329	$	1,466	$	706	$	558	$	93	$	5,152

	December 31, 2016
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Performing loans	$	2,369	$	1,382	$	717	$	516	$	117	$	5,101
Impaired loans	—		—		—		4		—		4
Total	$	2,369	$	1,382	$	717	$	520	$	117	$	5,105

Schedule of Financing Receivable Allowance for Credit Losses

The following tables detail the changes in the allowance for loan losses for the three month period ending March 31, 2017 and year ending December 31, 2016, by loan classification (amounts in thousands):

	March 31, 2017
	Commercial Real Estate			Consumer Real Estate		Construction and Land Development			Commercial and Industrial			Consumer and Other			Total
Beginning balance	$	2,369		$	1,382	$	717		$	520		$	117		$	5,105
Loans charged off	—			—		—			(3		)	(22		)	(25		)
Recoveries of loans charged off	5			17		5			16			17			60
Provision (reallocation) charged to operating expense	(45		)	67		(16		)	25			(19		)	12
Ending balance	$	2,329		$	1,466	$	706		$	558		$	93		$	5,152

	December 31, 2016
	Commercial Real Estate		Consumer Real Estate			Construction and Land Development			Commercial and Industrial			Consumer and Other			Total
Beginning balance	$	1,906	$	1,015		$	627		$	777		$	29		$	4,354
Loans charged off	—		(102		)	(14		)	(35		)	(155		)	(306		)
Recoveries of charge-offs	45		76			22			58			68			269
Provision (reallocation) charged to operating expense	418		393			82			(280		)	175			788
Ending balance	$	2,369	$	1,382		$	717		$	520		$	117		$	5,105

Financing Receivable Credit Quality Indicators

The following tables outline the amount of each loan classification and the amount categorized into each risk rating as of March 31, 2017 and December 31, 2016 (amounts in thousands):

Non PCI Loans

	March 31, 2017
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Pass	$	392,338	$	176,001	$	113,447	$	88,723	$	6,685	$	777,194
Watch	635		514		87		237		—		1,473
Special mention	—		103		—		—		229		332
Substandard	243		853		634		209		—		1,939
Doubtful	—		—		—		—		—		—
Total	$	393,216	$	177,471	$	114,168	$	89,169	$	6,914	$	780,938

PCI Loans

	March 31, 2017
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Pass	$	11,617	$	6,816	$	848	$	1,309	$	—	$	20,590
Watch	890		1,280		645		19		—		2,834
Special mention	—		—		—		183		—		183
Substandard	2,176		778		13		—		—		2,967
Doubtful	—		—		—		27		—		27
Total	$	14,683	$	8,874	$	1,506	$	1,538	$	—	$	26,601
Total loans	$	407,899	$	186,345	$	115,674	$	90,707	$	6,914	$	807,539

Non PCI Loans

	December 31, 2016
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Pass	$	399,505	$	177,466	$	115,237	$	82,992	$	7,238	$	782,438
Watch	640		550		89		252		—		1,531
Special mention	—		104		—		—		237		341
Substandard	120		678		865		210		—		1,873
Doubtful	—		—		—		—		—		—
Total	$	400,265	$	178,798	$	116,191	$	83,454	$	7,475	$	786,183

Note 4. Loans and Allowance for Loan Losses, Continued

Credit Risk Management (continued):

PCI Loans

	December 31, 2016
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Pass	$	11,836	$	6,811	$	1,019	$	1,507	$	—	$	21,173
Watch	1,045		1,577		645		22		—		3,289
Special mention	—		—		—		12		—		12
Substandard	2,062		616		14		—		—		2,692
Doubtful	—		—		—		27		—		27
Total	$	14,943	$	9,004	$	1,678	$	1,568	$	—	$	27,193
Total loans	$	415,208	$	187,802	$	117,869	$	85,022	$	7,475	$	813,376

Past Due Financing Receivables

The following tables present the aging of the recorded investment in loans as of March 31, 2017 and December 31, 2016 (amounts in thousands): 

	March 31, 2017
	30-89 Days  Past Due and Accruing		Past Due 90  Days or More and Accruing		Nonaccrual		Total  Past Due and NonAccrual		PCI Loans		Current Loans		Total Loans
Commercial real estate	$	196	$	—	$	124	$	320	$	14,683	$	392,896	$	407,899
Consumer real estate	1,180		—		523		1,703		8,874		175,768		186,345
Construction and land development	34		—		634		668		1,506		113,500		115,674
Commercial and industrial	359		27		164		550		1,538		88,619		90,707
Consumer and other	20		—		—		20		—		6,894		6,914
Total	$	1,789	$	27	$	1,445	$	3,261	$	26,601	$	777,677	$	807,539

Note 4. Loans and Allowance for Loan Losses, Continued

Past Due Loans (continued):

	December 31, 2016
	30-89 Days Past Due and Accruing		Past Due 90 Days or More and Accruing		Nonaccrual		Total Past Due and NonAccrual		PCI Loans		Current Loans		Total Loans
Commercial real estate	$	395	$	—	$	—	$	395	$	14,943	$	399,870	$	415,208
Consumer real estate	695		699		386		1,780		9,004		177,018		187,802
Construction and land development	690		—		865		1,555		1,678		114,636		117,869
Commercial and industrial	257		—		164		421		1,568		83,033		85,022
Consumer and other	17		—		—		17		—		7,458		7,475
Total	$	2,054	$	699	$	1,415	$	4,168	$	27,193	$	782,015	$	813,376

Impaired Financing Receivables

The following is an analysis of the impaired loan portfolio, excluding PCI loans, detailing the related allowance recorded as of March 31, 2017 and December 31, 2016 (amounts in thoudands):  

							For the three months ended
	At March 31, 2017						March 31, 2017
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans without a valuation allowance:
Commercial real estate	$	238	$	241	$	—	$	179	$	3
Consumer real estate	368		383		—		595		6
Construction and land development	634		634		—		750		—
Commercial and industrial	45		45		—		46		1
Consumer and other	—		—		—		—		—
	1,285		1,303		—		1,570		10
Impaired loans with a valuation allowance:
Commercial real estate	—		—		—		—		—
Consumer real estate	625		644		68		313		5
Construction and land development	—		—		—		—		—
Commercial and industrial	164		243		4		164		—
Consumer and other	—		—		—		—		—
	789		887		72		477		5
Total impaired loans	$	2,074	$	2,190	$	72	$	2,047	$	15

Note 4. Loans and Allowance for Loan Losses, Continued

Impaired Loans (continued):

