10-Q

.

United States Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2022

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

For the transition period from __________ to __________

Commission File Number: 001-37661

(Exact name of registrant as specified in its charter)

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

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

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

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

Yes  ☒   No  ☐

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

Yes  ☒    No  ☐

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

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

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

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

Yes  ☐    No  ☒

As of May 4, 2022, there were 16,896,987 shares of common stock, $1.00 par value per share, issued and outstanding.

TABLE OF CONTENTS

PART I –FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements (Unaudited)	3
	Consolidated Balance Sheets at March 31, 2022 and December 31, 2021	3
	Consolidated Statements of Income for the Three Months Ended March 31, 2022 and 2021	4
	Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2022 and 2021	5
	Consolidated Statements of Changes in Shareholders’ Equity for the Three Months Ended March 31, 2022 and 2021	6
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	42
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	55
Item 4.	Controls and Procedures	55
PART II – OTHER INFORMATION		56
Item 1.	Legal Proceedings	56
Item 1A.	Risk Factors	56
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	56
Item 3.	Defaults Upon Senior Securities	56
Item 4.	Mine Safety Disclosures	57
Item 5.	Other Information	57
Item 6.	Exhibits	58

2

PART I –FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

SMARTFINANCIAL, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except for share data)

	(Unaudited)
	March 31,		December 31,
	2022		2021*
ASSETS:
Cash and due from banks	$	83,080	$	110,333
Interest-bearing deposits with banks		643,388		897,244
Federal funds sold		37,500		37,500
Total cash and cash equivalents		763,968		1,045,077
Securities available-for-sale, at fair value		540,483		482,453
Securities held-to-maturity, at amortized cost		289,532		76,969
Other investments		16,499		16,494
Loans held for sale		5,894		5,103
Loans and leases		2,806,026		2,693,397
Less: Allowance for loan and lease losses		(20,078)		(19,352)
Loans and leases, net		2,785,948		2,674,045
Premises and equipment, net		84,793		85,958
Other real estate owned		1,612		1,780
Goodwill and other intangibles, net		105,215		105,852
Bank owned life insurance		80,074		79,619
Other assets		44,561		38,229
Total assets	$	4,718,579	$	4,611,579
LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits:
Noninterest-bearing demand	$	1,093,933	$	1,055,125
Interest-bearing demand		975,272		899,158
Money market and savings		1,573,101		1,493,007
Time deposits		549,047		574,648
Total deposits		4,191,353		4,021,938
Borrowings		36,713		87,585
Subordinated debt		41,952		41,930
Other liabilities		28,519		30,696
Total liabilities		4,298,537		4,182,149
Shareholders' equity:
Preferred stock, $1 par value; 2,000,000 shares authorized; No shares issued and outstanding		—		—
Common stock, $1 par value; 40,000,000 shares authorized; 16,893,282 and 16,802,990 shares issued and outstanding, respectively		16,893		16,803
Additional paid-in capital		293,376		292,937
Retained earnings		125,329		118,247
Accumulated other comprehensive income (loss)		(15,556)		1,443
Total shareholders' equity		420,042		429,430
Total liabilities and shareholders' equity	$	4,718,579	$	4,611,579

* Derived from audited financial statements.

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

3

SMARTFINANCIAL, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

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

		Three Months Ended
	March 31,
	2022		2021
Interest income:
Loans and leases, including fees	$	29,643	$	28,018
Securities:
Taxable		2,418		724
Tax-exempt		368		259
Federal funds sold and other earning assets		486		291
Total interest income		32,915		29,292
Interest expense:
Deposits		2,014		2,331
Borrowings		157		117
Subordinated debt		626		584
Total interest expense		2,797		3,032
Net interest income		30,118		26,260
Provision for loan and lease losses		1,006		67
Net interest income after provision for loan and lease losses		29,112		26,193
Noninterest income:
Service charges on deposit accounts		1,319		1,009
Mortgage banking		834		1,139
Investment services		1,070		531
Insurance commissions		901		1,466
Interchange and debit card transaction fees, net		1,284		839
Other		1,703		707
Total noninterest income		7,111		5,691
Noninterest expense:
Salaries and employee benefits		15,046		10,869
Occupancy and equipment		3,059		2,341
FDIC insurance		641		371
Other real estate and loan related expense		729		602
Advertising and marketing		369		190
Data processing and technology		1,586		1,379
Professional services		1,242		641
Amortization of intangibles		637		444
Merger related and restructuring expenses		439		103
Other		1,970		2,524
Total noninterest expense		25,718		19,464
Income before income tax expense		10,505		12,420
Income tax expense		2,246		2,664
Net income	$	8,259	$	9,756
Earnings per common share:
Basic	$	0.49	$	0.65
Diluted	$	0.49	$	0.65
Weighted average common shares outstanding:
Basic		16,718,371		15,011,573
Diluted		16,858,288		15,111,947

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

4

SMARTFINANCIAL, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(Dollars in thousands)

	Three Months Ended
	March 31,
	2022		2021
Net income	$	8,259	$	9,756
Other comprehensive income (loss):
Investment securities:
Unrealized holding (losses) on securities available-for-sale		(20,348)		(2,808)
Tax effect		5,256		738
Reclassification of unrealized loss on securities transferred from available-for-sale to held-to-maturity		(2,009)		—
Tax effect		519		—
Amortization of unrealized gains on investment securities transferred from available-for-sale to held-to-maturity		(11)		—
Tax effect		3		—
Unrealized gains (losses) on securities available-for-sale, net of tax		(16,590)		(2,070)
Fair value hedging activities:
Unrealized gains (losses) on fair value municipal security hedges		(551)		1,313
Tax effect		142		(343)
Unrealized gains (losses) on fair value municipal security hedge instruments arising during the period, net of tax		(409)		970
Total other comprehensive income (loss)		(16,999)		(1,100)
Comprehensive income (loss)	$	(8,740)	$	8,656

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

5

SMARTFINANCIAL, INC. AND SUBSIDIARY

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

For the Three Months Ended March 31, 2022 and 2021

(Dollars in thousands, except for share data)

								Accumulated
								Other
	Common Stock			Additional		Retained		Comprehensive
	Shares	Amount		Paid-in Capital		Earnings		Income (Loss)		Total
Balance, December 31, 2020	15,107,214	$	15,107	$	252,693	$	87,185	$	2,183	$	357,168
Net income	—		—		—		9,756		—		9,756
Other comprehensive income (loss)	—		—		—		—		(1,100)		(1,100)
Common stock issued pursuant to:
Stock options exercised	15,965		16		131		—		—		147
Restricted stock	40,967		41		(41)		—		—		—
Stock compensation expense	—		—		201		—		—		201
Common stock dividend ($0.06 per share)	—		—		—		(907)		—		(907)
Repurchases of common stock	(59,610)		(59)		(1,148)		—		—		(1,207)
Balance, March 31, 2021	15,104,536	$	15,105	$	251,836	$	96,034	$	1,083	$	364,058
Balance, December 31, 2021	16,802,990	$	16,803	$	292,937	$	118,247	$	1,443	$	429,430
Net income	—		—		—		8,259		—		8,259
Other comprehensive income (loss)	—		—		—		—		(16,999)		(16,999)
Common stock issued pursuant to:
Stock options exercised	27,550		27		190		—		—		217
Restricted stock	62,742		63		(63)		—		—		—
Stock compensation expense	—		—		312		—		—		312
Common stock dividend ($0.07 per share)	—		—		—		(1,177)		—		(1,177)
Repurchases of common stock	—		—		—		—		—		—
Balance, March 31, 2022	16,893,282	$	16,893	$	293,376	$	125,329	$	(15,556)	$	420,042

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

6

SMARTFINANCIAL, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)

	Three Months Ended March 31,
	2022		2021
Cash flows from operating activities:
Net income	$	8,259	$	9,756
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,387		1,499
Accretion of fair value purchase accounting adjustments, net		(358)		(1,636)
Provision for loan and lease losses		1,006		67
Stock compensation expense		312		201
Deferred income tax expense		948		446
Increase in cash surrender value of bank owned life insurance		(455)		(370)
Net losses from sale and write downs of other real estate owned		59		151
Net gains from mortgage banking		(834)		(1,139)
Origination of loans held for sale		(30,916)		(35,229)
Proceeds from sales of loans held for sale		30,959		40,219
Net gain from sale of fixed assets		(348)		—
Net change in:
Accrued interest receivable		(452)		(86)
Accrued interest payable		352		367
Other assets		(5,244)		(1,234)
Other liabilities		5,019		3,078
Net cash provided by operating activities		10,694		16,090
Cash flows from investing activities:
Available-for-sale:
Proceeds from maturities, calls and paydowns		10,217		16,241
Purchases		(257,101)		(55,757)
Held-to-maturity:
Purchases		(50,575)		—
Proceeds from sales of other investments		—		147
Purchases of other investments		(5)		(80)
Purchases of bank owned life insurance		—		(40,000)
Net increase in loans and leases		(112,551)		(103,308)
Proceeds from sale of fixed assets		1,224		—
Purchases of premises and equipment		(879)		(1,009)
Proceeds from sale of other real estate owned		108		98
Net cash used in investing activities		(409,562)		(183,668)
Cash flows from financing activities:
Net increase in deposits		169,591		243,084
Net (decrease) increase in securities sold under agreements to repurchase		(872)		1,447
Repayment borrowings		(50,000)		(4)
Cash dividends paid		(1,177)		(907)
Issuance of common stock		217		147
Repurchases of common stock		—		(1,207)
Net cash provided by financing activities		117,759		242,560
Net change in cash and cash equivalents		(281,109)		74,982
Cash and cash equivalents, beginning of period		1,045,077		481,719
Cash and cash equivalents, end of period	$	763,968	$	556,701
Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	2,112	$	2,665
Cash paid during the period for income taxes		15		—
Cash received from income taxes refunds		50		—
Noncash investing and financing activities:
Acquisition of real estate through foreclosure		—		14
Transfer of securities from available-for-sale to held-to-maturity		162,378		—
Change in goodwill due to acquisitions and sale of a portfolio of loans		—		324

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

7

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1. Presentation of Financial Information

Nature of Business:

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

Basis of Presentation and Accounting Estimates:

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

In management’s opinion, all accounting adjustments necessary to accurately reflect the financial position and results of operations on the accompanying financial statements have been made. These adjustments are normal and recurring accruals considered necessary for a fair and accurate presentation. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan and lease losses, the valuation of foreclosed assets and deferred taxes, other than temporary impairments of securities, the fair value of financial instruments, goodwill, and the fair value of assets acquired, and liabilities assumed in acquisitions. The results for interim periods are not necessarily indicative of results for the full year or any other interim periods. The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes appearing in the Company’s annual report on Form 10-K for the year ended December 31, 2021.

Recently Issued and Adopted Accounting Pronouncements:

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference London Interbank Offered Rate (“LIBOR”). It is intended to help stakeholders during the global market-wide reference rate transition period. The guidance is effective for all entities as of March 12, 2020, through December 31, 2022. The Company implemented a transition plan to identify and modify its loans and other financial instruments, including certain indebtedness, with attributes that are either directly or indirectly influenced by LIBOR. As of December 31, 2021, the Company ceased issuance of new LIBOR loans. Alternative reference rates at this time are predominantly Secured Overnight Funding Rate (“SOFR”) based.  Remaining LIBOR transition project activities include remediation of remaining LIBOR products by June of 2023. ASU 2020-04 will not have a material impact on the Company’s consolidated financial statements.

Recently Issued Not Yet Effective Accounting Pronouncements:

During interim periods, the Company follows the accounting policies set forth in its annual audited financial statements for the year ended December 31, 2021, as filed in its Annual Report on Form 10-K with the Securities and Exchange Commission ("SEC"). The following is a summary of recent authoritative pronouncements issued but not yet effective that could impact the accounting, reporting, and/or disclosure of financial information by the Company.

In October 2019, the Financial Accounting Standards Board approved a delay for the implementation of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). The Board decided that the Current Expected Credit Loss (“CECL”)

8

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

model will be effective for larger Public Business Entities ("PBEs") that are SEC filers, excluding Smaller Reporting Companies ("SRCs") as currently defined by the SEC, for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. For calendar-year-end companies that are not SRCs, this will be January 1, 2020. The determination of whether an entity is an SRC will be based on an entity’s most recent assessment in accordance with SEC regulations and the Company meets the regulations as an SRC. For SRCs and other entities, the Board decided that CECL will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. For all entities, early adoption will continue to be permitted; that is, early adoption is allowed for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years (that is, effective January 1, 2019, for calendar-year-end companies). The Company does not plan to adopt this standard early and being that the Company is an SRC, adoption is required for fiscal years beginning after December 15, 2022.

Under the CECL model, we will be required to present certain financial assets carried at amortized cost, such as loans held for investment and held-to-maturity debt securities, at the net amount expected to be collected. The measurement of expected credit losses is to be based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. This measurement will take place at the time the financial asset is first added to the balance sheet and periodically thereafter. This differs significantly from the “incurred loss” model currently required under GAAP, which delays recognition until it is probable a loss has been incurred. Accordingly, we expect that the adoption of the CECL model will materially affect how we determine our allowance for loan losses and could require us to significantly increase our allowance. Moreover, the CECL model may create more volatility in the level of our allowance for loan losses. If we are required to materially increase our level of allowance for loan losses for any reason, such increase could adversely affect our business, financial condition and results of operations.

A cross-functional working group comprised of individuals from credit administration, risk management and accounting and finance are in place implementing and developing the data, forecast, processes, and portfolio segmentation that will be used in the models that will estimate the expected credit loss for each loan segment. The Company has contracted with a third party vendor solution to assist us in the application, analysis, and model development required with implementation of ASU 2016-13. The Company is currently unable to reasonably estimate the impact of adopting ASU 2016-13, and it will be influenced by the composition, characteristics and quality of our loan and securities portfolio, as well as the economic conditions and forecasts as of each reporting period. These economic conditions and forecasts could be significantly different in future periods.

In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging - Portfolio Layer Method, which allows multiple hedged layers to be designated for a single closed portfolio of financial assets resulting in a greater portion of the interest rate risk in the closed portfolio being eligible to be hedged. The amendments allow the flexibility to use different types of derivatives or combinations of derivatives to better align with risk management strategies. Furthermore, among other things, the amendments clarify that basis adjustments of hedged items in the closed portfolio should be allocated at the portfolio level and not the individual assets within the portfolio. The guidance is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early adoption is permitted, including early adoption in an interim period. An entity should apply ASU 2022-01 prospectively. If an entity elects to early adopt ASU 2022-01 in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes the interim period. The Company is assessing ASU 2022-01 and its impact on its accounting and disclosures.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which removes the accounting guidance for troubled debt restructurings and requires entities to evaluate whether a modification provided to a borrower results in a new loan or continuation of an existing loan. The amendments enhance existing disclosures and require new disclosures for receivables when there has been a modification in contractual cash flows due to a borrower experiencing financial difficulties. Additionally, the amendments require public business entities to disclose gross charge-off information by year of origination in the vintage disclosures. The guidance is effective for entities that have adopted ASU 2016-13 for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early adoption is permitted, including early adoption in an interim period. An entity should apply ASU 2022-02 prospectively. If an entity elects to early adopt ASU 2022-02 in an

9

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

interim period, the guidance should be applied as of the beginning of the fiscal year that includes the interim period. The Company will adopt ASU 2022-02 when adopting ASU 2016-13 in January 2023 and will assess its impact on its accounting and disclosures.

Note 2. Business Combinations

Sevier County Bancshares, Inc.

On September 1, 2021, the Company completed the acquisition of Sevier County Bancshares, Inc., a Tennessee corporation (“SCB”), pursuant to an Agreement and Plan of Merger dated April 13, 2021 (the “Merger Agreement”).

In connection with the merger, the Company acquired $484.9 million of assets and assumed $443.1 million of liabilities. Pursuant to the Merger Agreement, at the effective time of the merger, SCB shareholders were entitled to receive for each share of SCB common stock, no par value per share, outstanding immediately prior to the Merger, either (i) $10.17 in cash (the “Per Share Cash Consideration”), or (ii) 0.4116 shares of Company common stock, par value $1.00 (the “Per Share Stock Consideration”). Pursuant to the terms of the Merger Agreement, (i) each SCB shareholder holding 20,000 shares or more of SCB common stock will receive the Per Share Stock Consideration and (ii) each SCB shareholder holding fewer than 20,000 shares of SCB common stock may elect to receive either the Per Share Stock Consideration or the Per Share Cash Consideration.  SmartFinancial issued 1,692,168 shares of SmartFinancial common stock and paid $9.6 million in cash as consideration for the Merger.  The fair value of consideration paid exceeded the fair value of the identifiable assets and liabilities acquired and resulted in the establishment of goodwill in the amount of $17.2 million, representing the intangible value of SCB’s business and reputation within the markets it served. None of the goodwill recognized is expected to be deductible for income tax purposes.  The Company is amortizing the related core deposit intangible of $1.6 million using the effective yield method over 120 months (10 years), which represents the expected useful life of the asset.  

The purchased assets and assumed liabilities were recorded at their acquisition date fair values ⁽¹⁾ and are summarized in the table below (in thousands).

			Initial
	As recorded		Fair value		Subsequent		As recorded
	by SCB		adjustments		Adjustments		by the Company
Assets:
Cash & cash equivalents	$	84,313	$	—	$	—	$	84,313
Investment securities available-for-sale		64,219		(614)		—		63,605
Restricted investments		533		—		—		533
Loans		304,620		(4,551)		(3,049)		297,020
Allowance for loan losses		(3,644)		3,644		—		—
Premises and equipment, net		15,579		(295)		(22)		15,262
Bank owned life insurance		7,116		—		—		7,116
Deferred tax asset, net		10,340		(4,007)		769		7,102
Core deposit intangible		—		1,550		—		1,550
Interest Receivable		884		—		—		884
Other assets		920		(272)		(533)		115
Total assets acquired	$	484,880	$	(4,545)	$	(2,835)	$	477,500
Liabilities:
Deposits	$	435,036	$	—	$	—	$	435,036
Time deposit premium		—		888		—		888
Subordinated debt		2,500		—		—		2,500
Payables and other liabilities		5,563		115		(1,254)		4,424
Total liabilities assumed		443,099		1,003		(1,254)		442,848
Excess of assets acquired over liabilities assumed	$	41,781
Aggregate fair value adjustments			$	(5,548)	$	(1,581)
Total identifiable net assets								34,652
Consideration transferred:
Cash								9,568
Common stock issued (1,692,168 shares)								42,255
Total fair value of consideration transferred								51,823
Goodwill							$	17,171

⁽¹⁾ Fair values are preliminary and are subject to refinement for a period of one year after the closing date of an acquisition as information relative to the closing date fair value becomes available.

10

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The following table presents additional information related to the purchased credit impaired loans (ASC 310-30) of the acquired loan portfolio at the acquisition date (in thousands):

	September 1, 2021
Accounted for pursuant to ASC 310-30:
Contractually required principal and interest	$	30,293
Non-accretable differences		7,609
Cash flows expected to be collected		22,684
Accretable yield		3,552
Fair value	$	19,132

Fountain Leasing, LLC

On May 3, 2021, the Company completed the acquisition of Fountain Leasing, LLC, a Tennessee limited liability company, pursuant to the Purchase Agreement (the “Purchase Agreement”), dated May 2, 2021, by and among the Bank and the members of Fountain Leasing, LLC.  Following the closing of the acquisition, on May 4, 2021, the Company changed the name of Fountain Leasing, LLC to Fountain Equipment Finance, LLC (“Fountain”).

In connection with the acquisition, the Company acquired $54.1 million of assets and assumed $683 thousand of liabilities. Pursuant to the Purchase Agreement, the Company paid an aggregate amount of consideration to the Fountain members of $14.0 million in cash at closing, and the Company repaid approximately $45.8 million of Fountain’s indebtedness. In addition to the closing consideration, the Purchase Agreement contains a performance-based earnout, pursuant to which the former members of Fountain could be entitled to up to $6.0 million, which is excluded from consideration pursuant to ASC 805, in future cash payments from the Company based on future results of the acquired business over various periods through December 31, 2026.  The fair value of consideration paid exceeded the fair value of the identifiable assets and liabilities acquired and resulted in the establishment of goodwill in the amount of $2.4 million, representing the intangible value of Fountains business and reputation within the markets it served. The goodwill recognized is expected to be deductible for income tax purposes. The Company established an intangible asset related to customer relationships of $2.7 million, amortizing sum-of-the-years digits over 96 months (8 years).

The purchased assets and assumed liabilities were recorded at their acquisition date fair values ⁽¹⁾ and are summarized in the table below (in thousands).

	As recorded		Fair value		Subsequent		As recorded
	by Fountain		adjustments		Adjustments		by the Company
Assets:
Cash & cash equivalents	$	413	$	—	$	—	$	413
Leases		54,945		(720)		—		54,225
Allowance for lease losses		(1,796)		1,796		—		—
Customer list intangible		—		2,658		—		2,658
Other repossessed assets		319		—		—		319
Other assets		233		—		—		233
Total assets acquired	$	54,114	$	3,734	$	—	$	57,848
Liabilities:
Payables and other liabilities	$	683	$	(229)	$	—	$	454
Total liabilities assumed		683		(229)		—		454
Excess of assets acquired over liabilities assumed	$	53,431
Aggregate fair value adjustments			$	3,963	$	—
Total identifiable net assets								57,394
Consideration transferred:
Cash								59,794
Total fair value of consideration transferred								59,794
Goodwill							$	2,400

⁽¹⁾ Fair values are preliminary and are subject to refinement for a period of one year after the closing date of an acquisition as information relative to the closing date fair value becomes available.

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The following table presents additional information related to the purchased credit impaired financing leases (ASC 310-30) of the acquired lease portfolio at the acquisition date (in thousands):

	May 3, 2021
Accounted for pursuant to ASC 310-30:
Contractually required principal and interest	$	6,018
Non-accretable differences		447
Cash flows expected to be collected		5,571
Accretable yield		649
Fair value	$	4,922

Note 3. Earnings Per Share

Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding. Diluted earnings per common share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding and dilutive common share equivalents using the treasury stock method. Dilutive common share equivalents include common shares issuable upon exercise of outstanding stock options and restricted stock. The effect from the stock options and restricted stock on incremental shares from the assumed conversions for net income per share-basic and net income per share-diluted are presented below. There were no antidilutive shares for the three months ended March 31, 2022, and March 31, 2021, respectively.

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

	Three Months Ended
	March 31,
	2022		2021
Basic earnings per share computation:
Net income available to common shareholders	$	8,259	$	9,756
Average common shares outstanding – basic		16,718,371		15,011,573
Basic earnings per share	$	0.49	$	0.65
Diluted earnings per share computation:
Net income available to common shareholders	$	8,259	$	9,756
Average common shares outstanding – basic		16,718,371		15,011,573
Incremental shares from assumed conversions:
Stock options and restricted stock		139,917		100,374
Average common shares outstanding - diluted		16,858,288		15,111,947
Diluted earnings per common share	$	0.49	$	0.65

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Note 4. Securities

The amortized cost, gross unrealized gains and losses and fair value of securities available-for-sale and held-to-maturity are summarized as follows (in thousands):

	March 31, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Available-for-sale:	Cost		Gains		Losses		Value
U.S. Treasury	$	239,056	$	—	$	(9,143)	$	229,913
U.S. Government-sponsored enterprises (GSEs)		512		—		(6)		506
Municipal securities		55,318		67		(144)		55,241
Other debt securities		28,982		139		(581)		28,540
Mortgage-backed securities (GSEs)		236,929		167		(10,813)		226,283
Total	$	560,797	$	373	$	(20,687)	$	540,483

	March 31, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Held-to-maturity:	Cost		Gains		Losses		Value
U.S. Treasury	$	150,471	$	—	$	(2,131)	$	148,340
U.S. Government-sponsored enterprises (GSEs)		51,425		—		(3,634)		47,791
Municipal securities		54,459		—		(4,561)		49,898
Mortgage-backed securities (GSEs)		33,177		—		(1,472)		31,705
Total	$	289,532	$	—	$	(11,798)	$	277,734

	December 31, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Available-for-sale:	Cost		Gains		Losses		Value
U.S. Treasury	$	138,212	$	64	$	(518)	$	137,758
U.S. Government-sponsored enterprises (GSEs)		21,898		76		(173)		21,801
Municipal securities		67,310		512		(2)		67,820
Other debt securities		26,989		313		(82)		27,220
Mortgage-backed securities (GSEs)		228,011		971		(1,128)		227,854
Total	$	482,420	$	1,936	$	(1,903)	$	482,453

	December 31, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Held-to-maturity:	Cost		Gains		Losses		Value
U.S. Government-sponsored enterprises (GSEs)	$	31,023	$	20	$	(87)	$	30,956
Municipal securities		45,946		63		(19)		45,990
Total	$	76,969	$	83	$	(106)	$	76,946

At March 31, 2022 and December 31, 2021, securities with a carrying value totaling approximately $219.6 million and $201.2 million, respectively, were pledged to secure public funds and securities sold under agreements to repurchase.

During the first quarter of 2022, the Company transferred $162.4 million of available-for-sale securities to the held-to-maturity category, reflecting the Company’s intent to hold those securities to maturity. Transfers of investment securities into the held-to-maturity category from the available-for-sale category are made at fair value at the date of transfer. The

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

related $2.0 million of unrealized holding loss that was included in the transfer is retained in accumulated other comprehensive income, net of tax, and in the carrying value of the held-to-maturity securities. This amount will be amortized as an adjustment to interest income over the remaining life of the securities. This will offset the impact of amortization of the net premium created in the transfer. There were no gains or losses recognized as a result of this transfer.

The Company has entered-into-various fair value hedging transactions to mitigate the impact of changing interest rates on the fair values of available for sale securities. See Note 11 – Derivatives Financial Instruments for disclosure of the gains and losses recognized on derivative instruments and the cumulative fair value hedging adjustments to the carrying amount of the hedged securities.

The amortized cost and estimated fair value of securities at March 31, 2022 by contractual maturity for non-mortgage backed securities are shown below (in thousands). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	March 31, 2022
	Amortized		Fair
Available-for-sale:	Cost		Value
Due in one year or less	$	902	$	903
Due from one year to five years		178,294		173,044
Due from five years to ten years		99,601		95,174
Due after ten years		45,071		45,079
		323,868		314,200
Mortgage-backed securities		236,929		226,283
Total	$	560,797	$	540,483
Held-to-maturity:
Due in one year or less	$	—	$	—
Due from one year to five years		150,471		148,339
Due from five years to ten years		28,250		26,931
Due after ten years		77,634		70,759
		256,355		246,029
Mortgage-backed securities		33,177		31,705
Total	$	289,532	$	277,734

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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 and held-to-maturity have been in a continuous unrealized loss position (in thousands):

	March 31, 2022
	Less than 12 Months					12 Months or Greater					Total
			Gross		Number			Gross		Number			Gross		Number
	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized		of
Available-for-sale:	Value		Losses		Securities	Value		Losses		Securities	Value		Losses		Securities
U.S. Treasury	$	229,913	$	(9,143)	19	$	—	$	—	—	$	229,913	$	(9,143)	19
U.S. Government-sponsored enterprises (GSEs)		—		—	—		506		(6)	2		506		(6)	2
Municipal securities		9,885		(144)	17		—		—	—		9,885		(144)	17
Other debt securities		16,086		(505)	16		1,424		(76)	1		17,510		(581)	17
Mortgage-backed securities (GSEs)		201,144		(10,627)	70		7,701		(186)	6		208,845		(10,813)	76
Total	$	457,028	$	(20,419)	122	$	9,631	$	(268)	9	$	466,659	$	(20,687)	131
	March 31, 2022
	Less than 12 Months					12 Months or Greater					Total
			Gross		Number			Gross		Number			Gross		Number
	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized		of
Held-to-maturity:	Value		Losses		Securities	Value		Losses		Securities	Value		Losses		Securities
U.S. Treasury	$	148,339	$	(2,131)	4	$	—	$	—	—	$	148,339	$	(2,131)	4
U.S. Government-sponsored enterprises (GSEs)		23,735		(1,576)	6		24,057		(2,058)	7		47,792		(3,634)	13
Municipal securities		49,628		(4,561)	34		—		—	—		49,628		(4,561)	34
Mortgage-backed securities (GSEs)		31,705		(1,472)	5		—		—	—		31,705		(1,472)	5
Total	$	253,407	$	(9,740)	49	$	24,057	$	(2,058)	7	$	277,464	$	(11,798)	56

	December 31, 2021
	Less than 12 Months					12 Months or Greater					Total
			Gross		Number			Gross		Number			Gross		Number
	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized		of
Available-for-sale:	Value		Losses		Securities	Value		Losses		Securities	Value		Losses		Securities
U.S. Treasury	$	99,959	$	(518)	11	$	—	$	—	—	$	99,959	$	(518)	11
U.S. Government-sponsored enterprises (GSEs)		14,156		(168)	2		579		(5)	2		14,735		(173)	4
Municipal securities		2,519		(2)	1		—		—	—		2,519		(2)	1
Other debt securities		5,983		(82)	6		—		—	—		5,983		(82)	6
Mortgage-backed securities (GSEs)		159,725		(1,002)	31		8,233		(126)	6		167,958		(1,128)	37
Total	$	282,342	$	(1,772)	51	$	8,812	$	(131)	8	$	291,154	$	(1,903)	59
	December 31, 2021
	Less than 12 Months					12 Months or Greater					Total
			Gross		Number			Gross		Number			Gross		Number
	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized		of
Held-to-maturity:	Value		Losses		Securities	Value		Losses		Securities	Value		Losses		Securities
U.S. Government-sponsored enterprises (GSEs)	$	21,901	$	(87)	8	$	—	$	—	—	$	21,901	$	(87)	8
Municipal securities		4,173		(19)	6		—		—	—		4,173		(19)	6
Total	$	26,074	$	(106)	14	$	—	$	—	—	$	26,074	$	(106)	14

The Company reviews the securities portfolio on a quarterly basis to monitor its exposure to other-than-temporary impairment. A determination as to whether a security’s decline in fair value is other-than-temporary takes into consideration numerous factors and the relative significance of any single factor can vary by security. Some factors the Company may consider in the other-than-temporary impairment analysis include the length of time and extent to which

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

the security has been in an unrealized loss position, changes in security ratings, financial condition and near-term prospects of the issuer, as well as security and industry specific economic conditions.

Based on this evaluation, the Company concluded that any unrealized losses at March 31, 2022, represented a temporary impairment, as these unrealized losses are primarily attributable to changes in interest rates and current market conditions, and not credit deterioration of the issuers. As of March 31, 2022, the Company does not intend, or be required, to sell any of the securities, and expects to recover the entire amortized cost of all of the securities.

Other Investments:

Our other investments consist of restricted non-marketable equity securities that have no readily determinable market value. Accordingly, when evaluating these securities for impairment, management considers the ultimate recoverability of the par value rather than recognizing temporary declines in value. As of March 31, 2022, the Company determined that there was no impairment on its other investment securities.

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

	March 31,		December 31,
	2022		2021
Federal Reserve Bank stock	$	9,698	$	9,693
Federal Home Loan Bank stock		6,451		6,451
First National Bankers Bank stock		350		350
Total	$	16,499	$	16,494

Note 5. Loans and Leases and Allowance for Loan and Lease Losses

Portfolio Segmentation:

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

	March 31, 2022						December 31, 2021
	PCI		All Other				PCI		All Other
	Loans and Leases1		Loans and Leases		Total		Loans and Leases1		Loans and Leases		Total
Commercial real estate	$	20,270	$	1,455,586	$	1,475,856	$	20,875	$	1,363,281	$	1,384,156
Consumer real estate		9,791		473,438		483,229		11,833		465,439		477,272
Construction and land development		2,662		311,992		314,654		2,882		275,504		278,386
Commercial and industrial		2,479		458,674		461,153		2,516		485,508		488,024
Leases		2,230		57,662		59,892		3,170		50,538		53,708
Consumer and other		17		11,225		11,242		71		11,780		11,851
Total loans and leases		37,449		2,768,577		2,806,026		41,347		2,652,050		2,693,397
Less: Allowance for loan and lease losses		(187)		(19,891)		(20,078)		(179)		(19,173)		(19,352)
Loans and leases, net	$	37,262	$	2,748,686	$	2,785,948	$	41,168	$	2,632,877	$	2,674,045

¹ Purchased Credit Impaired loans and leases (“PCI loans and leases”) are loans and leases with evidence of credit deterioration at purchase.

For purposes of the disclosures required pursuant to ASC 310, the loan and lease 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 loan and lease losses. There are six loan and lease portfolio segments that include commercial real estate, consumer real estate, construction and land development, commercial and industrial, leases, and consumer and other.

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

Commercial Real Estate: Commercial real estate loans include owner-occupied commercial real estate loans and loans secured by income-producing properties. Owner-occupied commercial real estate loans to operating businesses are long-

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SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

term financing of land and buildings. These loans are repaid by cash flow generated from the business operation. Real estate loans for income-producing properties such as apartment buildings, office and industrial buildings, and retail shopping centers are repaid from rent income derived from the properties. Loans within this portfolio segment are particularly sensitive to the valuation of real estate.

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

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

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

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

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

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 and lease 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 and leases 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 and lease portfolio segments are measured and monitored regularly. Detailed reports, by product, collateral, accrual status, etc., are reviewed by Director, Management and Loan Committees.

The allowance for loan and lease losses is a valuation reserve established through provisions for loan and lease losses charged against income. The allowance for loan and lease losses, which is evaluated quarterly, is maintained at a level that management deems sufficient to absorb probable losses inherent in the loan and lease portfolio. Loans and leases deemed to be uncollectible are charged against the allowance for loan and lease losses, while recoveries of previously charged-off amounts are credited to the allowance for loan and lease losses. The allowance for loan and lease losses is comprised of

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SMARTFINANCIAL, INC. AND SUBSIDIARY

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specific valuation allowances for loans and leases evaluated individually for impairment and general allocations for pools of homogeneous loans and leases with similar risk characteristics and trends.

The allowance for loan and lease losses related to specific loans and leases is based on management’s estimate of potential losses on impaired loans and leases as determined by (1) the present value of expected future cash flows; (2) the fair value of collateral if the loan or lease is determined to be collateral dependent or (3) the loan’s or leases’ observable market price. The Company’s homogeneous loan and lease pools include commercial real estate loans, consumer real estate loans, construction and land development loans, commercial and industrial loans, leases and consumer and other loans. The general allocations to these loan and lease pools are based on the historical loss rates for specific loan and lease 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 and lease portfolio volume; (4) the composition and concentrations of credit; (5) the impact of competition on loan and lease structuring and pricing; (6) the impact of the regulatory environment and changes in laws; (7) effectiveness of the Company’s loan and lease policies, procedures and internal controls; (8) COVID-19 loan modification factor and (9) COVID-19 Q factor, which is based upon active COVID cases within the Company’s footprint.  The total allowance established for each homogeneous loan and lease pool represents the product of the historical loss ratio adjusted for qualitative factors and the total dollar amount of the loans and leases in the pool.