							For the year ended
	At December 31, 2016						December 31, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans without a valuation allowance:
Commercial real estate	$	119	$	119	$	—	$	1,311	$	73
Consumer real estate	821		849		—		2,334		100
Construction and land development	865		865		—		967		3
Commercial and industrial	46		46		—		47		4
Consumer and other	—		—		—		—		—
	1,851		1,879		—		4,659		180
Impaired loans with a valuation allowance:
Commercial real estate	—		—		—		—		—
Consumer real estate	—		—		—		—		—
Construction and land development	—		—		—		—		—
Commercial and industrial	164		243		4		306		70
Consumer and other	—		—		—		—		—
	164		243		4		306		70
Total impaired loans	$	2,015	$	2,122	$	4	$	4,965	$	250

Troubled Debt Restructurings on Financing Receivables

The following table presents a summary of loans that were modified as troubled debt restructurings during the three month period ended March 31, 2017 (amounts in thousands):

		Pre-Modification Outstanding Recorded		Post-Modification Outstanding Recorded
March 31, 2017	Number of Contracts	Investment		Investment
Consumer real estate	1	$	138	$	138

The following table presents a summary of loans that were modified as troubled debt restructurings during the twelve month period ended December 31, 2016 (amounts in thousands):

		Pre-Modification Outstanding Recorded		Post-Modification Outstanding Recorded
December 31, 2016	Number of Contracts	Investment		Investment
Construction and land development	1	$	278	$	278
Commercial and industrial	1	$	164	$	164

Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period, Carrying Amount of Loans

The Company has acquired loans which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of those loans as of is as follows:

	March 31, 2017			December 31, 2016
Commercial real estate	$	18,105		$	18,473
Consumer real estate	11,954			12,111
Construction and land development	2,364			2,553
Commercial and industrial	2,380			2,482
Consumer and other	—			—
Total loans	34,803			35,619
Less remaining purchase discount	(8,202		)	(8,426		)
Total loans, net of purchase discount	26,601			27,193
Less: Allowance for loan losses	—			—
Carrying amount, net of allowance	$	26,601		$	27,193

Schedule of Certain Loans Acquired in Transfer Accounted for as Debt Securities, Accretable Yield Movement

Activity related to the accretable portion of the purchase discount on loans acquired with deteriorated credit quality is as follows for the three months period ended March 31, 2017 and 2016:

Note 4. Loans and Allowance for Loan Losses, Continued

Purchased Credit Impaired Loans (continued):

	Three Months Ended March 31, 2017			Three Months Ended March 31, 2016
Accretable yield, beginning of period	$	8,950		$	10,216
Additions	—			—
Accretion income	(697		)	(629		)
Reclassification to accretable	244			(41		)
Other changes, net	(15		)	60
Accretable yield	$	8,482		$	9,606

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Employee Benefit Plans (Tables)

3 Months Ended

Mar. 31, 2017

Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]

Schedule of Share-based Compensation, Stock Options, Activity

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

	Number		Weighted Average Exercisable Price
Outstanding at December 31, 2016	717,524		$	10.57
Exercised	(473,558	)	9.61
Forfeited	(18,524	)	20.27
Outstanding at March 31, 2017	225,442		$	11.78

	Number		Weighted Average Exercisable Price
Outstanding at December 31, 2015	817,414		$	10.62
Exercised	(89,556	)	8.98
Forfeited	(10,334	)	28.49
Outstanding at December 31, 2016	717,524		$	10.57

Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range

Information pertaining to options outstanding at March 31, 2017, is as follows: 

		Options Outstanding				Options Exercisable
			Weighted- Average Remaining	Weighted- Average			Weighted- Average
Exercise		Number	Contractual	Exercise		Number	Exercise
Prices		Outstanding	Life	Price		Exercisable	Price
$	6.20	750	4.0 years	$	6.20	750	$	6.20
6.60		41,500	5.0 years	6.60		41,500	6.60
6.80		19,375	3.9 years	6.80		19,375	6.80
9.48		29,375	5.9 years	9.48		29,375	9.48
9.52		525	0.3 years	9.52		525	9.52
9.60		37,625	6.9 years	9.60		37,625	9.60
10.48		20,513	0.4 years	10.48		20,513	10.48
11.67		3,250	3.8 years	11.67		3,250	11.67
14.40		15,180	1.9 years	14.40		15,180	14.40
15.05		42,745	8.5 years	15.05		4,104	15.05
31.96		13,916	0.9 years	31.96		13,916	31.96
60.80		688	0.1 years	60.80		688	60.80
Outstanding, end of period		225,442	5.1 years	11.78		186,801	11.11

Schedule Of Share Based Compensation Arrangement By Share Based Payment Award Options Non Vested

Information related to non-vested options for the period ended March 31, 2017, is as follows: 

	Number		Weighted Average Grant-Date Fair Value
Nonvested at December 31, 2016	47,970		$	12.31
Granted	—		—
Vested	—		—
Forfeited/expired	(9,329	)	12.31
Nonvested at March 31, 2017	38,641		$	12.31

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Commitments and Contingent Liabilities (Tables)

3 Months Ended

Mar. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

Other Commitments

A summary of the Bank’s total contractual amount for all off-balance sheet commitments at March 31, 2017 is as follows:

Commitments to extend credit	$	133.4	million
Standby letters of credit	$	2.9	million

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Fair Value Disclosures (Tables)

3 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

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

Assets and liabilities recorded at fair value on a recurring basis are as follows (in thousands): 

	Balance as of March 31, 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Debt securities available-for-sale:
U.S. Government-sponsored enterprises (GSEs)	$	17,798	$	—	$	17,798	$	—
Mortgage-backed securities	110,051		—		110,051		—
Other debt securities	946				946
Municipal securities	8,338		—		8,338		—
Total securities available-for-sale	$	137,133	$	—	$	137,133	$	—

	Balance as of December 31, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Debt securities available-for-sale:
U.S. Government-sponsored enterprises (GSEs)	$	17,723	$	—	$	17,723	$	—
Mortgage-backed securities:	103,680		—		103,680		—
Municipal securities	8,019		—		8,019		—
Total securities available-for-sale	$	129,422	$	—	$	129,422	$	—

Fair Value, Assets and Liabilities Measured on Non-Recurring Basis

	Balance as of March 31, 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Impaired loans	$	717	$	—	$	—	$	717
Foreclosed assets	2,371		—		—		2,371

Note 7. Fair Value Disclosures, Continued

Assets Measured at Fair Value on a Nonrecurring Basis (continued):

	Balance as of December 31, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Impaired loans	$	239	$	—	$	—	$	239
Foreclosed assets	2,386		—		—		2,386

Fair Value, Assets Measured On Non-Recurring Basis, Unobservable Input Reconciliation

For Level 3 assets measured at fair value on a non-recurring basis as of March 31, 2017 and December 31, 2016 a, the significant unobservable inputs used in the fair value measurements are presented below (in thousands).