The determination of the adequacy of the allowance for loan and lease 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 and leases, management obtains independent appraisals for significant collateral.

The Company’s loans and leases are generally secured by specific items of collateral including real property, consumer assets, and business assets. Although the Company has a diversified loan and lease 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 and leases, further reductions in the carrying amounts of loans and leases 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 and leases. 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 and leases may change materially in the near term.

At March 31, 2022, the net deferred fees outstanding was $972 thousand for the 2021 Paycheck Protection Program (“PPP“) loans and as of December 31, 2021, the net deferred fees outstanding for the 2021 PPP loans was $2.0 million.  PPP loans are included in the Commercial and Industrial loan segments. As of March 31, 2022, the Company had 273 PPP loans outstanding, with an outstanding principal balance of $27.9 million and as of December 31, 2021, the Company had 587 PPP loans outstanding, with an outstanding principal balance of $52.2 million.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The composition of loans and leases by loan classification for performing, impaired and PCI loan and leases status is summarized in the tables below (in thousands):

					Construction		Commercial
	Commercial		Consumer		and Land		and				Consumer
	Real Estate		Real Estate		Development		Industrial		Leases		and Other		Total
March 31, 2022:
Performing loans and leases	$	1,454,728	$	471,368	$	311,992	$	458,674	$	57,662	$	11,225	$	2,765,649
Impaired loans and leases		858		2,070		—		—		—		—		2,928
		1,455,586		473,438		311,992		458,674		57,662		11,225		2,768,577
PCI loans and leases		20,270		9,791		2,662		2,479		2,230		17		37,449
Total loans and leases	$	1,475,856	$	483,229	$	314,654	$	461,153	$	59,892	$	11,242	$	2,806,026
December 31, 2021:
Performing loans and leases	$	1,362,423	$	463,374	$	275,504	$	485,411	$	50,538	$	11,780	$	2,649,030
Impaired loans and leases		858		2,065		—		97		—		—		3,020
		1,363,281		465,439		275,504		485,508		50,538		11,780		2,652,050
PCI loans and leases		20,875		11,833		2,882		2,516		3,170		71		41,347
Total loans and leases	$	1,384,156	$	477,272	$	278,386	$	488,024	$	53,708	$	11,851	$	2,693,397

The following tables show the allowance for loan and lease losses allocation by loan and lease classification for impaired, PCI, and performing (in thousands):

					Construction		Commercial				Consumer
	Commercial		Consumer		and Land		and				and
	Real Estate		Real Estate		Development		Industrial		Leases		Other		Total
March 31, 2022:
Performing loans and leases	$	9,945	$	3,267	$	2,120	$	3,501	$	548	$	115	$	19,496
Impaired loans and leases		395		—		—		—		—		—		395
		10,340		3,267		2,120		3,501		548		115		19,891
PCI loans and leases		65		121		—		—		—		1		187
Total loans and leases	$	10,405	$	3,388	$	2,120	$	3,501	$	548	$	116	$	20,078
December 31, 2021:
Performing loans and leases	$	9,355	$	3,237	$	1,882	$	3,685	$	330	$	123	$	18,612
Impaired loans and leases		396		69		—		96		—		—		561
		9,751		3,306		1,882		3,781		330		123		19,173
PCI loans and leases		30		148		—		—		—		1		179
Total loans and leases	$	9,781	$	3,454	$	1,882	$	3,781	$	330	$	124	$	19,352

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

	Three Months Ended March 31, 2022
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and				Consumer
	Real Estate		Estate		Development		Industrial		Leases		and Other		Total
Beginning balance	$	9,781	$	3,454	$	1,882	$	3,781	$	330	$	124	$	19,352
Charged-off loans and leases		—		(33)		—		(188)		(85)		(182)		(488)
Recoveries of charge-offs		1		7		—		17		157		26		208
Provision charged to expense		623		(40)		238		(109)		146		148		1,006
Ending balance	$	10,405	$	3,388	$	2,120	$	3,501	$	548	$	116	$	20,078

19

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

	Three Months Ended March 31, 2021
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and				Consumer
	Real Estate		Estate		Development		Industrial		Leases		and Other		Total
Beginning balance	$	7,579	$	3,471	$	2,076	$	5,107	$	—	$	113	$	18,346
Charged-off loans and leases		—		—		—		—		—		(120)		(120)
Recoveries of charge-offs		3		16		—		3		—		55		77
Provision charged to expense		55		(179)		(108)		237		—		62		67
Ending balance	$	7,637	$	3,308	$	1,968	$	5,347	$	—	$	110	$	18,370

We maintain the allowance at a level that we deem appropriate to adequately cover the probable losses inherent in the loan and lease portfolio. Our provision for loan and lease losses for the three months ended March 31, 2022, is $1.0 million compared to $67 thousand in the same period in 2021, an increase of $939 thousand.  As of March 31, 2022, and December 31, 2021, our allowance for loan and lease losses was $20.1 million and $19.4 million, respectively, which we deemed to be adequate at each of the respective dates.  Our allowance for loan and lease losses as a percentage of total loans and leases was 0.72% at March 31, 2021 and December 31, 2021.

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

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

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

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

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

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

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

20

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The Company evaluates the loan risk grading system definitions and allowance for loan loss methodology on an ongoing basis.  No significant changes have been made.

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

	March 31, 2022
					Construction		Commercial
	Commercial		Consumer		and Land		and				Consumer
Non PCI Loans and Leases:	Real Estate		Real Estate		Development		Industrial		Leases		and Other		Total
Pass	$	1,421,096	$	467,908	$	311,618	$	454,048	$	57,662	$	11,190	$	2,723,522
Watch		26,938		1,610		297		4,392		—		24		33,261
Special mention		6,524		1,512		69		109		—		—		8,214
Substandard		1,028		2,408		8		125		—		11		3,580
Doubtful		—		—		—		—		—		—		—
Total		1,455,586		473,438		311,992		458,674		57,662		11,225		2,768,577
PCI Loans and Leases:
Pass		15,490		8,063		2,119		2,479		2,230		17		30,398
Watch		1,228		483		89		—		—		—		1,800
Special mention		14		64		—		—		—		—		78
Substandard		3,538		1,181		454		—		—		—		5,173
Doubtful		—		—		—		—		—		—		—
Total		20,270		9,791		2,662		2,479		2,230		17		37,449
Total loans and leases	$	1,475,856	$	483,229	$	314,654	$	461,153	$	59,892	$	11,242	$	2,806,026

	December 31, 2021
					Construction		Commercial
	Commercial		Consumer		and Land		and				Consumer
Non PCI Loans and Leases:	Real Estate		Real Estate		Development		Industrial		Leases		and Other		Total
Pass	$	1,330,888	$	460,190	$	275,124	$	480,677	$	50,538	$	11,724	$	2,609,141
Watch		27,246		1,334		237		4,345		—		42		33,204
Special mention		4,120		1,525		70		228		—		—		5,943
Substandard		1,027		2,390		73		213		—		14		3,717
Doubtful		—		—		—		45		—		—		45
Total		1,363,281		465,439		275,504		485,508		50,538		11,780		2,652,050
PCI Loans and Leases:
Pass		16,019		9,714		2,335		2,516		3,170		71		33,825
Watch		1,271		539		91		—		—		—		1,901
Special mention		15		68		—		—		—		—		83
Substandard		3,570		1,512		456		—		—		—		5,538
Doubtful		—		—		—		—		—		—		—
Total		20,875		11,833		2,882		2,516		3,170		71		41,347
Total loans and leases	$	1,384,156	$	477,272	$	278,386	$	488,024	$	53,708	$	11,851	$	2,693,397

Past Due Loans and Leases:

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

21

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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

	March 31, 2022
	30-60 Days		61-89 Days		Past Due 90				Total
	Past Due and		Past Due and		Days or More				Past Due and
	Accruing		Accruing		and Accruing		Nonaccrual		Nonaccrual		PCI		Current		Total
Commercial real estate	$	118	$	—	$	—	$	858	$	976	$	20,270	$	1,454,610	$	1,475,856
Consumer real estate		846		—		—		2,383		3,229		9,791		470,209		483,229
Construction and land development		—		—		—		—		—		2,662		311,992		314,654
Commercial and industrial		158		—		—		92		250		2,479		458,424		461,153
Leases		336		—		—		—		336		2,230		57,326		59,892
Consumer and other		308		—		—		9		317		17		10,908		11,242
Total	$	1,766	$	—	$	—	$	3,342	$	5,108	$	37,449	$	2,763,469	$	2,806,026

	December 31, 2021
	30-60 Days		61-89 Days		Past Due 90				Total
	Past Due and		Past Due and		Days or More				Past Due and
	Accruing		Accruing		and Accruing		Nonaccrual		Nonaccrual		PCI		Current		Total
Commercial real estate	$	172	$	—	$	—	$	858	$	1,030	$	20,875	$	1,362,251	$	1,384,156
Consumer real estate		884		10		—		2,139		3,033		11,833		462,406		477,272
Construction and land development		91		—		—		—		91		2,882		275,413		278,386
Commercial and industrial		1,191		119		45		116		1,471		2,516		484,037		488,024
Leases		361		—		—		—		361		3,170		50,177		53,708
Consumer and other		99		4		19		11		133		71		11,647		11,851
Total	$	2,798	$	133	$	64	$	3,124	$	6,119	$	41,347	$	2,645,931	$	2,693,397

Impaired Loans and Leases:

A loan or lease held for investment is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due (both principal and interest) according to the terms of the loan or lease agreement.

22

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The following is an analysis of the impaired loan and lease portfolio, including PCI loans and leases, detailing the related allowance recorded (in thousands):

	March 31, 2022						December 31, 2021
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
Impaired loans and leases without a valuation allowance:
Commercial real estate	$	—	$	—	$	—	$	—	$	—	$	—
Consumer real estate		2,070		2,069		—		1,805		1,806		—
Construction and land development		—		—		—		—		—		—
Commercial and industrial		—		—		—		—		—		—
Leases		—		—		—		—		—		—
Consumer and other		—		—		—		—		—		—
		2,070		2,069		—		1,805		1,806		—
Impaired loans and leases with a valuation allowance:
Commercial real estate		858		858		395		858		859		396
Consumer real estate		—		—		—		260		262		69
Construction and land development		—		—		—		—		—		—
Commercial and industrial		—		—		—		97		96		96
Leases		—		—		—		—		—		—
Consumer and other		—		—		—		—		—		—
		858		858		395		1,215		1,217		561
PCI loans and leases:
Commercial real estate		1,232		1,513		65		707		926		30
Consumer real estate		901		865		121		1,129		1,251		148
Construction and land development		—		—		—		—		—		—
Commercial and industrial		—		—		—		—		—		—
Leases		—		—		—		—		—		—
Consumer and other		3		2		1		5		3		1
		2,136		2,380		187		1,841		2,180		179
Total impaired loans and leases	$	5,064	$	5,307	$	582	$	4,861	$	5,203	$	740

23

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

	Three Months Ended March 31,
	2022				2021
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Impaired loans and leases without a valuation allowance:
Commercial real estate	$	—	$	—	$	2,001	$	1
Consumer real estate		1,937		17		1,384		12
Construction and land development		—		—		—		—
Commercial and industrial		—		—		—		—
Leases		—		—		—		—
Consumer and other		—		—		—		—
		1,937		17		3,385		13
Impaired loans and leases with a valuation allowance:
Commercial real estate		858		—		1,577		102
Consumer real estate		130		—		444		5
Construction and land development		—		—		—		—
Commercial and industrial		49		—		128		2
Leases		—		—		—		—
Consumer and other		—		—		—		—
		1,037		—		2,149		109
PCI loans and leases:
Commercial real estate		1,231		24		—		—
Consumer real estate		901		16		1,215		22
Construction and land development		—		—		—		—
Commercial and industrial		—		—		268		1
Leases		—		—		—		—
Consumer and other		3		—		19		—
		2,135		40		1,502		23
Total impaired loans and leases	$	5,109	$	57	$	7,036	$	145

Troubled Debt Restructurings:

For the periods presented, impaired loans included loans that were classified as trouble debt restricting (“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, 2022 and December 31, 2021, management had approximately $625 thousand and $206 thousand, respectively, in loans that met the criteria for TDR, none of which were on nonaccrual. A loan is placed back on accrual status when both principal and interest are current, and it is probable that the Company will be able to collect all amounts due (both principal and interest) according to the terms of the loan agreement.

24

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

There was one loan for $516 thousand that was modified as a TDR during the three months ended March 31, 2022, and no loans were modified during the three months ended March 31, 2021. There were no loans that were modified as TDRs during the past three months and for which there was a subsequent payment default.

Foreclosure Proceedings and Balances:

As of March 31, 2022, there were no residential properties secured by real estate included in other real estate owned and  there were no residential real estate loans in the process of foreclosure.

Purchased Credit Impaired Loans and Leases:

The Company has acquired loans and leases where 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 and leases are as follows (in thousands):

	March 31,		December 31,
	2022		2021
Commercial real estate	$	30,981	$	31,600
Consumer real estate		11,954		14,215
Construction and land development		3,127		3,699
Commercial and industrial		3,467		3,424
Leases		2,542		3,557
Consumer and other		65		125
Total loans and leases		52,136		56,620
Less: Remaining purchase discount		(14,687)		(15,273)
Total loans and leases, net of purchase discount		37,449		41,347
Less: Allowance for loan and leases losses		(187)		(179)
Carrying amount, net of allowance	$	37,262	$	41,168

Activity related to the accretable yield on loans and leases acquired with deteriorated credit quality is as follows (in thousands):

	Three Months Ended
	March 31,
	2022		2021
Accretable yield, beginning of period	$	14,618	$	16,889
Additions		—		—
Accretion income		(1,096)		(1,931)
Reclassification		269		337
Other changes, net		7,490		(590)
Accretable yield, end of period	$	21,281	$	14,705

Note 6. Goodwill and Intangible Assets

In accordance with FASB ASC 350, Goodwill and Other, regarding testing goodwill for impairment provides an entity the option to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The Company performs its annual goodwill impairment test as of December 31 of each year. For 2021, the results of the qualitative assessment provided no indication of potential impairment.

25

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The Company’s other intangible assets consist of core deposit, customer relationships and tradename.  They are initially recognized based on a valuation performed as of the consummation date. The core deposit intangible is amortized over the average remaining life of the acquired customer deposits, the customer relationships are amortized over a weighted average of 8.6 years and the tradename is amortized over five years.

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

	March 31,		December 31,
	2022		2021
Goodwill:
Balance, beginning of period	$	91,565	$	74,135
Acquisition of PFG		—		323
Acquisition of Fountain		—		2,400
Acquisition of SCB		—		17,171
Adjustment, due to Sale		—		(2,464)
Balance, end of the period	$	91,565	$	91,565

	Core Deposit		Customer Relationships		Tradename
Amortized other intangible assets:	Intangibles		Intangibles		Intangibles		Total
March 31, 2022:
Beginning balance January 1, 2022, gross	$	17,470	$	3,722	$	63	$	21,255
Less: accumulated amortization		(6,671)		(908)		(26)		(7,605)
Balance, March 31, 2022, other intangible assets, net	$	10,799	$	2,814	$	37	$	13,650
December 31, 2021:
Beginning balance January 1, 2021, gross	$	15,920	$	1,064	$	63	$	17,047
Acquisition of Fountain		-		2,658		-		2,658
Acquisition of SCB		1,550		-		-		1,550
Balance, December 31, 2021, other intangible assets, gross		17,470		3,722		63		21,255
Less: accumulated amortization		(6,212)		(733)		(23)		(6,968)
Balance, December 31, 2021, other intangible assets, net	$	11,258	$	2,989	$	40	$	14,287

The aggregate amortization expense for other intangible assets for the three months ended March 31, 2022 and 2021, was $637 thousand and $444 thousand, respectively.

The estimated aggregate amortization expense for future periods for intangibles is as follows (in thousands):

Remainder of 2022	$	1,884
2023		2,356
2024		2,203
2025		2,041
2026		1,888
Thereafter		3,278
Total	$	13,650

26

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 7. Borrowings, Line of Credit and Subordinated Debt

Borrowings:

At March 31, 2022, total borrowings were $36.7 million compared to $87.6 million at December 31, 2021.  During the quarter ending March 31, 2022, the FHLB called a $50 million advance.  Borrowings consist of the following (dollars in thousands):

	March 31,		December 31,
	2022		2021
Securities sold under customer repurchase agreements	$	4,213	$	5,085
FHLB borrowings		25,000		75,000
Other borrowings		7,500		7,500
Total	$	36,713	$	87,585

Securities Sold Under Agreements to Repurchase:

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

The Company had securities sold under agreements to repurchase with commercial checking customers which were secured by government agency securities.  The carrying value of investment securities pledged as collateral under repurchase agreements was $9.8 million and $10.1 million at March 31, 2022 and December 31, 2021, respectively. The average balance during the three month period March 31, 2022 and 2021 was $5.0 million and $6.4 million, respectively.  The maximum month-end outstanding balance for the three month period March 31, 2022 and 2021 was $5.5 million and $7.2 million, respectively.

Line of Credit:

The Company has a Loan and Security Agreement and revolving note with ServisFirst Bank, pursuant to which ServisFirst Bank has made a $25.0 million revolving line of credit available to the Company. The maturity of the line of credit is March 24, 2023. At March 31, 2022, $7.5 million was outstanding under the line of credit, and $17.5 million of the line of credit remained available to the Company.

Subordinated Debt:

On September 28, 2018, the Company issued $40 million of 5.625% fixed-to-floating rate subordinated notes (the "Notes"), which was outstanding as of March 31, 2022 and December 31, 2021. Unamortized debt issuance cost was $548 thousand and $570 thousand at March 31, 2022 and December 31, 2021, respectively.

The Notes initially bears interest at a rate of 5.625% per annum from and including September 28, 2018, to but excluding October 2, 2023, with interest during this period payable semi-annually in arrears. From and including October 2, 2023, to but excluding the maturity date or early redemption date, the interest rate will reset quarterly to an annual floating rate equal to three-month LIBOR, or an alternative rate determined in accordance with the terms of the Notes if three-month LIBOR cannot be determined, plus 255 basis points, with interest during this period payable quarterly in arrears. The Notes are redeemable by the Company, in whole or in part, on or after October 2, 2023, and at any time, in whole but not in part, upon the occurrence of certain events. The Notes have been structured to qualify initially as Tier 2 capital for the Company for regulatory capital purposes.

The Notes unamortized debt issuance costs totaled $548 thousand at March 31, 2022, and will be amortized through the Notes’ maturity date. Amortization expense totaled $21 thousand for the three months ended March 31, 2022 and 2021, respectively

27

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

On September 1, 2021, the Company acquired $2.5 million of subordinated notes (“sub-debt”) from the acquisition of SCB. The sub-debt bears interest at a rate of 6.75% per annum until August 14, 2024, with the interest during this period payable semi-annually in arrears. From and including August 14, 2024, to but excluding the maturity date or early redemption date, the interest rate will reset quarterly to an annual floating rate equal to three-month LIBOR, or an alternative rate determined in accordance with the terms of the sub-debt if three-month LIBOR cannot be determined, plus 530.25 basis points, with interest during this period payable quarterly in arrears. The sub-debt is redeemable by the Company, in whole or in part, on or after August 14, 2024, and at any time, in whole but not in part, upon the occurrence of certain events. The sub-debt has been structured to qualify initially as Tier 2 capital for the Company for regulatory capital purposes.

Note 8. Employee Benefit Plans

401(k) Plan:

The Company provides a deferred salary reduction plan (“Plan”) under Section 401(k) of the Internal Revenue Code covering substantially all employees. After 90 days of service, the Company matches 100% of employee contributions up to 3% of compensation and 50% of employee contributions on the next 2% of compensation. The Company’s contribution to the Plan for the three month periods ending March 31, 2022 and 2021, respectively, was $393 thousand and $288 thousand.    

Equity Incentive Plans:

The Compensation Committee of the Company’s Board of Directors may grant or award eligible participants stock options, restricted stock, restricted stock units, stock appreciation rights, and other stock-based awards or any combination of awards (collectively referred to herein as "Rights"). At March 31, 2022, the Company had one active equity incentive plan available for future grants, the 2015 Stock Incentive Plan, which has 1,767,518 Rights available for future grants or awards.

In addition, the Company has 33,500 Rights issued from the Cornerstone Non-Qualified Plan Options, and 2,266 Rights issued from the Capstone Stock Option Plan. These plans do not have any Rights available for future grants or awards.

Stock Options:

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

		Weighted
		Average
		Exercisable
	Number	Price
Outstanding at December 31, 2021	79,667	$	10.17
Granted	—		—
Exercised	(27,550)		7.90
Forfeited	—		—
Outstanding at March 31, 2022	52,117	$	11.37

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Information pertaining to stock options outstanding at March 31, 2022, is as follows:

		Options Outstanding				Options Exercisable
			Weighted-
			Average	Weighted-			Weighted-
			Remaining	Average			Average
Exercise		Number	Contractual	Exercise		Number	Exercise
Prices		Outstanding	Life	Price		Exercisable	Price
$	9.48	15,500	0.95 years	$	9.48	15,500	$	9.48
	9.60	18,000	1.71 years		9.60	18,000		9.60
	11.76	2,266	0.25 years		11.76	2,266		11.76
	15.05	16,351	3.21 years		15.05	16,351		15.05
Outstanding, end of period		52,117	1.89 years	$	11.37	52,117	$	11.37

The Company did not recognize any stock option-based compensation expense during the three months ended March 31, 2022 and 2021, respectively, as all stock options issued are fully vested, and no future compensation cost will be recognized related to nonvested stock-based compensation arrangements granted under the Plans.

The intrinsic value of options exercised during the three months ended March 31, 2022 and 2021, was $506 thousand and $192 thousand, respectively.  The aggregate intrinsic value of total options outstanding and exercisable options at March 31, 2022, was $741 thousand. Cash received from options exercised under all share-based payment arrangements for the three months ended March 31, 2022 was $217 thousand.

Stock options of 27,550 and 15,965 shares were exercised during the three month periods ended March 31, 2022, and 2021, respectively.  The income tax benefit recognized for the exercise of options during the three months ended March 31, 2022, and 2021, was a $76 thousand and $1 thousand, respectively.

Restricted Stock Awards:

A summary of the activity of the Company’s unvested restricted stock awards for the period ended March 31, 2022 is presented below:

		Weighted
		Average
		Grant-Date
	Number	Fair Value
Balance at December 31, 2021	144,367	$	19.49
Granted	21,842		26.66
Vested	(4,167)		20.14
Forfeited/expired	—		—
Balance at March 31, 2022	162,042	$	20.44

The Company measures the fair value of restricted stock awards based on the price of the Company’s common stock on the grant date, and compensation expense is recorded over the vesting period. The compensation expense for restricted stock awards during the three months ended March 31, 2022 and 2021, was $312 thousand and $201 thousand, respectively. As of March 31, 2022, there was $1.7 million of unrecognized compensation cost related to non-vested restricted stock awards granted under the plan. The cost is expected to be recognized over a weighted average period of 2.20 years. The grant-date fair value of restricted stock awards vested was $84 thousand for the three months ended March 31, 2022.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Stock Appreciation Rights ("SARs"):

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

		Weighted
		Average
	Number	Exercisable Price
Outstanding at December 31, 2021	55,000	$	18.21
Granted	—		—
Exercised	(4,500)		18.12
Forfeited	—		—
Outstanding at March 31, 2022	50,500	$	18.21

Information pertaining to SARs outstanding at March 31, 2022, is as follows:

		SARs Outstanding				SARs Exercisable
			Weighted-
			Average	Weighted-
			Remaining	Average			Weighted- Average
Exercise		Number	Contractual	Exercise		Number	Exercise
Prices		Outstanding	Life		Price	Exercisable	Price
$	15.19	16,000	1.75 years	$	15.19	—	$	—
	18.12	14,500	0.75 years		18.12	14,500		18.12
	20.70	20,000	2.76 years		20.70	—		—
	Outstanding, end of period	50,500	1.86 years	$	18.21	14,500	$	18.12

SARs compensation expense of ($26) thousand and $49 thousand was recognized for the three month periods ended March 31, 2022 and 2021, respectively. The credit in expense for the three month period ended March 31, 2022, was due to adjustments related to the fair value evaluation of SARs.  

Note 9. Commitments and Contingent Liabilities

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

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

	March 31,		December 31,
	2022		2021
Commitments to extend credit	$	723,380	$	669,770
Standby letters of credit		17,919		17,868

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if deemed

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necessary by the Company upon extension of credit, is based on management’s credit evaluation of the customer. Collateral held varies, but may include accounts receivable, inventory, property and equipment, residential real estate, and income-producing commercial properties.

Standby letters of credit issued by the Company are conditional commitments to guarantee the performance of a customer to a third party. Those letters of credit are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. Collateral held varies and is required in instances which the Company deems necessary. At March 31, 2022 and December 31, 2021, the carrying amount of liabilities related to the Company’s obligation to perform under standby letters of credit was insignificant.

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

Note 10. Fair Value Disclosures

Determination of Fair Value:

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

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

Fair Value Hierarchy:

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

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

Level 2 - Valuation is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The valuation may be based on quoted prices for similar assets or liabilities; quoted

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prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

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

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

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

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

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Recurring Measurements of Fair Value:

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

			Quoted Prices in		Significant		Significant
			Active Markets		Other		Other
			for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
Description	Fair Value		(Level 1)		(Level 2)		(Level 3)
March 31, 2022:
Assets:
Securities available-for-sale:
U.S. Treasury	$	229,913	$	—	$	229,913	$	—
U.S. Government-sponsored enterprises (GSEs)		506		—		506		—
Municipal securities		55,241		—		55,241		—
Other debt securities		28,540		—		28,540		—
Mortgage-backed securities (GSEs)		226,283		—		226,283		—
Total securities available-for-sale		540,483		—		540,483		—
Interest rate swaps agreements for customer loans		1,334		—		1,334		—
Total assets at fair value	$	541,817	$	—	$	541,817	$	—
Liabilities:
Derivative financial instruments and interest rate swap agreements	$	2,552	$	—	$	2,552	$	—
December 31, 2021:
Assets:
Securities available-for-sale:
U.S. Treasury	$	137,758			$	137,758	$	—
U.S. Government-sponsored enterprises (GSEs)		21,801		—		21,801		—
Municipal securities		67,820		—		67,820		—
Other debt securities		27,220		—		27,220		—
Mortgage-backed securities (GSEs)		227,854		—		227,854		—
Total securities available-for-sale		482,453		—		482,453		—
Interest rate swaps agreements for customer loans		1,326		—		1,326		—
Total assets at fair value	$	483,779	$	—	$	483,779	$	—
Liabilities:
Derivative financial instruments	$	4,893	$	—	$	4,893	$	—

During the three months ending March 31, 2022, there were no transfers between Level 1 and Level 2 in the fair value hierarchy.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Assets Measured at Fair Value on a Nonrecurring Basis:

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

			Quoted Prices in		Significant		Significant
			Active Markets		Other		Other
			for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
March 31, 2022:
Collateral dependent loans	$	2,412	$	—	$	—	$	2,412
Other real estate owned		696		—		—		696
December 31, 2021:
Collateral dependent loans	$	2,280	$	—	$	—	$	2,280
Other real estate owned		367		—		—		367

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

					Weighted
			Valuation	Significant Other	Average of
	Fair Value		Technique	Unobservable Input	Input
March 31, 2022:
Collateral dependent loans	$	2,412	Appraisal	Appraisal discounts	19	%
Other real estate owned		696	Appraisal	Appraisal discounts	21	%
December 31, 2021:
Collateral dependent loans	$	2,280	Appraisal	Appraisal discounts	25	%
Other real estate owned		367	Appraisal	Appraisal discounts	13	%

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

Other real estate owned: Other real estate owned, consisting of properties obtained through foreclosure or in satisfaction of loans, are initially recorded at fair value less estimated costs to sell upon transfer of the loans to other real estate. Subsequently, other real estate is carried at the lower of carrying value or fair value less costs to sell. Fair values are generally based on third party appraisals of the property and are classified within Level 3 of the fair value hierarchy. The appraisals are sometimes further discounted based on management’s historical knowledge, and/or changes in market conditions from the date of the most recent appraisal, and/or management’s expertise and knowledge of the customer and

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

the customer’s business. Such discounts are typically significant unobservable inputs for determining fair value. In cases where the carrying amount exceeds the fair value, less estimated costs to sell, the difference is recognized in noninterest expense.

Carrying value and estimated fair value:

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

	Fair Value Measurements Using
	Carrying								Estimated
	Amount		Level 1		Level 2		Level 3		Fair Value
March 31, 2022:
Assets:
Cash and cash equivalents	$	763,968	$	763,968	$	—	$	—	$	763,968
Securities available-for-sale		540,483		—		540,483		—		540,483
Securities held-to-maturity		289,532		—		277,734		—		277,734
Other investments		16,499		N/A		N/A		N/A		N/A
Loans and leases, net and loans held for sale		2,791,842		—		—		2,739,655		2,739,655
Interest rate swaps agreements for customer loans		1,334		—		1,334		—		1,334
Liabilities:
Noninterest-bearing demand deposits		1,093,933		—		1,093,933		—		1,093,933
Interest-bearing demand deposits		975,272		—		975,272		—		975,272
Money market and savings deposits		1,573,101		—		1,573,101		—		1,573,101
Time deposits		549,047		—		549,677		—		549,677
Borrowings		36,713		—		36,750		—		36,750
Subordinated debt		41,952		—		—		42,487		42,487
Derivative financial instruments and interest rate swap agreements		2,552		—		2,552		—		2,552
December 31, 2021:
Assets:
Cash and cash equivalents	$	1,045,077	$	1,045,077	$	—	$	—	$	1,045,077
Securities available-for-sale		482,453		—		482,453		—		482,453
Securities held-to-maturity		76,969		—		76,946				76,946
Other investments		16,494		N/A		N/A		N/A		N/A
Loans and leases, net and loans held for sale		2,679,148		—		—		2,676,181		2,676,181
Interest rate swaps agreements for customer loans		1,326		—		1,326		—		1,326
Liabilities:
Noninterest-bearing demand deposits		1,055,125		—		1,055,125		—		1,055,125
Interest-bearing demand deposits		899,158		—		899,158		—		899,158
Money market and savings deposits		1,493,007		—		1,493,007		—		1,493,007
Time deposits		574,648		—		576,598		—		576,598
Borrowings		87,585		—		88,082		—		88,082
Subordinated debt		41,930		—		—		43,374		43,374
Derivative financial instruments and interest rate swap agreements		4,893		—		4,893		—		4,893

Limitations:

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

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 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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 11.Derivatives Financial Instruments

Derivatives designated as fair value hedges:

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

A summary of the Company’s fair value hedge relationships for the periods presented are as follows (dollars in thousands):

		Weighted
		Average
	Balance	Remaining	Weighted
	Sheet	Maturity	Average		Receive	Notional		Estimated
Liability derivatives	Location	(In Years)	Pay Rate		Rate	Amount		Fair Value
March 31, 2022:
Interest rate swap agreements - securities	Other liabilities	6.00	3.09	%	3 month LIBOR	$	36,000	$	(1,218)
December 31, 2021:
Interest rate swap agreements - securities	Other liabilities	6.20	3.09	%	3 month LIBOR	$	36,000	$	(3,567)

The effects of the Company’s fair value hedge relationships reported in interest income on tax-exempt available-for-sale securities on the consolidated income statement were as follows (in thousands):

	Three Months Ended
	March 31,
	2022		2021
Interest income on tax-exempt securities	$	393	$	564
Effects of fair value hedge relationships		(254)		(305)
Reported interest income on tax-exempt securities	$	139	$	259

	Three Months Ended
	March 31,
Gain (loss) on fair value hedging relationship	2022		2021
Interest rate swap agreements - securities:
Hedged items	$	(1,218)	$	(4,008)
Derivative designated as hedging instruments	$	1,218	$	4,008
Carry amount of hedged assets - securities available-for-sale	$	40,125	$	43,073

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Non-hedged derivatives:

During the second quarter of 2021, the Company initiated a loan hedging program to certain loan customers. Through this program, the Company originates a variable rate loan with the customer. The Company and the customer will then enter into a fixed interest rate swap. Lastly, an identical offsetting swap is entered into by the Company with a dealer bank. These “back-to-back” swap arrangements are intended to offset each other and allow the Company to book a variable rate loan, while providing the customer with a contract for fixed interest payments. In these arrangements, the Company’s net cash flow is equal to the interest income received from the variable rate loan originated with the customer. These customer swaps are not designated as hedging instruments and are recorded at fair value in other assets and other liabilities. Since the income statement impact of the offsetting positions is limited, any changes in fair value is recognized as other noninterest income in the current period.

At March 31, 2022 and December 31, 2021, interest rate swaps related to the Company’s loan hedging program that were outstanding are presented in the following table (in thousands):

	March 31, 2022				December 31, 2021
		Notional		Estimated		Notional		Estimated
		Amount		Fair Value		Amount		Fair Value
Interest rate swap agreements:
Assets	$	84,141	$	1,334	$	48,125	$	1,326
Liabilities		84,141		(1,334)		48,125		(1,326)

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

	Three Months Ended
	March 31,
	2022		2021
Interest rate swap agreements	$	520	$	—

Note 12. Leases

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

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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

		March 31,		December 31,
	Classification	2022		2021
Assets:
Operating lease right-of-use assets	Other assets	$	9,499	$	9,812
Liabilities:
Operating lease liabilities	Other liabilities	$	9,586	$	9,881

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

As of March 31, 2022, the weighted average remaining lease term was 9.77 years and the weighted average discount rate was 2.10%.

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

	Three Months Ended
	March 31,
	2022		2021
Lease costs:
Operating lease costs	$	414	$	240
Variable lease costs		25		24
Total	$	439	$	264
Other information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	396	$	233

Future minimum payments for operating leases with initial or remaining terms of one year or more as of March 31, 2022, were as follows (in thousands):

	Amounts
March 31, 2023	$	1,142
March 31, 2024		1,290
March 31, 2025		1,079
March 31, 2026		1,047
March 31, 2027		946
Thereafter		5,249
Total future minimum lease payments		10,753
Amounts representing interest		(1,167)
Present value of net future minimum lease payments	$	9,586

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 13. Regulatory Matters

Regulatory Capital Requirements:

The final rules implementing the Basel Committee on Banking Supervision's capital guidelines for U.S. banks (Basel III rules) became effective January 1, 2015. In order to avoid restrictions on capital distributions and discretionary bonus payments to executives, under the new rules a covered banking organization is also required to maintain a “capital conservation buffer” in addition to its minimum risk-based capital requirements. This buffer is required to consist solely of common equity Tier 1, and the buffer applies to all three risk-based measurements (CET1, Tier 1 capital and total capital).  As of January 1, 2019, an additional amount of Tier 1 common equity equal to 2.5% of risk-weighted assets is required for compliance with the capital conservation buffer. The ratios for the Company and the Bank are currently sufficient to satisfy the fully phased-in conservation buffer. At March 31, 2022, the Company and the Bank exceeded the minimum regulatory requirements and exceeded the threshold for the "well capitalized" regulatory classification.