	Balance as of March 31, 2017		Valuation Technique	Significant Other Unobservable Input	Weighted Average of Input
Impaired loans	$	717	Appraisal	Discounted Cash Flow / Appraisal Discounts	9.1	%
Foreclosed assets	2,371		Appraisal	Appraisal Discounts	22.5	%

	Balance as of December 31, 2016 (in thousands)		Valuation Technique	Significant Other Unobservable Input	Weighted Average of Input
Impaired loans	$	239	Cash Flow	Discounted Cash Flow / Appraisal Discounts	2.4	%
Foreclosed assets	2,386		Appraisal	Appraisal Discounts	12.2	%

Fair Value, by Balance Sheet Grouping

The carrying amount and estimated fair value of the Company’s financial instruments at March 31, 2017 and December 31, 2016 are as follows (in thousands):

	March 31, 2017				December 31, 2016
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Cash and cash equivalents	$	55,548	$	55,548	$	68,748	$	68,748
Securities available for sale	137,133		137,133		129,422		129,422
Restricted investments	5,628		N/A		5,628		N/A
Loans, net	802,387		795,077		808,271		803,057
Liabilities:
Noninterest-bearing demand deposits	160,673		160,673		153,483		153,483
Interest-bearing demand deposits	167,433		167,433		162,702		162,702
Money Market and Savings deposits	274,993		274,993		274,605		274,605
Time deposits	286,600		286,414		316,275		316,734
Securities sold under agreements to repurchase	23,153		23,153		26,622		26,622
Federal Home Loan Bank advances and other borrowings	60		60		18,505		18,505

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Earnings per share (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Earnings Per Share [Abstract]
Net income available to common shareholders	$ 1,448,851	$ 1,136,863
Weighted average common shares outstanding	7,524,830	5,807,488
Effect of dilutive stock options (in shares)	106,389	300,599
Diluted shares	7,631,219	6,108,087
Basic earnings per common share (in dollars per share)	$ 0.19	$ 0.20
Diluted earnings per common share (in dollars per share)	$ 0.19	$ 0.19

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Earnings per share - Narrative (Details) - shares	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Earnings Per Share [Abstract]
Antidilutive securities excluded from computation of earnings per share (in shares)	14,604	18,100

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Securities - Amortized Cost and Fair Value of Available-for-sale Securities (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Debt securities available-for-sale:
Amortized Cost	$ 138,240	$ 131,046
Gross Unrealized Gains	256	209
Gross Unrealized Losses	(1,363)	(1,833)
Fair Value	137,133	129,422
U.S. Government-sponsored enterprises (GSEs) [Member]
Debt securities available-for-sale:
Amortized Cost	18,261	18,279
Gross Unrealized Gains	5	8
Gross Unrealized Losses	(468)	(564)
Fair Value	17,798	17,723
Municipal securities [Member]
Debt securities available-for-sale:
Amortized Cost	8,434	8,182
Gross Unrealized Gains	23	16
Gross Unrealized Losses	(119)	(179)
Fair Value	8,338	8,019
Other debt securities [Member]
Debt securities available-for-sale:
Amortized Cost	972
Gross Unrealized Gains	0
Gross Unrealized Losses	(26)
Fair Value	946
Mortgage-backed securities [Member]
Debt securities available-for-sale:
Amortized Cost	110,573	104,585
Gross Unrealized Gains	228	185
Gross Unrealized Losses	(750)	(1,090)
Fair Value	$ 110,051	$ 103,680

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Securities - Available-for-sale Securities by Contractual Maturity (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Amortized Cost
Securities Available for Sale, Due in one year or less, Amortized Cost	$ 3,011,000
Securities Available for Sale, Due from one year to five years, Amortized Cost	12,391,000
Securities Available for Sale, Due from five years to ten years, Amortized Cost	8,543,000
Securities Available for Sale, Due after ten years, Amortized Cost	3,722,000
Securities Available for Sale, Debt Securities, Amortized Cost	27,667,000
Securities Available for Sale, Mortgage-backed securities, Amortized Cost	110,573,000
Amortized Cost	138,240,000	$ 131,046,000
Fair Value
Securities Available for Sale, Due in one year or less, Fair Value	3,011,000
Securities Available for Sale, Due from one year to five years, Fair Value	12,048,000
Securities Available for Sale, Due from five years to ten years, Fair Value	8,341,000
Securities Available for Sale, Due after ten years, Fair Value	3,682,000
Securities Available for Sale, Debt Securities, Fair Value	27,082,000
Securities Available for Sale, Mortgage-backed securities, Fair Value	110,051,000
Securities Available for Sale, Fair Value	$ 137,132,626	$ 129,421,914

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Securities - Available-for-sale Securities in Continuous Loss Position (Details) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2017 USD ($) investment	Dec. 31, 2016 USD ($)
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	$ 83,266	$ 88,133
Less than 12 Months, Gross Unrealized Losses	(992)	(1,433)
12 Months or Greater, Fair Value	12,383	8,948
12 Months or Greater, Gross Unrealized Losses	(371)	(400)
Total, Fair Value	95,649	97,081
Total, Gross Unrealized Losses	(1,363)	(1,833)
U.S. Government-sponsored enterprises (GSEs) [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	14,379	14,702
Less than 12 Months, Gross Unrealized Losses	(468)	(564)
12 Months or Greater, Fair Value	0	0
12 Months or Greater, Gross Unrealized Losses	0	0
Total, Fair Value	14,379	14,702
Total, Gross Unrealized Losses	$ (468)	(564)
Number of investments in unrealized loss positions | investment	5
Municipal securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	$ 5,115	6,368
Less than 12 Months, Gross Unrealized Losses	(118)	(179)
12 Months or Greater, Fair Value	254	0
12 Months or Greater, Gross Unrealized Losses	(1)	0
Total, Fair Value	5,369	6,368
Total, Gross Unrealized Losses	$ (119)	(179)
Number of investments in unrealized loss positions | investment	13
Other debt securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	$ 945
Less than 12 Months, Gross Unrealized Losses	(26)
12 Months or Greater, Fair Value	0
12 Months or Greater, Gross Unrealized Losses	0
Total, Fair Value	945
Total, Gross Unrealized Losses	$ (26)
Number of investments in unrealized loss positions | investment	1
Mortgage-backed securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	$ 62,827	67,063
Less than 12 Months, Gross Unrealized Losses	(380)	(690)
12 Months or Greater, Fair Value	12,129	8,948
12 Months or Greater, Gross Unrealized Losses	(370)	(400)
Total, Fair Value	74,956	76,011
Total, Gross Unrealized Losses	$ (750)	$ (1,090)
Number of investments in unrealized loss positions | investment	57

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Securities - Narrative (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2017
Investments, Debt and Equity Securities [Abstract]
Available-for-sale securities pledged as collateral		$ 81,068,000
Proceeds from sale of available-for-sale securities	$ 5,072,500
Gains from sale of securities	83,263
Losses from sale of securities	$ 0

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Loans and Allowance for Loan Losses - Loan Summary (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 807,539,000	$ 813,376,000
Less: Allowance for loan losses	(5,152,000)	(5,105,000)	$ (4,354,000)
Loans, net	802,387,400	808,271,003
Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	26,601,000	27,193,000
Less: Allowance for loan losses	0	0
Loans, net	26,601,000	27,193,000
All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	780,938,000	786,183,000
Less: Allowance for loan losses	(5,152,000)	(5,105,000)
Loans, net	775,786,000	781,078,000
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	407,899,000	415,208,000
Less: Allowance for loan losses	(2,329,000)	(2,369,000)	(1,906,000)
Commercial Real Estate [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	14,683,000	14,943,000
Commercial Real Estate [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	393,216,000	400,265,000
Consumer Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	186,345,000	187,802,000
Less: Allowance for loan losses	(1,466,000)	(1,382,000)	(1,015,000)
Consumer Real Estate [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	8,874,000	9,004,000
Consumer Real Estate [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	177,471,000	178,798,000
Construction and Land Development [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	115,674,000	117,869,000
Less: Allowance for loan losses	(706,000)	(717,000)	(627,000)
Construction and Land Development [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	1,506,000	1,678,000
Construction and Land Development [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	114,168,000	116,191,000
Commercial and Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	90,707,000	85,022,000
Less: Allowance for loan losses	(558,000)	(520,000)	(777,000)
Commercial and Industrial [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	1,538,000	1,568,000
Commercial and Industrial [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	89,169,000	83,454,000
Consumer and Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	6,914,000	7,475,000
Less: Allowance for loan losses	(93,000)	(117,000)	$ (29,000)
Consumer and Other [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	0	0
Consumer and Other [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 6,914,000	$ 7,475,000

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Loans and Allowance for Loan Losses - Performing and Impaired Loans (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 807,539	$ 813,376
All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	780,938	786,183
Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	26,601	27,193
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	407,899	415,208
Commercial Real Estate [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	393,216	400,265
Commercial Real Estate [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	14,683	14,943
Consumer Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	186,345	187,802
Consumer Real Estate [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	177,471	178,798
Consumer Real Estate [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	8,874	9,004
Construction and Land Development [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	115,674	117,869
Construction and Land Development [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	114,168	116,191
Construction and Land Development [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	1,506	1,678
Commercial and Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	90,707	85,022
Commercial and Industrial [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	89,169	83,454
Commercial and Industrial [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	1,538	1,568
Consumer and Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	6,914	7,475
Consumer and Other [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	6,914	7,475
Consumer and Other [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	0	0
Performing [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	778,864	784,168
Performing [Member] | Commercial Real Estate [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	392,978	400,146
Performing [Member] | Consumer Real Estate [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	176,478	177,977
Performing [Member] | Construction and Land Development [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	113,534	115,326
Performing [Member] | Commercial and Industrial [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	88,960	83,244
Performing [Member] | Consumer and Other [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	6,914	7,475
Impaired Loans [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	2,074	2,015
Impaired Loans [Member] | Commercial Real Estate [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	238	119
Impaired Loans [Member] | Consumer Real Estate [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	993	821
Impaired Loans [Member] | Construction and Land Development [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	634	865
Impaired Loans [Member] | Commercial and Industrial [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	209	210
Impaired Loans [Member] | Consumer and Other [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 0	$ 0

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Loans and Allowance for Loan Losses - ALL by Loan Classification (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	$ 5,152	$ 5,105	$ 4,354
All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	5,152	5,105
Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	0	0
Performing [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	5,080	5,101
Impaired Loans [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	72	4
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	2,329	2,369	1,906
Commercial Real Estate [Member] | Performing [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	2,329	2,369
Commercial Real Estate [Member] | Impaired Loans [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	0	0
Consumer Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	1,466	1,382	1,015
Consumer Real Estate [Member] | Performing [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	1,398	1,382
Consumer Real Estate [Member] | Impaired Loans [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	68	0
Construction and Land Development [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	706	717	627
Construction and Land Development [Member] | Performing [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	706	717
Construction and Land Development [Member] | Impaired Loans [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	0	0
Commercial and Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	558	520	777
Commercial and Industrial [Member] | Performing [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	554	516
Commercial and Industrial [Member] | Impaired Loans [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	4	4
Consumer and Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	93	117	$ 29
Consumer and Other [Member] | Performing [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	93	117
Consumer and Other [Member] | Impaired Loans [Member] | All Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	$ 0	$ 0

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Loans and Allowance for Loan Losses - ALL Roll Forward (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	$ 5,105,000	$ 4,354,000	$ 4,354,000
Loans charged off	(25,000)		(306,000)
Recoveries of loans charged off	60,000		269,000
Provision (reallocation) charged to operating expense	12,450	137,557	788,000
Ending balance	5,152,000		5,105,000
Commercial Real Estate [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	2,369,000	1,906,000	1,906,000
Loans charged off	0		0
Recoveries of loans charged off	5,000		45,000
Provision (reallocation) charged to operating expense	(45,000)		418,000
Ending balance	2,329,000		2,369,000
Consumer Real Estate [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	1,382,000	1,015,000	1,015,000
Loans charged off	0		(102,000)
Recoveries of loans charged off	17,000		76,000
Provision (reallocation) charged to operating expense	67,000		393,000
Ending balance	1,466,000		1,382,000
Construction and Land Development [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	717,000	627,000	627,000
Loans charged off	0		(14,000)
Recoveries of loans charged off	5,000		22,000
Provision (reallocation) charged to operating expense	(16,000)		82,000
Ending balance	706,000		717,000
Commercial and Industrial [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	520,000	777,000	777,000
Loans charged off	(3,000)		(35,000)
Recoveries of loans charged off	16,000		58,000
Provision (reallocation) charged to operating expense	25,000		(280,000)
Ending balance	558,000		520,000
Consumer and Other [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	117,000	$ 29,000	29,000
Loans charged off	(22,000)		(155,000)
Recoveries of loans charged off	17,000		68,000
Provision (reallocation) charged to operating expense	(19,000)		175,000
Ending balance	$ 93,000		$ 117,000