Regulatory Restrictions on Dividends:

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

During the three months ended March 31, 2022, the Bank did not pay a dividend to the Company and the Company paid a quarterly common stock dividend of $0.07 per share.  The amount and timing of all future dividend payments by the Company, if any, is subject to discretion of the Company’s board of directors and will depend on the Company’s earnings, capital position, financial condition and other factors, including new regulatory capital requirements, as they become known to the Company.

39

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Regulatory Capital Levels:

Actual and required capital levels at March 31, 2022, and December 31, 2021 are presented below (dollars in thousands):

									Minimum to be
									well
									capitalized under
					Minimum for				prompt
					capital				corrective action
		Actual			adequacy purposes				provisions1
	Amount		Ratio		Amount		Ratio		Amount		Ratio
March 31, 2022
SmartFinancial:
Total Capital (to Risk Weighted Assets)	$	395,523	12.22	%	$	258,996	8.00	%		N/A	N/A
Tier 1 Capital (to Risk Weighted Assets)		333,493	10.30	%		194,247	6.00	%		N/A	N/A
Common Equity Tier 1 Capital (to Risk Weighted Assets)		333,493	10.30	%		145,685	4.50	%		N/A	N/A
Tier 1 Capital (to Average Assets)2		333,493	7.41	%		180,085	4.00	%		N/A	N/A
SmartBank:
Total Capital (to Risk Weighted Assets)	$	390,953	12.08	%	$	258,990	8.00	%	$	323,737	10.00	%
Tier 1 Capital (to Risk Weighted Assets)		370,875	11.46	%		194,242	6.00	%		258,990	8.00	%
Common Equity Tier 1 Capital (to Risk Weighted Assets)		370,875	11.46	%		145,682	4.50	%		210,429	6.50	%
Tier 1 Capital (to Average Assets)2		370,875	8.24	%		180,011	4.00	%		225,013	5.00	%
December 31, 2021
SmartFinancial:
Total Capital (to Risk Weighted Assets)	$	386,627	12.55	%	$	246,483	8.00	%		N/A	N/A
Tier 1 Capital (to Risk Weighted Assets)		325,345	10.56	%		184,862	6.00	%		N/A	N/A
Common Equity Tier 1 Capital (to Risk Weighted Assets)		325,345	10.56	%		138,647	4.50	%		N/A	N/A
Tier 1 Capital (to Average Assets)		325,345	7.45	%		174,578	4.00	%		N/A	N/A
SmartBank:
Total Capital (to Risk Weighted Assets)	$	378,055	12.29	%	$	246,053	8.00	%	$	307,566	10.00	%
Tier 1 Capital (to Risk Weighted Assets)		358,703	11.66	%		184,539	6.00	%		246,053	8.00	%
Common Equity Tier 1 Capital (to Risk Weighted Assets)		358,703	11.66	%		138,405	4.50	%		199,918	6.50	%
Tier 1 Capital (to Average Assets)		358,703	8.23	%		174,384	4.00	%		217,980	5.00	%

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

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

40

SMARTFINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 14. Other Comprehensive Income (Loss)

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

	Three Months Ended March 31, 2022
						Accumulated
	Securities		Securities	Fair Value		Other
	Available-for-		Transferred to	Municipal		Comprehensive
	Sale		Held-to-Maturity	Security Hedges		Income (Loss)
Beginning balance, December 31, 2021	$	25	665	$	753	$	1,443
Other comprehensive income (loss)		(15,092)	(1,490)		(409)		(16,991)
Reclassification of amounts included in net income		—	(8)		—		(8)
Net other comprehensive income (loss) during period		(15,092)	(1,498)		(409)		(16,999)
Ending balance, March 31, 2022	$	(15,067)	(833)	$	344	$	(15,556)
	Three Months Ended March 31, 2021
						Accumulated
	Securities		Securities	Fair Value		Other
	Available-for-		Transferred to	Municipal		Comprehensive
	Sale		Held-to-Maturity	Security Hedges		Income (Loss)
Beginning balance, December 31, 2020	$	2,968	—	$	(785)	$	2,183
Other comprehensive income (loss)		(2,070)	—		970		(1,100)
Reclassification of amounts included in net income		—	—		—		—
Net other comprehensive income (loss) during period		(2,070)	—		970		(1,100)
Ending balance, March 31, 2021	$	898	—	$	185	$	1,083

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

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

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

Forward-Looking Statement

The Company may from time to time make written or oral statements, including statements contained in this report and information incorporated by reference herein (including, without limitation, certain statements in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2), that constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements, including statements regarding the effects of the COVID-19 (and the variants thereof) pandemic on the Company’s business and financial results and conditions, are based on assumptions and estimates and are not guarantees of future performance. Any statements that do not relate to historical or current facts or matters are forward-looking statements. You can identify some of the forward-looking statements by the use of forward-looking words (and their derivatives), such as “may,” “will,” “could,” “project,” “believe,” “anticipate,” “expect,” “estimate,” “continue,” “potential,” “plan,” “forecast,” and the like, the negatives of such expressions, or the use of the future tense. Statements concerning current conditions may also be forward-looking if they imply a continuation of a current condition. These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, financial condition, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to:

● weakness or a decline in the U.S. economy, in particular in Tennessee, and other markets in which we operate;

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

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

● competition from financial institutions and other financial service providers;

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

● the impact of recently enacted and future legislation and regulation on our business and the resulting effect of all of such items on our operations, liquidity and capital position, and on the financial condition of our borrowers and other customers;

● governmental monetary and fiscal policies, including interest rate policies of the Board of Governors of the Federal Reserve, as well as legislative, tax and regulatory changes, including those that impact the money supply and inflation;

● negative changes in the real estate markets in which we operate and have our primary lending activities, which may result in an unanticipated decline in real estate values in our market area;

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

42

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

● the risks relating to the recently completed acquisitions including, without limitation: unexpected transaction costs, including the costs of integrating operations; the risks that the businesses will not be integrated successfully or that such integration may be more difficult, time-consuming or costly than expected; the potential failure to fully or timely realize expected revenues and revenue synergies, including as the result of revenues being lower than expected;

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

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

● government intervention in the U.S. financial system and the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve;

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

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

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

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

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

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

● our ability to retain the services of key personnel;

● adverse results from current or future litigation, regulatory examinations or other legal and/or regulatory actions, including as a result of the Company’s participation in and execution of government programs related to the COVID-19 pandemic;

● the continued impact of the COVID-19 pandemic on the Company’s assets, business, cash flows, financial condition, liquidity, prospects and results of operations;

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

● disruptions to the financial markets as a result of the current or anticipated impact of military conflict, including Russia’s military action in Ukraine, terrorism or other geopolitical events; and

● risks associated with widespread inflation or deflation.  

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

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Executive Summary

The following is a summary of the Company’s financial highlights and significant events during the first quarter of 2022:

● Net income totaled $8.3 million, or $0.49 per diluted common share, during the first quarter of 2022 compared to $9.8 million, or $0.65 per diluted common share, for the same period in 2021.  

● Annualized return on average assets for the three months ended March 31, 2022 and 2021 was 0.73% and 1.18%, respectively.

Selected Financial Information

The following is a summary of certain financial information for the three month periods ended March 31, 2022 and 2021 and as of March 31, 2022 and December 31, 2021 (dollars in thousands, except per share data):

	Three Months Ended
	March 31,
	2022			2021				Change
Income Statement:
Interest income	$	32,915		$	29,292		$	3,623
Interest expense		2,797			3,032			(235)
Net interest income		30,118			26,260			3,858
Provision for loan and lease losses		1,006			67			939
Net interest income after provision for loan and lease losses		29,112			26,193			2,919
Noninterest income		7,111			5,691			1,420
Noninterest expense		25,718			19,464			6,254
Income before income taxes		10,505			12,420			(1,915)
Income tax expense		2,246			2,664			(418)
Net income	$	8,259		$	9,756		$	(1,497)
Per Share Data:
Basic income per common share	$	0.49		$	0.65		$	(0.16)
Diluted income per common share	$	0.49		$	0.65		$	(0.16)
Performance Ratios:
Return on average assets		0.73	%		1.18	%		(0.45)	%
Return on average shareholders' equity		7.83	%		10.96	%		(3.14)	%
	March 31,			December 31,
	2022			2021				Change
Balance Sheet:
Loans and leases, net	$	2,785,948		$	2,674,045		$	111,903
Deposits		4,191,353			4,021,938			169,415

Analysis of Results of Operations

First quarter of 2022 compared to 2021

Net income was $8.3 million, or $0.49 per diluted common share, for the first quarter of 2022, compared to $9.8 million, or $0.65 per diluted common share, for the first quarter of 2021.  For the three months ended March 31, 2022, when compared to the comparable period in 2021, the decline in net income of $1.5 million was largely due to an increase in noninterest expense of $6.3 million, which was offset by an increase in net interest income after provision for loan and lease losses of $2.9 million and growth in our noninterest income of $1.4 million.  The tax equivalent net interest margin was 2.91% for the first quarter of 2022, compared to 3.48% for the first quarter of 2021. Noninterest income to average assets was 0.63% for the first quarter of 2022, decreasing from 0.69% for the first quarter of 2021. Noninterest expense to average assets decreased to 2.27% in the first quarter of 2022, from 2.35% in the first quarter of 2021.

44

Net Interest Income and Yield Analysis

First quarter of 2022 compared to 2021

Net interest income, taxable equivalent, increased to $30.3 million for the first quarter of 2022, up from $26.4 million for the first quarter of 2021. Net interest income was positively impacted, compared to the prior year, primarily by the increase in loan and lease balances and the reduction in interest expense on interest bearing liabilities.  Average interest-earning assets increased from $3.08 billion for the first quarter of 2021, to $4.22 billion for the first quarter of 2022, primarily because of the Company’s continued organic loan and lease growth, acquisition of Fountain completed on May 3, 2021, acquisition of SCB completed September 1, 2021 and the increase in our securities and overall liquidity position. Over this period, average loan and lease balances increased by $295.7 million, average securities increased $491.2 million, average federal funds sold and other interest earning assets increased by $358.7 million, average interest-bearing deposits increased by $855.1 million, average noninterest-bearing deposits increased $327.3 million and average borrowings decreased $12.1 million. The tax equivalent net interest margin decreased to 2.91% for the first quarter of 2022, compared to 3.48% for the first quarter of 2021. The yield on earning assets decreased from 3.88% for the first quarter of 2021, to 3.18% for the first quarter of 2022, primarily due to a reduction in PPP fees, loan discount accretion and lower yielding excess liquidity. The cost of average interest-bearing deposits decreased from 0.44% for the first quarter of 2021, to 0.27% for the first quarter of 2022, primarily due to a lower interest rate environment during the period.

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

	Three Months Ended March 31,
	2022						2021
	Average				Yield/		Average				Yield/
	Balance		Interest		Rate		Balance		Interest		Rate
Assets:
Loans and leases, including fees1	$	2,724,206	$	29,570	4.40	%	$	2,428,499	$	27,943	4.67	%
Loans held for sale		3,890		73	7.62	%		7,913		75	3.82	%
Taxable securities		612,980		2,418	1.60	%		136,492		724	2.15	%
Tax-exempt securities2		105,516		533	2.05	%		90,849		409	1.82	%
Federal funds sold and other earning assets		775,834		486	0.25	%		417,144		291	0.28	%
Total interest-earning assets		4,222,426		33,080	3.18	%		3,080,897		29,442	3.88	%
Noninterest-earning assets		381,807						275,272
Total assets	$	4,604,233					$	3,356,169
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits	$	921,835		446	0.20	%	$	641,214		256	0.16	%
Money market and savings deposits		1,523,188		859	0.23	%		983,893		821	0.34	%
Time deposits		561,207		709	0.51	%		526,062		1,254	0.97	%
Total interest-bearing deposits		3,006,230		2,014	0.27	%		2,151,169		2,331	0.44	%
Borrowings		69,769		157	0.91	%		81,837		117	0.58	%
Subordinated debt		41,938		626	6.05	%		39,354		584	6.01	%
Total interest-bearing liabilities		3,117,937		2,797	0.36	%		2,272,360		3,032	0.54	%
Noninterest-bearing deposits		1,028,298						700,962
Other liabilities		30,053						21,928
Total liabilities		4,176,288						2,995,250
Shareholders' equity		427,945						360,919
Total liabilities and shareholders’ equity	$	4,604,233					$	3,356,169
Net interest income, taxable equivalent			$	30,283					$	26,410
Interest rate spread					2.82	%					3.33	%
Tax equivalent net interest margin					2.91	%					3.48	%
Percentage of average interest-earning assets to average interest-bearing liabilities					135.42	%					135.58	%
Percentage of average equity to average assets					9.29	%					10.75	%

¹Loans and leases include PPP loans with an average balance of $54.0 million and $312.6 million for the three months ended March 31, 2022, and 2021, respectively.  Loan and lease fees included in loan and lease income was $1.6 million and $2.9 million for the three months ended March 31, 2022, and 2021, respectively. Loan and lease fee income for the three months ended March 31, 2022 and 2021, includes $1.1 million and $2.4 million accretion of loan fees on PPP loans, respectively.    

45

²Yields related to investment securities exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 21.0%. The taxable-equivalent adjustment was $165 thousand for the three months ended March 31, 2022 and $150 thousand for the three months ended March 31, 2021.

Noninterest Income

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

	Three Months Ended
	March 31,
	2022		2021			Change
Service charges on deposit accounts	$	1,319	$	1,009	$	310
Mortgage banking		834		1,139		(305)
Investment services		1,070		531		539
Insurance commissions		901		1,466		(565)
Interchange and debit card transaction fees, net		1,284		839		445
Other		1,703		707		996
Total noninterest income	$	7,111	$	5,691	$	1,420

First quarter of 2022 compared to 2021

Noninterest income increased by $1.4 million, or 25.0%, during the first quarter of 2022 compared to the same period in 2021. This quarterly change in total noninterest income primarily resulted from the following:

● Increase in service charges on deposit accounts, related to the SCB acquisition, deposit growth and transaction volume;

● Decrease in mortgage banking, related to decreased volume;

● Increase in investment services, related to the addition of a new wealth management team hired during the fourth quarter of 2021;

● Decrease insurance commissions, related to the commissions from the placement of life insurances policies in the first quarter of 2021;

● Increase in interchange and debit card transaction fees, related to increased volume, deposit growth and the SCB acquisition: and

● Increase in other, primarily from new fee income from the acquisition of Fountain and SWAP fee income from the newly created capital markets program in the second quarter of 2021.

Noninterest Expense

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

	Three Months Ended
	March 31,
	2022		2021			Change
Salaries and employee benefits	$	15,046	$	10,869	$	4,177
Occupancy and equipment		3,059		2,341		718
FDIC insurance		641		371		270
Other real estate and loan related expense		729		602		127
Advertising and marketing		369		190		179
Data processing and technology		1,586		1,379		207
Professional services		1,242		641		601
Amortization of intangibles		637		444		193
Merger related and restructuring expenses		439		103		336
Other		1,970		2,524		(554)
Total noninterest expense	$	25,718	$	19,464	$	6,254

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First quarter of 2022 compared to 2021

Noninterest expense increased by $6.3 million, or 32.1%, in the first quarter of 2022 as compared to the same period in 2021. The quarterly increase in total noninterest expense primarily resulted from the following:

● Increase in salary and employee benefits, related to the Fountain acquisition completed May 3, 2021, SCB acquisition completed September 1, 2021, and overall franchise growth from talent hired in Auburn, Dothan, Montgomery and Birmingham, Alabama and Tallahassee, Florida in 2021;

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

● Increase in professional services, due to additional services performed; and

● Decrease in other, primarily from an equity method investment in a start-up fintech company in the first quarter of 2021.

Taxes

First quarter of 2022 compared to 2021

In the first quarter of 2022 income tax expense totaled $2.2 million compared to $2.7 million in the first quarter of 2021. The effective tax rate was approximately 21.4% in the first quarter of 2022 compared to 21.5% first quarter of 2021.

Loan and Lease Portfolio

The Company had total net loans and leases outstanding, including organic and acquired loans and leases, of approximately $2.79 billion at March 31, 2022 compared to $2.67 billion at December 31, 2021. Loans secured by real estate, consisting of commercial and residential property, are the principal component of our loan and lease portfolio.

Organic Loans and Leases

Our organic net loans and leases, which excludes loans and leases purchased through acquisitions, increased by $155.1 million, or 7.0%, from December 31, 2021, to $2.38 billion at March 31, 2022. Decreasing the growth was $24.4 million of forgiven PPP loans during the first quarter of 2022.  Total net deferred fees remaining with the PPP loans at March 31, 2022, was $972 thousand.

Acquired Loans and Leases

Net purchased non-credit impaired loans and leases of $369.3 million at March 31, 2022 decreased by $39.3 million from December 31, 2021.  Since December 31, 2021, our net purchased credit impaired (“PCI”) loans and leases, decreased by $3.9 million to $37.3 million at March 31, 2022. The decrease in purchased non-credit impaired loans and leases and PCI loans and leases is related to maturities, paydowns and payoffs.