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Loans and Allowance for Loan Losses - Loan Risk Rating (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment [Line Items]
Total loans	$ 807,539	$ 813,376
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	407,899	415,208
Consumer Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	186,345	187,802
Construction and Land Development [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	115,674	117,869
Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	90,707	85,022
Consumer and Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	6,914	7,475
Non PCI Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	780,938	786,183
Non PCI Loans [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	777,194	782,438
Non PCI Loans [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,473	1,531
Non PCI Loans [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	332	341
Non PCI Loans [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,939	1,873
Non PCI Loans [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Non PCI Loans [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	393,216	400,265
Non PCI Loans [Member] | Commercial Real Estate [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	392,338	399,505
Non PCI Loans [Member] | Commercial Real Estate [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	635	640
Non PCI Loans [Member] | Commercial Real Estate [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Non PCI Loans [Member] | Commercial Real Estate [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	243	120
Non PCI Loans [Member] | Commercial Real Estate [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Non PCI Loans [Member] | Consumer Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	177,471	178,798
Non PCI Loans [Member] | Consumer Real Estate [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	176,001	177,466
Non PCI Loans [Member] | Consumer Real Estate [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	514	550
Non PCI Loans [Member] | Consumer Real Estate [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	103	104
Non PCI Loans [Member] | Consumer Real Estate [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	853	678
Non PCI Loans [Member] | Consumer Real Estate [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Non PCI Loans [Member] | Construction and Land Development [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	114,168	116,191
Non PCI Loans [Member] | Construction and Land Development [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	113,447	115,237
Non PCI Loans [Member] | Construction and Land Development [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	87	89
Non PCI Loans [Member] | Construction and Land Development [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Non PCI Loans [Member] | Construction and Land Development [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	634	865
Non PCI Loans [Member] | Construction and Land Development [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Non PCI Loans [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	89,169	83,454
Non PCI Loans [Member] | Commercial and Industrial [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	88,723	82,992
Non PCI Loans [Member] | Commercial and Industrial [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	237	252
Non PCI Loans [Member] | Commercial and Industrial [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Non PCI Loans [Member] | Commercial and Industrial [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	209	210
Non PCI Loans [Member] | Commercial and Industrial [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Non PCI Loans [Member] | Consumer and Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	6,914	7,475
Non PCI Loans [Member] | Consumer and Other [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	6,685	7,238
Non PCI Loans [Member] | Consumer and Other [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Non PCI Loans [Member] | Consumer and Other [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	229	237
Non PCI Loans [Member] | Consumer and Other [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Non PCI Loans [Member] | Consumer and Other [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Purchased Credit Impaired Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	26,601	27,193
Purchased Credit Impaired Loans [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	20,590	21,173
Purchased Credit Impaired Loans [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	2,834	3,289
Purchased Credit Impaired Loans [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	183	12
Purchased Credit Impaired Loans [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	2,967	2,692
Purchased Credit Impaired Loans [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	27	27
Purchased Credit Impaired Loans [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	14,683	14,943
Purchased Credit Impaired Loans [Member] | Commercial Real Estate [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	11,617	11,836
Purchased Credit Impaired Loans [Member] | Commercial Real Estate [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	890	1,045
Purchased Credit Impaired Loans [Member] | Commercial Real Estate [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Purchased Credit Impaired Loans [Member] | Commercial Real Estate [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	2,176	2,062
Purchased Credit Impaired Loans [Member] | Commercial Real Estate [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Purchased Credit Impaired Loans [Member] | Consumer Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	8,874	9,004
Purchased Credit Impaired Loans [Member] | Consumer Real Estate [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	6,816	6,811
Purchased Credit Impaired Loans [Member] | Consumer Real Estate [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,280	1,577
Purchased Credit Impaired Loans [Member] | Consumer Real Estate [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Purchased Credit Impaired Loans [Member] | Consumer Real Estate [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	778	616
Purchased Credit Impaired Loans [Member] | Consumer Real Estate [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Purchased Credit Impaired Loans [Member] | Construction and Land Development [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,506	1,678
Purchased Credit Impaired Loans [Member] | Construction and Land Development [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	848	1,019
Purchased Credit Impaired Loans [Member] | Construction and Land Development [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	645	645
Purchased Credit Impaired Loans [Member] | Construction and Land Development [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Purchased Credit Impaired Loans [Member] | Construction and Land Development [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	13	14
Purchased Credit Impaired Loans [Member] | Construction and Land Development [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Purchased Credit Impaired Loans [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,538	1,568
Purchased Credit Impaired Loans [Member] | Commercial and Industrial [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,309	1,507
Purchased Credit Impaired Loans [Member] | Commercial and Industrial [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	19	22
Purchased Credit Impaired Loans [Member] | Commercial and Industrial [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	183	12
Purchased Credit Impaired Loans [Member] | Commercial and Industrial [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Purchased Credit Impaired Loans [Member] | Commercial and Industrial [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	27	27
Purchased Credit Impaired Loans [Member] | Consumer and Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Purchased Credit Impaired Loans [Member] | Consumer and Other [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Purchased Credit Impaired Loans [Member] | Consumer and Other [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Purchased Credit Impaired Loans [Member] | Consumer and Other [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Purchased Credit Impaired Loans [Member] | Consumer and Other [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Purchased Credit Impaired Loans [Member] | Consumer and Other [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	$ 0	$ 0

XML

Loans and Allowance for Loan Losses - Past Due Loans (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	$ 1,445	$ 1,415
Total Past Due and NonAccrual	3,261	4,168
Current Loans	777,677	782,015
Total loans	807,539	813,376
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	124	0
Total Past Due and NonAccrual	320	395
Current Loans	392,896	399,870
Total loans	407,899	415,208
Consumer Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	523	386
Total Past Due and NonAccrual	1,703	1,780
Current Loans	175,768	177,018
Total loans	186,345	187,802
Construction and Land Development [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	634	865
Total Past Due and NonAccrual	668	1,555
Current Loans	113,500	114,636
Total loans	115,674	117,869
Commercial and Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	164	164
Total Past Due and NonAccrual	550	421
Current Loans	88,619	83,033
Total loans	90,707	85,022
Consumer and Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	0	0
Total Past Due and NonAccrual	20	17
Current Loans	6,894	7,458
Total loans	6,914	7,475
Purchased Credit Impaired Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	26,601	27,193
Purchased Credit Impaired Loans [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	14,683	14,943
Purchased Credit Impaired Loans [Member] | Consumer Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	8,874	9,004
Purchased Credit Impaired Loans [Member] | Construction and Land Development [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	1,506	1,678
Purchased Credit Impaired Loans [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	1,538	1,568
Purchased Credit Impaired Loans [Member] | Consumer and Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	0	0
30-89 Days Past Due and Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Recorded investment, past due	1,789	2,054
30-89 Days Past Due and Accruing [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Recorded investment, past due	196	395
30-89 Days Past Due and Accruing [Member] | Consumer Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Recorded investment, past due	1,180	695
30-89 Days Past Due and Accruing [Member] | Construction and Land Development [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Recorded investment, past due	34	690
30-89 Days Past Due and Accruing [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Recorded investment, past due	359	257
30-89 Days Past Due and Accruing [Member] | Consumer and Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Recorded investment, past due	20	17
Past Due 90 Days or More and Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Recorded investment, past due	27	699
Past Due 90 Days or More and Accruing [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Recorded investment, past due	0	0
Past Due 90 Days or More and Accruing [Member] | Consumer Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Recorded investment, past due	0	699
Past Due 90 Days or More and Accruing [Member] | Construction and Land Development [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Recorded investment, past due	0	0
Past Due 90 Days or More and Accruing [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Recorded investment, past due	27	0
Past Due 90 Days or More and Accruing [Member] | Consumer and Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Recorded investment, past due	$ 0	$ 0

XML

Loans and Allowance for Loan Losses - Impaired Loan Portfolio (Details) - Non PCI Loans [Member] - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Financing Receivable, Impaired [Line Items]
Impaired loans without a valuation allowance, Recorded Investment	$ 1,285	$ 1,851
Impaired loans without a valuation allowance, Unpaid Principal Balance	1,303	1,879
Impaired loans without a valuation allowance, Average Recorded Investment	1,570	4,659
Impaired loans without a valuation allowance, Interest Income Recognized	10	180
Impaired loans with a valuation allowance, Recorded Investment	789	164
Impaired loans with a valuation allowance, Unpaid Principal Balance	887	243
Impaired loans with a valuation allowance, Related Allowance	72	4
Impaired loans with a valuation allowance, Average Recorded Investment	477	306
Impaired loans with a valuation allowance, Interest Income Recognized	5	70
Total impaired loans, Recorded Investment	2,074	2,015
Total impaired loans, Unpaid Principal Balance	2,190	2,122
Total impaired loans, Average Recorded Investment	2,047	4,965
Total impaired loans, Interest Income Recognized	15	250
Commercial Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans without a valuation allowance, Recorded Investment	238	119
Impaired loans without a valuation allowance, Unpaid Principal Balance	241	119
Impaired loans without a valuation allowance, Average Recorded Investment	179	1,311
Impaired loans without a valuation allowance, Interest Income Recognized	3	73
Impaired loans with a valuation allowance, Recorded Investment	0	0
Impaired loans with a valuation allowance, Unpaid Principal Balance	0	0
Impaired loans with a valuation allowance, Related Allowance	0	0
Impaired loans with a valuation allowance, Average Recorded Investment	0	0
Impaired loans with a valuation allowance, Interest Income Recognized	0	0
Consumer Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans without a valuation allowance, Recorded Investment	368	821
Impaired loans without a valuation allowance, Unpaid Principal Balance	383	849
Impaired loans without a valuation allowance, Average Recorded Investment	595	2,334
Impaired loans without a valuation allowance, Interest Income Recognized	6	100
Impaired loans with a valuation allowance, Recorded Investment	625	0
Impaired loans with a valuation allowance, Unpaid Principal Balance	644	0
Impaired loans with a valuation allowance, Related Allowance	68	0
Impaired loans with a valuation allowance, Average Recorded Investment	313	0
Impaired loans with a valuation allowance, Interest Income Recognized	5	0
Construction and Land Development [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans without a valuation allowance, Recorded Investment	634	865
Impaired loans without a valuation allowance, Unpaid Principal Balance	634	865
Impaired loans without a valuation allowance, Average Recorded Investment	750	967
Impaired loans without a valuation allowance, Interest Income Recognized	0	3
Impaired loans with a valuation allowance, Recorded Investment	0	0
Impaired loans with a valuation allowance, Unpaid Principal Balance	0	0
Impaired loans with a valuation allowance, Related Allowance	0	0
Impaired loans with a valuation allowance, Average Recorded Investment	0	0
Impaired loans with a valuation allowance, Interest Income Recognized	0	0
Commercial and Industrial [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans without a valuation allowance, Recorded Investment	45	46
Impaired loans without a valuation allowance, Unpaid Principal Balance	45	46
Impaired loans without a valuation allowance, Average Recorded Investment	46	47
Impaired loans without a valuation allowance, Interest Income Recognized	1	4
Impaired loans with a valuation allowance, Recorded Investment	164	164
Impaired loans with a valuation allowance, Unpaid Principal Balance	243	243
Impaired loans with a valuation allowance, Related Allowance	4	4
Impaired loans with a valuation allowance, Average Recorded Investment	164	306
Impaired loans with a valuation allowance, Interest Income Recognized	0	70
Consumer and Other [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans without a valuation allowance, Recorded Investment	0	0
Impaired loans without a valuation allowance, Unpaid Principal Balance	0	0
Impaired loans without a valuation allowance, Average Recorded Investment	0	0
Impaired loans without a valuation allowance, Interest Income Recognized	0	0
Impaired loans with a valuation allowance, Recorded Investment	0	0
Impaired loans with a valuation allowance, Unpaid Principal Balance	0	0
Impaired loans with a valuation allowance, Related Allowance	0	0
Impaired loans with a valuation allowance, Average Recorded Investment	0	0
Impaired loans with a valuation allowance, Interest Income Recognized	$ 0	$ 0

XML

Loans and Allowance for Loan Losses - Troubled Debt Restructuring (Details) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2017 USD ($) contract	Dec. 31, 2016 USD ($) contract
Consumer Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	1
Pre-Modification Outstanding Recorded Investment	$ 138
Post-Modification Outstanding Recorded Investment	$ 138
Construction and Land Development [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract		1
Pre-Modification Outstanding Recorded Investment		$ 278
Post-Modification Outstanding Recorded Investment		$ 278
Commercial and Industrial [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract		1
Pre-Modification Outstanding Recorded Investment		$ 164
Post-Modification Outstanding Recorded Investment		$ 164

XML

Loans and Allowance for Loan Losses - Purchased Credit Impaired Loans (Details) - Purchased Credit Impaired Loans [Member] - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Line Items]
Total loans	$ 34,803	$ 35,619
Less remaining purchase discount	(8,202)	(8,426)
Total loans, net of purchase discount	26,601	27,193
Less: Allowance for loan losses	0	0
Carrying amount, net of allowance	26,601	27,193
Commercial Real Estate [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Line Items]
Total loans	18,105	18,473
Consumer Real Estate [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Line Items]
Total loans	11,954	12,111
Construction and Land Development [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Line Items]
Total loans	2,364	2,553
Commercial and Industrial [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Line Items]
Total loans	2,380	2,482
Consumer and Other [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Line Items]
Total loans	$ 0	$ 0

XML

Loans and Allowance for Loan Losses - Accretable Yield Roll Forward (Details) - Purchased Credit Impaired Loans [Member] - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Certain Loans Acquired in Transfer Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Accretable yield, beginning of period	$ 8,950	$ 10,216
Additions	0	0
Accretion income	(697)	(629)
Reclassification to accretable	244	(41)
Other changes, net	(15)	60
Accretable yield	$ 8,482	$ 9,606

XML

Loans and Allowance for Loan Losses - Narrative (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Financing Receivable, Modifications [Line Items]
Loans on nonaccrual	$ 1,445	$ 1,415
Trouble Debt Restructuring [Member]
Financing Receivable, Modifications [Line Items]
Loans that met criteria for restructured	552	608
Loans on nonaccrual	$ 251	$ 442