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

	March 31, 2022
			Purchased		Purchased				% of
			Non-Credit		Credit		Total		Gross
	Organic		Impaired		Impaired		Amount		Total
Commercial real estate-mortgage	$	1,265,008	$	190,578	$	20,270	$	1,475,856	52.6	%
Consumer real estate-mortgage		364,840		108,598		9,791		483,229	17.2	%
Construction and land development		296,213		15,779		2,662		314,654	11.2	%
Commercial and industrial		429,972		28,702		2,479		461,153	16.4	%
Leases		30,240		27,422		2,230		59,892	2.1	%
Consumer and other		10,300		925		17		11,242	0.4	%
Total gross loans and leases receivable, net of deferred fees		2,396,573		372,004		37,449		2,806,026	100.0	%
Allowance for loan and leases losses		(17,159)	$	(2,732)		(187)		(20,078)
Total loans and leases, net	$	2,379,414	$	369,272	$	37,262	$	2,785,948

	December 31, 2021
			Purchased		Purchased				% of
			Non-Credit		Credit		Total		Gross
	Organic		Impaired		Impaired		Amount		Total
Commercial real estate-mortgage	$	1,157,702	$	205,579	$	20,875	$	1,384,156	51.4	%
Consumer real estate-mortgage		346,322		119,117		11,833		477,272	17.7	%
Construction and land development		258,196		17,308		2,882		278,386	10.3	%
Commercial and industrial		449,909		35,599		2,516		488,024	18.1	%
Leases		18,067		32,471		3,170		53,708	2.0	%
Consumer and other		10,536		1,244		71		11,851	0.4	%
Total gross loans and leases receivable, net of deferred fees		2,240,732		411,318		41,347		2,693,397	100.0	%
Allowance for loan and lease losses		(16,441)		(2,732)		(179)		(19,352)
Total loans and leases, net	$	2,224,291	$	408,586	$	41,168	$	2,674,045

Loan and Lease Portfolio Maturities

The following table sets forth the maturity distribution of our loans and leases at March 31, 2022, including the interest rate sensitivity for loans and leases maturing after one year (in thousands):

											Rate Structure for Loans and Leases
											Maturing Over One Year
	One Year		One through			Five through	Over Fifteen				Fixed		Floating
	or Less		Five Years			Fifteen Years	Years		Total		Rate		Rate
Commercial real estate-mortgage	$	143,675	$	618,010	$	689,534	$	24,637	$	1,475,856	$	855,133	$	477,048
Consumer real estate-mortgage		34,070		180,858		180,452		87,849		483,229		238,791		210,368
Construction and land development		82,920		148,696		61,531		21,507		314,654		124,370		107,364
Commercial and industrial		116,539		232,606		103,517		8,491		461,153		277,064		67,550
Leases		1,912		57,980		—		—		59,892		57,980		—
Consumer and other		4,948		5,767		477		50		11,242		6,043		251
Total loans and leases	$	384,064	$	1,243,917	$	1,035,511	$	142,534	$	2,806,026	$	1,559,381	$	862,581

Nonaccrual, Past Due, and Restructured Loans and Leases

Nonperforming loans and leases as a percentage of total gross loans and leases, net of deferred fees, was 0.12% as of March 31, 2022, and December 31, 2021, respectively. Total nonperforming assets as a percentage of total assets was 0.11% as of March 31, 2022, and December 31, 2021, respectively. Acquired PCI loans and leases that are included in loan pools are reclassified at acquisition to accrual status and thus are not included as nonperforming assets.

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

			Accruing Loans				Accruing Loans
			30-89 Days				90 Days or More				Total Accruing
			Past Due				Past Due				Past Due Loans
					Percentage of				Percentage of				Percentage of
		Total			Loans in				Loans in				Loans in
		Loans		Amount	Category			Amount	Category			Amount	Category
March 31, 2022
Commercial real estate	$	1,475,856	$	118	0.01	%	$	-	-	%	$	118	0.01	%
Consumer real estate		483,229		846	0.18			-	-			846	0.18
Construction and land development		314,654		-	-			-	-			-	-
Commercial and industrial		461,153		158	0.03			-	-			158	0.03
Leases		59,892		336	0.56			-	-			336	0.56
Consumer and other		11,242		308	2.74			-	-			308	2.74
Total	$	2,806,026	$	1,766	0.06		$	-	-		$	1,766	0.06
December 31, 2021
Commercial real estate	$	1,384,156	$	172	0.01	%	$	-	-	%	$	172	0.01	%
Consumer real estate		477,272		894	0.19			-	-			894	0.19
Construction and land development		278,386		91	0.03			-	-			91	0.03
Commercial and industrial		488,024		1,310	0.27			45	0.01			1,355	0.28
Leases		53,708		361	0.67			-	-			361	0.67
Consumer and other		11,851		103	0.87			19	0.16			122	1.03
Total	$	2,693,397	$	2,931	0.11		$	64	-		$	2,995	0.11

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

	March 31, 2022						December 31, 2021
			Nonaccrual Loans						Nonaccrual Loans
					Percentage of						Percentage of
		Total			Loans in			Total			Loans in
		Loans		Amount	Category			Loans		Amount	Category
Commercial real estate	$	1,475,856	$	858	0.06	%	$	1,384,156	$	858	0.06	%
Consumer real estate		483,229		2,383	0.49			477,272		2,139	0.45
Construction and land development		314,654		-	-			278,386		-	-
Commercial and industrial		461,153		92	0.02			488,024		116	0.02
Leases		59,892		-	-			53,708		-	-
Consumer and other		11,242		9	0.08			11,851		11	0.09
Total	$	2,806,026	$	3,342	0.12		$	2,693,397	$	3,124	0.12
Allowance for loans and leases to nonaccrual loans				600.78%						619.46%

Allocation of the Allowance for Loan and Lease Losses

We maintain the allowance at a level that we deem appropriate to adequately cover the probable losses inherent in the loan and lease portfolio. Our provision for loan and lease losses for the three months ended March 31, 2022, is $1.0 million compared to $67 thousand in the same period of 2021, an increase of $939 thousand.  As of March 31, 2022 and December 31, 2021, our allowance for loan and lease losses was $20.1 million and $19.4 million, respectively, which we deemed to be adequate at each of the respective dates.  Our allowance for loan and lease loss as a percentage of total loans and leases was 0.72% at March 31, 2022 and December 31, 2021, respectively.

Our purchased loans and leases were recorded at fair value upon acquisition. The fair value adjustments on the performing purchased loans and leases will be accreted into income over the life of the loans and leases. A provision for loan and lease losses is recorded for any deterioration in these loans and leases subsequent to the acquisition. As of March 31, 2022, the outstanding principal balance on PCI loan and leases was $52.1 million and the carrying value was $37.4 million, for a net difference of $14.7 million in discounts. At March 31, 2022, there was an allowance on PCI loans and leases of $187 thousand.

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The following table sets forth, based on management's best estimate, the allocation of the allowance for credit losses on loans and leases to categories of loans and leases and loan and lease balances by category and the percentage of loans and leases in each category to total loans and leases and allowance for credit losses as a percentage of total loans and leases within each loan and lease category for each period presented (in thousands):

	Amount of		Percentage of Loans in Each			Total		Ratio of Allowance Allocated to
	Allowance Allocated		Category to Total Loans			Loans		Loans in Each Category
March 31, 2022
Commercial real estate	$	10,405		52.6	%	$	1,475,856		0.71	%
Consumer real estate		3,388		17.2			483,229		0.70
Construction and land development		2,120		11.2			314,654		0.67
Commercial and industrial		3,501		16.4			461,153		0.76
Leases		548		2.1			59,892		0.91
Consumer and other		116		0.4			11,242		1.03
Total	$	20,078		100.0	%	$	2,806,026		0.72
December 31, 2021
Commercial real estate	$	9,781		51.4	%	$	1,384,156		0.71	%
Consumer real estate		3,454		17.7			477,272		0.72
Construction and land development		1,882		10.3			278,386		0.68
Commercial and industrial		3,781		18.1			488,024		0.77
Leases		330		2.0			53,708		0.61
Consumer and other		124		0.4			11,851		1.05
Total	$	19,352		100.0	%	$	2,693,397		0.72

The allocation by category is determined based on the loans and leases individually assigned risk rating, if applicable, and environmental factors applicable to each category of loan and lease. For impaired loans and leases, those loans and leases are reviewed for a specific allowance allocation. Specific valuation allowances related to impaired, non PCI loans and leases were approximately $395 thousand at March 31, 2022, compared to $561 thousand at December 31, 2021.

Analysis of the Allowance for Loan and Lease Losses

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

	Provision for		Net (charge-offs)		Average		Ratio of Net (charge-offs)
	Credit Losses		Recoveries		Loans		Recoveries to Average Loans
Three Months Ended March 31, 2022
Commercial real estate	$	623	$	1	$	1,432,822		-	%
Consumer real estate		(40)		(26)		447,706		(0.01)
Construction and land development		238		-		305,479		-
Commercial and industrial		(109)		(171)		469,139		(0.04)
Leases		146		72		58,146		0.12
Consumer and other		148		(156)		10,914		(1.43)
Total	$	1,006	$	(280)	$	2,724,206		(0.01)
Three Months Ended March 31, 2021
Commercial real estate	$	55		3	$	1,045,402		-	%
Consumer real estate		(179)		16		422,291		-
Construction and land development		(108)		-		279,232		-
Commercial and industrial		237		3		669,838		-
Leases		-		-		-		-
Consumer and other		62		(65)		11,736		(0.55)
Total	$	67	$	(43)	$	2,428,499		-

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 and lease portfolio, past loan and lease loss experience, known and inherent risks in the portfolio, the views of the Bank’s regulators, adverse situations that may affect borrowers’ ability to repay (including the timing of future payments), the estimated value of any underlying collateral, composition of the loan and lease portfolio, economic conditions, industry and peer bank loan and lease quality indications and other pertinent factors. This

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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 and leases that may be susceptible to significant change.

Securities Portfolio

Our available-for-sale investment portfolio is carried at fair market value and our held-to-maturity investment portfolio is carried at amortized cost, and consists primarily of Federal agency bonds, mortgage-backed securities, state and municipal securities and other debt securities. Our investment portfolio increased from $559.4 million at December 31, 2021, to $830.0 million at March 31, 2022, primarily as a result of strategically deploying a portion of the Bank’s cash position.  New purchases were focused on U.S. Treasuries to provide cash flow and liquidity. Our investment to asset ratio has increased from 12.1% at December 31, 2021, to 17.6% at March 31, 2022. Over the past three months the bank has increased its securities portfolio to strategically invest in higher yielding assets compared to the bank’s yield on cash.

The following table presents the contractual maturity of the Company’s securities by contractual maturity date and average yields based on amortized cost (for all obligations on a fully taxable basis) at March 31, 2022 (dollars in thousands). The composition and maturity/repricing distribution of the securities portfolio is subject to change depending on rate sensitivity, capital and liquidity needs.

	1 or Less				1 to 5				5 to 10				Over 10				Total
			Weighted				Weighted				Weighted				Weighted				Weighted
			Average				Average				Average				Average				Average
Available-for-sale:		Amount	Yield (1)			Amount	Yield (1)			Amount	Yield (1)			Amount	Yield (1)			Amount	Yield (1)
U.S. Treasury	$	—	-	%	$	173,953	1.26	%	$	65,103	1.70	%	$	—	-	%	$	239,056	1.38	%
U.S. Government agencies		—	-			—	-			512	1.92			—	-			512	1.92
State and political subdivisions		902	1.80			3,352	1.62			6,493	2.45			44,571	4.04			55,318	3.67
Other debt securities		—	-			989	2.12			27,493	4.48			500	4.50			28,982	4.40
Mortgage-backed securities		40	1.99			4,763	1.49			81,893	1.33			150,233	1.63			236,929	1.52
Total securities	$	942	1.81		$	183,057	1.27		$	181,494	1.98		$	195,304	2.19		$	560,797	1.82
Held-to-maturity:
U.S. Treasury	$	—	-	%	$	150,471	1.48	%	$	—	-	%	$	—	-	%	$	150,471	1.48	%
U.S. Government agencies		—	-			—	-			23,926	1.90			27,499	1.82			51,425	1.86
State and political subdivisions		—	-			—	-			4,324	2.20			50,135	2.13			54,459	2.14
Other debt securities		—	-			—	-			—	-			—	-			—	-
Mortgage-backed securities		—	-			—	-			4,892	2.14			28,285	2.15			33,177	2.15
Total securities	$	—	-		$	150,471	1.48		$	33,142	1.98		$	105,919	2.05		$	289,532	1.75

⁽¹⁾Based on amortized cost, taxable equivalent basis

Deposits

Deposits are the primary source of funds for the Company’s lending and investing activities. The Company provides a range of deposit services to businesses and individuals, including noninterest-bearing checking accounts, interest-bearing checking accounts, savings accounts, money market accounts, IRAs and CDs. These accounts generally earn interest at rates the Company establishes based on market factors and the anticipated amount and timing of funding needs. The establishment or continuity of a core deposit relationship can be a factor in loan pricing decisions. While the Company’s primary focus is on establishing customer relationships to attract core deposits, at times, the Company uses brokered deposits and other wholesale deposits to supplement its funding sources. As of March 31, 2022, brokered deposits represented approximately 1.2% of total deposits.

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The following table summarizes the average balances outstanding and average interest rates for each major category of deposits (dollars in thousands):

	Three Months Ended						Three Months Ended
	March 31, 2022						March 31, 2021
	Average		% of		Average		Average		% of		Average
	Balance		Total		Rate		Balance		Total		Rate
Noninterest-bearing demand	$	1,028,298	25.5	%	—	%	$	700,962	24.6	%	—	%
Interest-bearing demand		921,835	22.8	%	0.20	%		641,214	22.5	%	0.16	%
Money market and savings		1,523,188	37.8	%	0.23	%		983,893	34.5	%	0.34	%
Time deposits		561,207	13.9	%	0.51	%		526,062	18.4	%	0.97	%
Total average deposits	$	4,034,528	100.0	%	0.20	%	$	2,852,131	100.0	%	0.33	%

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, 2022 and 2021, was 0.27% and 0.44%, respectively. The decrease cost was primarily due to maturing and repricing of time deposits, which decreased by 46 basis points.  

Total deposits as of March 31, 2022, were $4.19 billion, which was an increase of $169.4 million from December 31, 2021. This increase was primarily from organic deposit growth. As of March 31, 2022, the Company had outstanding time deposits under $250,000 with balances of $396.0 million and time deposits over $250,000 with balances of $153.1 million.

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

	March 31,
	2022
Three months or less	$	30,753
Three to six months		42,371
Six to twelve months		52,345
More than twelve months		27,628
Total	$	153,097

Borrowings

The Company uses short-term borrowings and long-term debt to provide both funding and, to a lesser extent, regulatory capital using debt at the Company level which can be downstreamed as Tier 1 capital to the Bank. Borrowings totaled $36.7 million at March 31, 2022, and consisted of $25.0 million in FHLB borrowing and short-term borrowings totaled $11.7 million and consisted of $7.5 million with ServisFirst Bank and $4.2 million of securities sold under repurchase agreements. Long-term debt totaled $42.0 million at March 31, 2022, and $41.9 million at December 31, 2021, and consisted entirely of subordinated debt.  For more information regarding our borrowings, see "Part I - Item 1. Consolidated Financial Statements - Note 7 – Borrowings, Line of Credit and Subordinated Debt."

Capital Resources

The Company uses leverage analysis to examine the potential of the institution to increase assets and liabilities using the current capital base. The key measurements included in this analysis are the Bank’s Common Equity Tier 1 capital, Tier 1 capital, leverage and total capital ratios. At March 31, 2022 and December 31, 2021, our capital ratios, including our Bank’s capital ratios, exceeded regulatory minimum capital requirements. From time to time we may be required to support the capital needs of our bank subsidiary. We believe we have various capital raising techniques available to us to provide for the capital needs of our bank, if necessary. For more information regarding our capital, leverage and total capital ratios, see “Part I - Item 1. Consolidated Financial Statements - Note 13 - Regulatory Matters.”

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Liquidity and Off-Balance Sheet Arrangements

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing and depository needs of its customers. At March 31, 2022, we had $723.4 million of pre-approved but unused lines of credit and $18.0 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.  For more information regarding our off-balance sheet arrangements, see “Part I - Item 1. Consolidated Financial Statements - Note 9 – Commitments and Contingent Liabilities.”

Market Risk and Liquidity Risk Management

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

Interest Rate Sensitivity

Interest rate sensitivity refers to the responsiveness of interest-earning assets and interest-bearing liabilities to changes in market interest rates. In the normal course of business, we are exposed to market risk arising from fluctuations in interest rates. ALCO measures and evaluates the interest rate risk so that we can meet customer demands for various types of loans and leases and deposits. ALCO determines the most appropriate amounts of on-balance sheet and off-balance sheet items. The primary measurements we use to help us manage interest rate sensitivity are an earnings simulation model and an economic value of equity model. These measurements are used in conjunction with competitive pricing analysis and are further described below.

Earnings Simulation Model We believe interest rate risk is effectively measured by our earnings simulation modeling. Earning assets, interest-bearing liabilities and off-balance sheet financial instruments are combined with simulated forecasts of interest rates for the next 12 months. To limit interest rate risk, we have guidelines for our earnings at risk which seek to limit the variance of net interest income in instantaneous changes to interest rates. We also periodically monitor simulations based on various rate scenarios such as non-parallel shifts in market interest rates over time. For changes up or down in rates from our static interest rate forecast over the next 12 months, limits in the decline in net interest income are as follows:

	Estimated % Change in Net Interest Income Over 12 Months
March 31, 2022:
Instantaneous, Parallel Change in Prevailing Interest Rates Equal to:
100 basis points increase	4.27%
200 basis points increase	8.37%
100 basis points decrease	(3.29)%

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Economic Value of Equity Our economic value of equity model measures the extent that estimated economic values of our assets, liabilities and off-balance sheet items will change as a result of interest rate changes. Economic values are determined by discounting expected cash flows from assets, liabilities and off-balance sheet items, which establishes a base case economic value of equity.