XML

Employee Benefit Plans - Stock Option Activity (Details) - Officer and Employee Plans [Member] - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Number
Shares, Outstanding	717,524	817,414
Shares, Exercised	(473,558)	(89,556)
Shares, Forfeited	(18,524)	(10,334)
Shares, Outstanding	225,442	717,524
Weighted Average Exercisable Price
Weighted Average Exercisable Price, Outstanding (in dollars per share)	$ 10.57	$ 10.62
Weighted Average Exercisable Price Exercised (in dollars per share)	9.61	8.98
Weighted Average Exercisable Price Forfeited (in dollars per share)	20.27	28.49
Weighted Average Exercise Price, Outstanding (in dollars per share)	$ 11.78	$ 10.57

XML

Employee Benefit Plans - Options Outstanding by Exercise Price Range (Details) - Officer and Employee Plans [Member] - $ / shares	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Prices (in dollars per share)	$ 11.78	$ 10.57	$ 10.62
Number Outstanding (in shares)	225,442	717,524	817,414
Options Outstanding, Weighted Average Remaining Life	5 years 1 month 18 days
Options Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 11.78
Options, Number Exercisable (in shares)	186,801
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 11.11
6.20 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Prices (in dollars per share)	$ 6.20
Number Outstanding (in shares)	750
Options Outstanding, Weighted Average Remaining Life	4 years 18 days
Options Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 6.20
Options, Number Exercisable (in shares)	750
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 6.20
6.60 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Prices (in dollars per share)	$ 6.60
Number Outstanding (in shares)	41,500
Options Outstanding, Weighted Average Remaining Life	5 years 18 days
Options Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 6.60
Options, Number Exercisable (in shares)	41,500
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 6.60
6.80 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Prices (in dollars per share)	$ 6.80
Number Outstanding (in shares)	19,375
Options Outstanding, Weighted Average Remaining Life	3 years 10 months 24 days
Options Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 6.80
Options, Number Exercisable (in shares)	19,375
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 6.80
9.48 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Prices (in dollars per share)	$ 9.48
Number Outstanding (in shares)	29,375
Options Outstanding, Weighted Average Remaining Life	5 years 10 months 24 days
Options Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 9.48
Options, Number Exercisable (in shares)	29,375
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 9.48
9.52 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Prices (in dollars per share)	$ 9.52
Number Outstanding (in shares)	525
Options Outstanding, Weighted Average Remaining Life	3 months 18 days
Options Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 9.52
Options, Number Exercisable (in shares)	525
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 9.52
9.60 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Prices (in dollars per share)	$ 9.60
Number Outstanding (in shares)	37,625
Options Outstanding, Weighted Average Remaining Life	6 years 10 months 24 days
Options Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 9.60
Options, Number Exercisable (in shares)	37,625
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 9.60
10.48 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Prices (in dollars per share)	$ 10.48
Number Outstanding (in shares)	20,513
Options Outstanding, Weighted Average Remaining Life	4 months 18 days
Options Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 10.48
Options, Number Exercisable (in shares)	20,513
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 10.48
11.67 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Prices (in dollars per share)	$ 11.67
Number Outstanding (in shares)	3,250
Options Outstanding, Weighted Average Remaining Life	3 years 9 months 18 days
Options Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 11.67
Options, Number Exercisable (in shares)	3,250
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 11.67
14.40 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Prices (in dollars per share)	$ 14.40
Number Outstanding (in shares)	15,180
Options Outstanding, Weighted Average Remaining Life	1 year 10 months 24 days
Options Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 14.40
Options, Number Exercisable (in shares)	15,180
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 14.40
15.05 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Prices (in dollars per share)	$ 15.05
Number Outstanding (in shares)	42,745
Options Outstanding, Weighted Average Remaining Life	8 years 5 months 18 days
Options Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 15.05
Options, Number Exercisable (in shares)	4,104
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 15.05
31.96 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Prices (in dollars per share)	$ 31.96
Number Outstanding (in shares)	13,916
Options Outstanding, Weighted Average Remaining Life	10 months 24 days
Options Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 31.96
Options, Number Exercisable (in shares)	13,916
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 31.96
60.80 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Prices (in dollars per share)	$ 60.80
Number Outstanding (in shares)	688
Options Outstanding, Weighted Average Remaining Life	1 month 18 days
Options Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 60.80
Options, Number Exercisable (in shares)	688
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 60.80

XML

Employee Benefit Plans - Non-vested Options (Details) - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Number
Number of Shares, Nonvested, beginning balance	47,970
Number of Shares, Granted	0	0
Number of Shares, Vested	0
Number of Shares, Forfeited/expired	(9,329)
Number of Shares, Nonvested, ending balance	38,641	47,970
Weighted Average Grant-Date Fair Value
Weighted Average Grant-Date Fair Value, Nonvested, beginning balance (in dollars per share)	$ 12.31
Weighted Average Grant-Date Fair Value, Granted (in dollars per share)	0.00
Weighted Average Grant-Date Fair Value, Vested (in dollars per share)	0.00
Weighted Average Grant-Date Fair Value, Forfeited/expired (in dollars per share)	12.31
Weighted Average Grant-Date Fair Value, Nonvested, ending balance (in dollars per share)	$ 12.31	$ 12.31

XML

Employee Benefit Plans - Narrative (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Defined Benefit Plan Disclosure [Line Items]
Share-based compensation expense	$ 26,812	$ 33,635
Options vested in period, fair value	0	19,425
Deferred tax expense from stock options exercised	0	0
Options, exercises in period, intrinsic value	5,024,759
Options, outstanding, intrinsic value	2,266,259
Options, exercisable, intrinsic value	2,034,800
Proceeds from stock options exercised	$ 4,260,734
Number of shares granted	0		0
Deferred Salary Reduction Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined contribution plan, cost recognized	$ 102,716	$ 90,856
Director [Member]
Defined Benefit Plan Disclosure [Line Items]
Direct stock grant expense	31,791
Stock Options [Member]
Defined Benefit Plan Disclosure [Line Items]
Unrecognized compensation costs	$ 340,542
Unrecognized compensation costs, period for recognition	1 year 4 months 24 days
Legacy Cornerstone Bancshares, Inc. Long-Term Incentive Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Exercise price, not less than (as a percent)	100.00%
Smart Bank Stock Option Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Number of shares authorized	525,000
Exercise price, not less than (as a percent)	100.00%
Legacy Smart Financial Inc 2010 Incentive Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Number of shares authorized	525,000
Exercise price, not less than (as a percent)	100.00%
Stock Incentive Plan Two Thousand Fifteen [Member]
Defined Benefit Plan Disclosure [Line Items]
Exercise price, not less than (as a percent)	110.00%
Number Outstanding (in shares)	2,000,000
Term of options, no more than	10 years
Voting power held by participant (as a percent)	10.00%
Term of option to participants with more than ten percent voting power	5 years
Percentage Of incentive stock options vesting on second anniversary	30.00%
Percentage Of incentive stock options vesting on third anniversary	30.00%
Percentage Of incentive stock options vesting on fourth anniversary	40.00%
Percentage Of nonqualified stock options vesting on first anniversary	50.00%
Percentage Of nonqualified stock options vesting on second anniversary	50.00%
401 (k) Matching Range One [Member] | Deferred Salary Reduction Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Employer matching contribution, percent of employees gross pay	3.00%
Employer matching contribution, percent of match	100.00%
401 (k) Matching Range Two [Member] | Deferred Salary Reduction Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Employer matching contribution, percent of employees gross pay	2.00%
Employer matching contribution, percent of match	50.00%