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

	Current Estimated Instantaneous Rate Change
March 31, 2022:
Instantaneous, Parallel Change in Prevailing Interest Rates Equal to:
100 basis points increase	2.41%
200 basis points increase	4.05%
100 basis points decrease	(7.65)%

Liquidity Risk Management

The purpose of liquidity risk management is to ensure that there are sufficient cash flows to satisfy loan and lease demand, deposit withdrawals, and our other needs. Traditional sources of liquidity for a bank include asset maturities and growth in core deposits. A bank may achieve its desired liquidity objectives from the management of its assets and liabilities and by internally generated funding through its operations. Funds invested in marketable instruments that can be readily sold and the continuous maturing of other earning assets are sources of liquidity from an asset perspective. The liability base provides sources of liquidity through attraction of increased deposits and borrowing funds from various other institutions.

Changes in interest rates also affect our liquidity position. We currently price deposits in response to market rates and intend to continue this policy. If deposits are not priced in response to market rates, a loss of deposits could occur which would negatively affect our liquidity position.

Scheduled loan and lease payments are a relatively stable source of funds, but loan and lease payoffs and deposit flows fluctuate significantly, being influenced by interest rates, general economic conditions and competition. Additionally, debt security investments are subject to prepayment and call provisions that could accelerate their payoff prior to stated maturity. We attempt to price our deposit products to meet our asset/liability objectives consistent with local market conditions. Our ALCO is responsible for monitoring our ongoing liquidity needs. Our regulators also monitor our liquidity and capital resources on a periodic basis.

The Company has $942 thousand in investments that mature throughout the next 12 months. The Company also anticipates $34.4 million of principal payments from mortgage-backed securities over the same period. The Company also has unused borrowing capacity in the amount of $417.6 million available with the Federal Reserve, FHLB, several correspondent banks and a line of credit. With these sources of funds, the Company currently anticipates adequate liquidity to meet the expected obligations of its customers.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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

ITEM 4. CONTROLS AND PROCEDURES

Under the supervision and with the participation of management, including SmartFinancial’s Chief Executive Officer and Chief Financial Officer, SmartFinancial has evaluated the effectiveness of its disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of March 31, 2022 (the “Evaluation Date”). Based on such evaluation, SmartFinancial’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date, SmartFinancial’s disclosure controls and procedures were effective to ensure that information required to be disclosed by SmartFinancial in the reports that it files or submits under the Exchange Act is (i) accumulated and communicated to SmartFinancial’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decision regarding the required disclosure and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

There were no changes in SmartFinancial’s internal control over financial reporting during SmartFinancial’s fiscal quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, SmartFinancial’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

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

Item 1A. Risk Factors.

In addition to the other information set forth in this report, you should carefully consider the factors discussed under “Part I--Item 1A--Risk Factors” in our Form 10-K for the year ended December 31, 2021. These factors could materially and adversely affect our business, financial condition, liquidity, results of operations and capital position, and could cause our actual results to differ materially from our historical results or the results contemplated by the forward-looking statements contained in this report. Please be aware that these risks may change over time and other risks may prove to be important in the future.  In addition, these risks may be heightened by the continued disruption and uncertainty resulting from COVID-19. There have been no material changes from the risk factors described in our Form 10-K for the year ended December 31, 2021.

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

(a) Not applicable

(b) Not applicable

(c) Issuer Purchases of Registered Equity Securities

On November 20, 2018, the Company announced that its board of directors has authorized a stock repurchase plan pursuant to which the Company may purchase up to $10.0 million in shares of the Company’s outstanding common stock. Stock repurchases under the plan will be made from time to time in the open market, at the discretion of the management of the Company, and in accordance with applicable legal requirements. The stock repurchase plan does not obligate the Company to repurchase any dollar amount or number of shares, and the program may be extended, modified, amended, suspended, or discontinued at any time. As of March 31, 2022, we have purchased $5.5 million of the authorized $10.0 million and may purchase up to an additional $4.5 million in the Company’s outstanding common stock.

The following table summarizes the Company’s repurchase activity during the three months ended March 31, 2022.

					Maximum
					Number (or
					Approximate
					Dollar Value) of
					Shares That May
				Total Number of Shares	Yet Be Purchased
	Total Number of	Weighted		Purchased as Part of	Under the Plans
	Shares	Average Price Paid		Publicly Announced	or Programs (in
Period	Repurchased	Per Share		Plans or Programs	thousands)
January 1, 2022 to January 31, 2022	—	$	—	—	$	4,484
February 1, 2022 to February 28, 2022	—		—	—		4,484
March 1, 2022 to March 31, 2022	—		—	—		4,484
Total	—	$	—	—	$	4,484

Item 3. Defaults Upon Senior Securities.

None.

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Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

None.

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Item 6. Exhibits

Exhibit No.	Description	Location
3.1	Second Amended and Restated Charter of SmartFinancial, Inc.	Incorporated by reference to Exhibit 3.3 to Form 8-K filed September 2, 2015
3.2	Second Amended and Restated Bylaws of SmartFinancial, Inc.	Incorporated by reference to Exhibit 3.1 to Form 8-K filed October 26, 2015
31.1	Certification pursuant to Rule 13a -14(a)/15d-14(a)	Filed herewith.
31.2	Certification pursuant to Rule 13a -14(a)/15d-14(a)	Filed herewith.
32.1	Certification pursuant to 18 USC Section 1350 -Sarbanes-Oxley Act of 2002	Furnished herewith.
32.2	Certification pursuant to 18 USC Section 1350 -Sarbanes-Oxley Act of 2002	Furnished herewith.
101	Interactive Data Files (formatted as Inline XBRL)	Filed herewith.
104	Cover Page Interactive Data File (Formatted as Inline XBRL and contained in Exhibit 101	Filed herewith

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

58

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		SmartFinancial, Inc.
Date:	May 10, 2022	/s/ William Y. Carroll, Jr.
		William Y. Carroll, Jr.
		President and Chief Executive Officer
		(principal executive officer)
Date:	May 10, 2022	/s/ Ronald J. Gorczynski
		Ronald J. Gorczynski
		Executive Vice President and Chief Financial Officer
		(principal financial officer and accounting officer)

59

EX-31.1

EXHIBIT 31.1

CERTIFICATION

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

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

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

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

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

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

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

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

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

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

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

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

Date: May 10, 2022

/s/ William Y. Carroll, Jr.

William Y. Carroll, Jr.

President and Chief Executive Officer

(principal executive officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Ronald J. Gorczynski, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: May 10, 2022

/s/ Ronald J. Gorczynski

Ronald J. Gorczynski

Executive Vice President and Chief Financial Officer

(principal financial officer and accounting officer)

EX-32.1

EXHIBIT 32.1

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

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of SmartFinancial, Inc., (the “Company”) on Form 10-Q for the quarter ended March 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William Y. Carroll, Jr., President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

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

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

Date: May 10, 2022

/s/ William Y. Carroll, Jr.

William Y. Carroll, Jr.

President and Chief Executive Officer

(principal executive officer)

EX-32.2

EXHIBIT 32.2

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

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of SmartFinancial, Inc., (the “Company”) on Form 10-Q for the quarter ended March 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ronald J. Gorczynski, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

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

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

Date: May 10, 2022

/s/ Ronald J. Gorczynski

Ronald J. Gorczynski

Executive Vice President and Chief Financial Officer

(principal financial and accounting officer)

XML

Cover Page - shares	3 Months Ended
	Mar. 31, 2022	May 04, 2022
Cover page [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2022
Document Transition Report	false
Entity File Number	001-37661
Entity Registrant Name	SMARTFINANCIAL INC.
Entity Incorporation, State or Country Code	TN
Entity Tax Identification Number	62-1173944
Entity Address, Address Line One	5401 Kingston Pike, Suite 600
Entity Address, City or Town	Knoxville
Entity Address, State or Province	TN
City Area Code	865
Entity Address, Postal Zip Code	37919
Local Phone Number	437-5700
Title of 12(b) Security	Common Stock, par value $1.00
Trading Symbol	SMBK
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		16,896,987
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Entity Central Index Key	0001038773
Current Fiscal Year End Date	--12-31

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
ASSETS:
Cash and due from banks	$ 83,080	$ 110,333
Interest-bearing deposits with banks	643,388	897,244
Federal funds sold	37,500	37,500
Total cash and cash equivalents	763,968	1,045,077
Securities available-for-sale, at fair value	540,483	482,453
Securities held-to-maturity, at amortized cost	289,532	76,969
Other investments	16,499	16,494
Loans held for sale	5,894	5,103
Loans and leases	2,806,026	2,693,397
Less: Allowance for loan and leases losses	(20,078)	(19,352)
Loans and leases, net	2,785,948	2,674,045
Premises and equipment, net	84,793	85,958
Other real estate owned	1,612	1,780
Goodwill and other intangibles, net	105,215	105,852
Bank owned life insurance	80,074	79,619
Other assets	44,561	38,229
Total assets	4,718,579	4,611,579
Deposits:
Noninterest-bearing demand	1,093,933	1,055,125
Interest-bearing demand	975,272	899,158
Money market and savings	1,573,101	1,493,007
Time deposits	549,047	574,648
Total deposits	4,191,353	4,021,938
Borrowings	36,713	87,585
Subordinated debt	41,952	41,930
Other liabilities	28,519	30,696
Total liabilities	4,298,537	4,182,149
Stockholders' equity:
Common stock, $1 par value; 40,000,000 shares authorized; 16,893,282 and 16,802,990 shares issued and outstanding, respectively	16,893	16,803
Additional paid-in capital	293,376	292,937
Retained earnings	125,329	118,247
Accumulated other comprehensive income (loss)	(15,556)	1,443
Total stockholders' equity	420,042	429,430
Total liabilities and shareholders' equity	$ 4,718,579	$ 4,611,579

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Securities held to maturity, fair value	$ 277,734	$ 76,946
Preferred stock, par value (in dollars per share)	$ 1	$ 1
Preferred stock, shares authorized (in shares)	2,000,000	2,000,000
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, shares authorized (in shares)	40,000,000	40,000,000
Common stock, shares issued (in shares)	16,893,282	16,802,990
Common stock, shares outstanding (in shares)	16,893,282	16,802,990

XML

CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Interest Income:
Loans and leases, including fees	$ 29,643	$ 28,018
Securities available-for-sale:
Taxable	2,418	724
Tax-exempt	368	259
Federal funds sold and other earning assets	486	291
Total interest income	32,915	29,292
Interest Expense:
Deposits	2,014	2,331
Borrowings	157	117
Subordinated debt	626	584
Total interest expense	2,797	3,032
Net interest income	30,118	26,260
Provision for loan and lease losses	1,006	67
Net interest income after provision for loan losses	29,112	26,193
Noninterest Income:
Service charges on deposit accounts	1,319	1,009
Mortgage banking	834	1,139
Investment services	1,070	531
Insurance commissions	901	1,466
Interchange and debit card transaction fees, net	1,284	839
Other	1,703	707
Total noninterest income	7,111	5,691
Noninterest Expense:
Salaries and employee benefits	15,046	10,869
Occupancy and equipment	3,059	2,341
FDIC insurance	641	371
Other real estate and loan related expenses	729	602
Advertising and marketing	369	190
Data processing and technology	1,586	1,379
Professional services	1,242	641
Amortization of intangibles	637	444
Merger related and restructuring expenses	439	103
Other operating expenses	1,970	2,524
Total noninterest expenses	25,718	19,464
Income before income tax expense	10,505	12,420
Income tax expense	2,246	2,664
Net income	$ 8,259	$ 9,756
Earnings per common share:
Basic (in dollars per share)	$ 0.49	$ 0.65
Diluted (in dollars per share)	$ 0.49	$ 0.65
Weighted average common shares outstanding:
Basic (in shares)	16,718,371	15,011,573
Diluted (in shares)	16,858,288	15,111,947

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Statement of Comprehensive Income (Loss) [Abstract]
Net income	$ 8,259	$ 9,756
Other comprehensive income (loss):
Unrealized holding (losses) on securities available-for-sale	(20,348)	(2,808)
Tax effect	5,256	738
Reclassification of unrealized loss on securities transferred from available-for-sale to held-to-maturity	(2,009)
Tax effect	519
Amortization of unrealized gains on investment securities transferred from available-for-sale to held-to-maturity	(11)
Tax effect	3
Unrealized gains (losses) on securities available-for-sale arising during the period, net of tax	(16,590)	(2,070)
Unrealized gains (losses) on fair value municipal security hedges	(551)	1,313
Tax effect	142	(343)
Unrealized gains (losses) on fair value municipal security hedge instruments arising during the period, net of tax	(409)	970
Total other comprehensive income (loss)	(16,999)	(1,100)
Comprehensive income (loss)	$ (8,740)	$ 8,656

XML

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Total
BALANCE at Dec. 31, 2020	$ 15,107	$ 252,693	$ 87,185	$ 2,183	$ 357,168
BALANCE (in shares) at Dec. 31, 2020	15,107,214
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income			9,756		9,756
Other comprehensive income (loss)				(1,100)	(1,100)
Stock options exercised	$ 16	131			$ 147
Stock options exercised (in shares)	15,965				15,965
Restricted stock	$ 41	(41)
Restricted stock (in shares)	40,967
Stock compensation expense		201			$ 201
Common stock dividends			(907)		(907)
Repurchases of common stock	$ (59)	(1,148)			(1,207)
Repurchases of common stock (in shares)	(59,610)
BALANCE at Mar. 31, 2021	$ 15,105	$ 251,836	$ 96,034	1,083	364,058
BALANCE (in shares) at Mar. 31, 2021	15,104,536
BALANCE at Dec. 31, 2021				$ 1,443	$ 429,430
BALANCE (in shares) at Dec. 31, 2021	16,802,990	292,937,000	118,247,000	1,443,000	429,430,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income			$ 8,259		$ 8,259
Other comprehensive income (loss)				$ (16,999)	(16,999)
Stock options exercised	$ 27	$ 190			$ 217
Stock options exercised (in shares)	27,550				27,550
Restricted stock	$ 63	(63)
Restricted stock (in shares)	62,742
Stock compensation expense		312			$ 312
Common stock dividends			(1,177)		(1,177)
BALANCE at Mar. 31, 2022	$ 16,893	$ 293,376	$ 125,329	$ (15,556)	$ 420,042
BALANCE (in shares) at Mar. 31, 2022	16,893,282

XML

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Statement of Stockholders' Equity [Abstract]
Common stock dividend, per share	$ 0.07	$ 0.06

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Cash flows from operating activities:
Net income	$ 8,259	$ 9,756
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	2,387	1,499
Accretion of fair value purchase accounting adjustments, net	(358)	(1,636)
Provision for loan and lease losses	1,006	67
Stock compensation expense	312	201
Deferred income tax expense	948	446
Increase in cash surrender value of bank owned life insurance	(455)	(370)
Net losses from sale and write downs of other real estate owned	59	151
Net gains from mortgage banking	(834)	(1,139)
Origination of loans held for sale	(30,916)	(35,229)
Proceeds from sales of loans held for sale	30,959	40,219
Net (gain) from sale of loans and credit cards	(348)
Net change in:
Accrued interest receivable	(452)	(86)
Accrued interest payable	352	367
Other assets	(5,244)	(1,234)
Other liabilities	5,019	3,078
Net cash provided by operating activities	10,694	16,090
Cash flows from investing activities:
Proceeds from maturities, calls and paydowns	10,217	16,241
Purchases of securities available-for-sale	(257,101)	(55,757)
Purchases of securities held-to-maturity	(50,575)
Proceeds from sales of other investments		147
Purchase of other investments	(5)	(80)
Purchases of bank owned life insurance		(40,000)
Net increase in loans and leases	(112,551)	(103,308)
Proceeds from sale of fixed assets	1,224
Purchase of premises and equipment	(879)	(1,009)
Proceeds from sale of other real estate owned	108	98
Net cash used in investing activities	(409,562)	(183,668)
Cash flow from financing activities:
Net increase in deposits	169,591	243,084
Net (decrease) increase in securities sold under agreements to repurchase	(872)	1,447
Repayment borrowings	(50,000)	(4)
Cash dividends paid	(1,177)	(907)
Issuance of common stock	217	147
Repurchases of common stock		(1,207)
Net cash provided by financing activities	117,759	242,560
Net change in cash and cash equivalents	(281,109)	74,982
Cash and cash equivalents, beginning of period	1,045,077	481,719
Cash and cash equivalents, end of period	763,968	556,701
Supplemental disclosures of cash flow information:
Cash paid during the period for interest	2,112	2,665
Cash paid during the period for income taxes	15
Cash received from income tax refunds	50
Noncash investing and financing activities:
Acquisition of real estate through foreclosure		14
Transfer of securities from available-for-sale to held-to-maturity	$ 162,378
Change in goodwill due to acquisitions and sale of a portfolio of loans		$ 324

XML

Presentation of Financial Information

3 Months Ended

Mar. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Presentation of Financial Information

Note 1. Presentation of Financial Information

Nature of Business:

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

Basis of Presentation and Accounting Estimates:

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

In management’s opinion, all accounting adjustments necessary to accurately reflect the financial position and results of operations on the accompanying financial statements have been made. These adjustments are normal and recurring accruals considered necessary for a fair and accurate presentation. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan and lease losses, the valuation of foreclosed assets and deferred taxes, other than temporary impairments of securities, the fair value of financial instruments, goodwill, and the fair value of assets acquired, and liabilities assumed in acquisitions. The results for interim periods are not necessarily indicative of results for the full year or any other interim periods. The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes appearing in the Company’s annual report on Form 10-K for the year ended December 31, 2021.