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Commitments and Contingent Liabilities (Details) $ in Millions	3 Months Ended
	Mar. 31, 2017 USD ($)
Line of Credit Facility [Line Items]
Commitments to extend credit	$ 133.4
Standby letters of credit	$ 2.9
Standby Letters of Credit [Member]
Line of Credit Facility [Line Items]
Standby letter of credit term, or less	2 years

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Fair Value Disclosures - Assets and Liabilities Measured on Recurring Basis (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total securities available for sale	$ 137,133	$ 129,422
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total securities available for sale	0	0
Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total securities available for sale	137,133	129,422
Significant Other Unobservable Inputs (Level 3) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total securities available for sale	0	0
U.S. Government-sponsored enterprises (GSEs) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total securities available for sale	17,798	17,723
U.S. Government-sponsored enterprises (GSEs) [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total securities available for sale	0	0
U.S. Government-sponsored enterprises (GSEs) [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total securities available for sale	17,798	17,723
U.S. Government-sponsored enterprises (GSEs) [Member] | Significant Other Unobservable Inputs (Level 3) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total securities available for sale	0	0
Mortgage-backed securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total securities available for sale	110,051	103,680
Mortgage-backed securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total securities available for sale	0	0
Mortgage-backed securities [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total securities available for sale	110,051	103,680
Mortgage-backed securities [Member] | Significant Other Unobservable Inputs (Level 3) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total securities available for sale	0	0
Other debt securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total securities available for sale	946
Other debt securities [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total securities available for sale	946
Municipal securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total securities available for sale	8,338	8,019
Municipal securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total securities available for sale	0	0
Municipal securities [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total securities available for sale	8,338	8,019
Municipal securities [Member] | Significant Other Unobservable Inputs (Level 3) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total securities available for sale	$ 0	$ 0

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Fair Value Disclosures - Assets and Liabilities Measured on Nonrecurring Basis (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Impaired loans	$ 717	$ 239
Foreclosed assets	2,371	2,386
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Impaired loans	0	0
Foreclosed assets	0	0
Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Impaired loans	0	0
Foreclosed assets	0	0
Significant Other Unobservable Inputs (Level 3) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Impaired loans	717	239
Foreclosed assets	$ 2,371	$ 2,386

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Fair Value Disclosures - Significant Unobservable Inputs Used to Value Level 3 Assets (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Impaired loans [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets measured at fair value on non-recurring basis	$ 717	$ 239
Valuation Technique	Appraisal	Cash Flow
Significant Other Unobservable Input	Discounted Cash Flow / Appraisal Discounts	Discounted Cash Flow / Appraisal Discounts
Weighted Average of Input (as a percent)	9.10%	2.40%
Foreclosed assets [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets measured at fair value on non-recurring basis	$ 2,371	$ 2,386
Valuation Technique	Appraisal	Appraisal
Significant Other Unobservable Input	Appraisal Discounts	Appraisal Discounts
Weighted Average of Input (as a percent)	22.50%	12.20%

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Fair Value Disclosures - Carrying Amount and Estimated Fair Value of Financial Instruments (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016	Mar. 31, 2016	Dec. 31, 2015
Assets:
Cash and cash equivalents, Carrying Amount	$ 55,547,721	$ 68,748,308	$ 68,932,872	$ 79,964,633
Securities available for sale, Carrying Amount	137,133,000	129,422,000
Restricted investments, Carrying Amount	5,627,950	5,627,950
Loans, net, Carrying Amount	802,387,400	808,271,003
Cash and cash equivalents, Estimated Fair Value	55,548,000	68,748,000
Securities available for sale, Estimated Fair Value	137,133,000	129,422,000
Loans, net, Estimated Fair Value	795,077,000	803,057,000
Liabilities:
Noninterest-bearing demand deposits, Carrying Amount	160,672,567	153,482,650
Interest-bearing demand deposits, Carrying Amount	167,433,130	162,702,457
Money Market and Savings deposits, Carrying Amount	274,993,000	274,605,000
Time deposits, Carrying Amount	286,600,177	316,275,340
Securities sold under agreements to repurchase, Carrying Amount	23,153,397	26,621,984
Federal Home Loan Bank advances and other borrowings, Carrying Amount	60,000	18,505,390
Noninterest-bearing demand deposits, Estimated Fair Value	160,673,000	153,483,000
Interest-bearing demand deposits, Estimated Fair Value	167,433,000	162,702,000
Money Market and Savings deposits, Estimated Fair Value	274,993,000	274,605,000
Time deposits, Estimated Fair Value	286,414,000	316,734,000
Securities sold under agreements to repurchase, Estimated Fair Value	23,153,000	26,622,000
Federal Home Loan Bank advances and other borrowings, Estimated Fair Value	$ 60,000	$ 18,505,000

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Small Business Lending Fund - Narrative (Details) - USD ($)				3 Months Ended		12 Months Ended
	Mar. 06, 2017	Jan. 30, 2017	Feb. 04, 2016	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2011
Class of Stock [Line Items]
Preferred stock, shares issued				0		12,000
Preferred stock, dividend rate (as a percent)			9.00%				1.00%
Preferred stock dividends				$ 195,000	$ 212,000	$ 1,022,000	$ 120,000
Common stock, par value (in dollars per share)				$ 1		$ 1
Proceeds from issuance of common stock				$ 37,516,178	77,707
Payments for redemption of preferred stock	$ 12,000,000
Payment of dividends on preferred stock	$ 195,000			$ 195,000	$ 212,000
SBLF Program [Member]
Class of Stock [Line Items]
Preferred stock, shares issued								12,000
Share price (in dollars per share)								$ 1,000
Preferred stock, redemption price (in dollars per share)								$ 1,000
Common Stock [Member]
Class of Stock [Line Items]
Issuance of common stock in public offering (in shares)		2,010,084
Common stock, par value (in dollars per share)		$ 1.00
Proceeds from issuance of common stock		$ 33,200,000