Recently Issued and Adopted Accounting Pronouncements:

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference London Interbank Offered Rate (“LIBOR”). It is intended to help stakeholders during the global market-wide reference rate transition period. The guidance is effective for all entities as of March 12, 2020, through December 31, 2022. The Company implemented a transition plan to identify and modify its loans and other financial instruments, including certain indebtedness, with attributes that are either directly or indirectly influenced by LIBOR. As of December 31, 2021, the Company ceased issuance of new LIBOR loans. Alternative reference rates at this time are predominantly Secured Overnight Funding Rate (“SOFR”) based.  Remaining LIBOR transition project activities include remediation of remaining LIBOR products by June of 2023. ASU 2020-04 will not have a material impact on the Company’s consolidated financial statements.

Recently Issued Not Yet Effective Accounting Pronouncements:

During interim periods, the Company follows the accounting policies set forth in its annual audited financial statements for the year ended December 31, 2021, as filed in its Annual Report on Form 10-K with the Securities and Exchange Commission ("SEC"). The following is a summary of recent authoritative pronouncements issued but not yet effective that could impact the accounting, reporting, and/or disclosure of financial information by the Company.

In October 2019, the Financial Accounting Standards Board approved a delay for the implementation of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). The Board decided that the Current Expected Credit Loss (“CECL”)

model will be effective for larger Public Business Entities ("PBEs") that are SEC filers, excluding Smaller Reporting Companies ("SRCs") as currently defined by the SEC, for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. For calendar-year-end companies that are not SRCs, this will be January 1, 2020. The determination of whether an entity is an SRC will be based on an entity’s most recent assessment in accordance with SEC regulations and the Company meets the regulations as an SRC. For SRCs and other entities, the Board decided that CECL will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. For all entities, early adoption will continue to be permitted; that is, early adoption is allowed for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years (that is, effective January 1, 2019, for calendar-year-end companies). The Company does not plan to adopt this standard early and being that the Company is an SRC, adoption is required for fiscal years beginning after December 15, 2022.

Under the CECL model, we will be required to present certain financial assets carried at amortized cost, such as loans held for investment and held-to-maturity debt securities, at the net amount expected to be collected. The measurement of expected credit losses is to be based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. This measurement will take place at the time the financial asset is first added to the balance sheet and periodically thereafter. This differs significantly from the “incurred loss” model currently required under GAAP, which delays recognition until it is probable a loss has been incurred. Accordingly, we expect that the adoption of the CECL model will materially affect how we determine our allowance for loan losses and could require us to significantly increase our allowance. Moreover, the CECL model may create more volatility in the level of our allowance for loan losses. If we are required to materially increase our level of allowance for loan losses for any reason, such increase could adversely affect our business, financial condition and results of operations.

A cross-functional working group comprised of individuals from credit administration, risk management and accounting and finance are in place implementing and developing the data, forecast, processes, and portfolio segmentation that will be used in the models that will estimate the expected credit loss for each loan segment. The Company has contracted with a third party vendor solution to assist us in the application, analysis, and model development required with implementation of ASU 2016-13. The Company is currently unable to reasonably estimate the impact of adopting ASU 2016-13, and it will be influenced by the composition, characteristics and quality of our loan and securities portfolio, as well as the economic conditions and forecasts as of each reporting period. These economic conditions and forecasts could be significantly different in future periods.

In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging - Portfolio Layer Method, which allows multiple hedged layers to be designated for a single closed portfolio of financial assets resulting in a greater portion of the interest rate risk in the closed portfolio being eligible to be hedged. The amendments allow the flexibility to use different types of derivatives or combinations of derivatives to better align with risk management strategies. Furthermore, among other things, the amendments clarify that basis adjustments of hedged items in the closed portfolio should be allocated at the portfolio level and not the individual assets within the portfolio. The guidance is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early adoption is permitted, including early adoption in an interim period. An entity should apply ASU 2022-01 prospectively. If an entity elects to early adopt ASU 2022-01 in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes the interim period. The Company is assessing ASU 2022-01 and its impact on its accounting and disclosures.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which removes the accounting guidance for troubled debt restructurings and requires entities to evaluate whether a modification provided to a borrower results in a new loan or continuation of an existing loan. The amendments enhance existing disclosures and require new disclosures for receivables when there has been a modification in contractual cash flows due to a borrower experiencing financial difficulties. Additionally, the amendments require public business entities to disclose gross charge-off information by year of origination in the vintage disclosures. The guidance is effective for entities that have adopted ASU 2016-13 for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early adoption is permitted, including early adoption in an interim period. An entity should apply ASU 2022-02 prospectively. If an entity elects to early adopt ASU 2022-02 in an

interim period, the guidance should be applied as of the beginning of the fiscal year that includes the interim period. The Company will adopt ASU 2022-02 when adopting ASU 2016-13 in January 2023 and will assess its impact on its accounting and disclosures.

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Business Combinations

3 Months Ended

Mar. 31, 2022

Business Combinations [Abstract]

Business Combinations

Note 2. Business Combinations

Sevier County Bancshares, Inc.

On September 1, 2021, the Company completed the acquisition of Sevier County Bancshares, Inc., a Tennessee corporation (“SCB”), pursuant to an Agreement and Plan of Merger dated April 13, 2021 (the “Merger Agreement”).

In connection with the merger, the Company acquired $484.9 million of assets and assumed $443.1 million of liabilities. Pursuant to the Merger Agreement, at the effective time of the merger, SCB shareholders were entitled to receive for each share of SCB common stock, no par value per share, outstanding immediately prior to the Merger, either (i) $10.17 in cash (the “Per Share Cash Consideration”), or (ii) 0.4116 shares of Company common stock, par value $1.00 (the “Per Share Stock Consideration”). Pursuant to the terms of the Merger Agreement, (i) each SCB shareholder holding 20,000 shares or more of SCB common stock will receive the Per Share Stock Consideration and (ii) each SCB shareholder holding fewer than 20,000 shares of SCB common stock may elect to receive either the Per Share Stock Consideration or the Per Share Cash Consideration.  SmartFinancial issued 1,692,168 shares of SmartFinancial common stock and paid $9.6 million in cash as consideration for the Merger.  The fair value of consideration paid exceeded the fair value of the identifiable assets and liabilities acquired and resulted in the establishment of goodwill in the amount of $17.2 million, representing the intangible value of SCB’s business and reputation within the markets it served. None of the goodwill recognized is expected to be deductible for income tax purposes.  The Company is amortizing the related core deposit intangible of $1.6 million using the effective yield method over 120 months (10 years), which represents the expected useful life of the asset.  

The purchased assets and assumed liabilities were recorded at their acquisition date fair values ⁽¹⁾ and are summarized in the table below (in thousands).

			Initial
	As recorded		Fair value		Subsequent		As recorded
	by SCB		adjustments		Adjustments		by the Company
Assets:
Cash & cash equivalents	$	84,313	$	—	$	—	$	84,313
Investment securities available-for-sale		64,219		(614)		—		63,605
Restricted investments		533		—		—		533
Loans		304,620		(4,551)		(3,049)		297,020
Allowance for loan losses		(3,644)		3,644		—		—
Premises and equipment, net		15,579		(295)		(22)		15,262
Bank owned life insurance		7,116		—		—		7,116
Deferred tax asset, net		10,340		(4,007)		769		7,102
Core deposit intangible		—		1,550		—		1,550
Interest Receivable		884		—		—		884
Other assets		920		(272)		(533)		115
Total assets acquired	$	484,880	$	(4,545)	$	(2,835)	$	477,500
Liabilities:
Deposits	$	435,036	$	—	$	—	$	435,036
Time deposit premium		—		888		—		888
Subordinated debt		2,500		—		—		2,500
Payables and other liabilities		5,563		115		(1,254)		4,424
Total liabilities assumed		443,099		1,003		(1,254)		442,848
Excess of assets acquired over liabilities assumed	$	41,781
Aggregate fair value adjustments			$	(5,548)	$	(1,581)
Total identifiable net assets								34,652
Consideration transferred:
Cash								9,568
Common stock issued (1,692,168 shares)								42,255
Total fair value of consideration transferred								51,823
Goodwill							$	17,171

⁽¹⁾ Fair values are preliminary and are subject to refinement for a period of one year after the closing date of an acquisition as information relative to the closing date fair value becomes available.

The following table presents additional information related to the purchased credit impaired loans (ASC 310-30) of the acquired loan portfolio at the acquisition date (in thousands):

	September 1, 2021
Accounted for pursuant to ASC 310-30:
Contractually required principal and interest	$	30,293
Non-accretable differences		7,609
Cash flows expected to be collected		22,684
Accretable yield		3,552
Fair value	$	19,132

Fountain Leasing, LLC

On May 3, 2021, the Company completed the acquisition of Fountain Leasing, LLC, a Tennessee limited liability company, pursuant to the Purchase Agreement (the “Purchase Agreement”), dated May 2, 2021, by and among the Bank and the members of Fountain Leasing, LLC.  Following the closing of the acquisition, on May 4, 2021, the Company changed the name of Fountain Leasing, LLC to Fountain Equipment Finance, LLC (“Fountain”).

In connection with the acquisition, the Company acquired $54.1 million of assets and assumed $683 thousand of liabilities. Pursuant to the Purchase Agreement, the Company paid an aggregate amount of consideration to the Fountain members of $14.0 million in cash at closing, and the Company repaid approximately $45.8 million of Fountain’s indebtedness. In addition to the closing consideration, the Purchase Agreement contains a performance-based earnout, pursuant to which the former members of Fountain could be entitled to up to $6.0 million, which is excluded from consideration pursuant to ASC 805, in future cash payments from the Company based on future results of the acquired business over various periods through December 31, 2026.  The fair value of consideration paid exceeded the fair value of the identifiable assets and liabilities acquired and resulted in the establishment of goodwill in the amount of $2.4 million, representing the intangible value of Fountains business and reputation within the markets it served. The goodwill recognized is expected to be deductible for income tax purposes. The Company established an intangible asset related to customer relationships of $2.7 million, amortizing sum-of-the-years digits over 96 months (8 years).

The purchased assets and assumed liabilities were recorded at their acquisition date fair values ⁽¹⁾ and are summarized in the table below (in thousands).

	As recorded		Fair value		Subsequent		As recorded
	by Fountain		adjustments		Adjustments		by the Company
Assets:
Cash & cash equivalents	$	413	$	—	$	—	$	413
Leases		54,945		(720)		—		54,225
Allowance for lease losses		(1,796)		1,796		—		—
Customer list intangible		—		2,658		—		2,658
Other repossessed assets		319		—		—		319
Other assets		233		—		—		233
Total assets acquired	$	54,114	$	3,734	$	—	$	57,848
Liabilities:
Payables and other liabilities	$	683	$	(229)	$	—	$	454
Total liabilities assumed		683		(229)		—		454
Excess of assets acquired over liabilities assumed	$	53,431
Aggregate fair value adjustments			$	3,963	$	—
Total identifiable net assets								57,394
Consideration transferred:
Cash								59,794
Total fair value of consideration transferred								59,794
Goodwill							$	2,400

⁽¹⁾ Fair values are preliminary and are subject to refinement for a period of one year after the closing date of an acquisition as information relative to the closing date fair value becomes available.

The following table presents additional information related to the purchased credit impaired financing leases (ASC 310-30) of the acquired lease portfolio at the acquisition date (in thousands):

	May 3, 2021
Accounted for pursuant to ASC 310-30:
Contractually required principal and interest	$	6,018
Non-accretable differences		447
Cash flows expected to be collected		5,571
Accretable yield		649
Fair value	$	4,922

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Earnings Per Share

3 Months Ended

Mar. 31, 2022

Earnings Per Share [Abstract]

Earnings Per Share

Note 3. Earnings Per Share

Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding. Diluted earnings per common share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding and dilutive common share equivalents using the treasury stock method. Dilutive common share equivalents include common shares issuable upon exercise of outstanding stock options and restricted stock. The effect from the stock options and restricted stock on incremental shares from the assumed conversions for net income per share-basic and net income per share-diluted are presented below. There were no antidilutive shares for the three months ended March 31, 2022, and March 31, 2021, respectively.

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

	Three Months Ended
	March 31,
	2022		2021
Basic earnings per share computation:
Net income available to common shareholders	$	8,259	$	9,756
Average common shares outstanding – basic		16,718,371		15,011,573
Basic earnings per share	$	0.49	$	0.65
Diluted earnings per share computation:
Net income available to common shareholders	$	8,259	$	9,756
Average common shares outstanding – basic		16,718,371		15,011,573
Incremental shares from assumed conversions:
Stock options and restricted stock		139,917		100,374
Average common shares outstanding - diluted		16,858,288		15,111,947
Diluted earnings per common share	$	0.49	$	0.65

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Securities

3 Months Ended

Mar. 31, 2022

Securities [Abstract]

Securities

Note 4. Securities

The amortized cost, gross unrealized gains and losses and fair value of securities available-for-sale and held-to-maturity are summarized as follows (in thousands):

	March 31, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Available-for-sale:	Cost		Gains		Losses		Value
U.S. Treasury	$	239,056	$	—	$	(9,143)	$	229,913
U.S. Government-sponsored enterprises (GSEs)		512		—		(6)		506
Municipal securities		55,318		67		(144)		55,241
Other debt securities		28,982		139		(581)		28,540
Mortgage-backed securities (GSEs)		236,929		167		(10,813)		226,283
Total	$	560,797	$	373	$	(20,687)	$	540,483

	March 31, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Held-to-maturity:	Cost		Gains		Losses		Value
U.S. Treasury	$	150,471	$	—	$	(2,131)	$	148,340
U.S. Government-sponsored enterprises (GSEs)		51,425		—		(3,634)		47,791
Municipal securities		54,459		—		(4,561)		49,898
Mortgage-backed securities (GSEs)		33,177		—		(1,472)		31,705
Total	$	289,532	$	—	$	(11,798)	$	277,734

	December 31, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Available-for-sale:	Cost		Gains		Losses		Value
U.S. Treasury	$	138,212	$	64	$	(518)	$	137,758
U.S. Government-sponsored enterprises (GSEs)		21,898		76		(173)		21,801
Municipal securities		67,310		512		(2)		67,820
Other debt securities		26,989		313		(82)		27,220
Mortgage-backed securities (GSEs)		228,011		971		(1,128)		227,854
Total	$	482,420	$	1,936	$	(1,903)	$	482,453

	December 31, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Held-to-maturity:	Cost		Gains		Losses		Value
U.S. Government-sponsored enterprises (GSEs)	$	31,023	$	20	$	(87)	$	30,956
Municipal securities		45,946		63		(19)		45,990
Total	$	76,969	$	83	$	(106)	$	76,946

At March 31, 2022 and December 31, 2021, securities with a carrying value totaling approximately $219.6 million and $201.2 million, respectively, were pledged to secure public funds and securities sold under agreements to repurchase.

During the first quarter of 2022, the Company transferred $162.4 million of available-for-sale securities to the held-to-maturity category, reflecting the Company’s intent to hold those securities to maturity. Transfers of investment securities into the held-to-maturity category from the available-for-sale category are made at fair value at the date of transfer. The

related $2.0 million of unrealized holding loss that was included in the transfer is retained in accumulated other comprehensive income, net of tax, and in the carrying value of the held-to-maturity securities. This amount will be amortized as an adjustment to interest income over the remaining life of the securities. This will offset the impact of amortization of the net premium created in the transfer. There were no gains or losses recognized as a result of this transfer.

The Company has entered-into-various fair value hedging transactions to mitigate the impact of changing interest rates on the fair values of available for sale securities. See Note 11 – Derivatives Financial Instruments for disclosure of the gains and losses recognized on derivative instruments and the cumulative fair value hedging adjustments to the carrying amount of the hedged securities.

The amortized cost and estimated fair value of securities at March 31, 2022 by contractual maturity for non-mortgage backed securities are shown below (in thousands). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	March 31, 2022
	Amortized		Fair
Available-for-sale:	Cost		Value
Due in one year or less	$	902	$	903
Due from one year to five years		178,294		173,044
Due from five years to ten years		99,601		95,174
Due after ten years		45,071		45,079
		323,868		314,200
Mortgage-backed securities		236,929		226,283
Total	$	560,797	$	540,483
Held-to-maturity:
Due in one year or less	$	—	$	—
Due from one year to five years		150,471		148,339
Due from five years to ten years		28,250		26,931
Due after ten years		77,634		70,759
		256,355		246,029
Mortgage-backed securities		33,177		31,705
Total	$	289,532	$	277,734

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 and held-to-maturity have been in a continuous unrealized loss position (in thousands):

	March 31, 2022
	Less than 12 Months					12 Months or Greater					Total
			Gross		Number			Gross		Number			Gross		Number
	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized		of
Available-for-sale:	Value		Losses		Securities	Value		Losses		Securities	Value		Losses		Securities
U.S. Treasury	$	229,913	$	(9,143)	19	$	—	$	—	—	$	229,913	$	(9,143)	19
U.S. Government-sponsored enterprises (GSEs)		—		—	—		506		(6)	2		506		(6)	2
Municipal securities		9,885		(144)	17		—		—	—		9,885		(144)	17
Other debt securities		16,086		(505)	16		1,424		(76)	1		17,510		(581)	17
Mortgage-backed securities (GSEs)		201,144		(10,627)	70		7,701		(186)	6		208,845		(10,813)	76
Total	$	457,028	$	(20,419)	122	$	9,631	$	(268)	9	$	466,659	$	(20,687)	131
	March 31, 2022
	Less than 12 Months					12 Months or Greater					Total
			Gross		Number			Gross		Number			Gross		Number
	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized		of
Held-to-maturity:	Value		Losses		Securities	Value		Losses		Securities	Value		Losses		Securities
U.S. Treasury	$	148,339	$	(2,131)	4	$	—	$	—	—	$	148,339	$	(2,131)	4
U.S. Government-sponsored enterprises (GSEs)		23,735		(1,576)	6		24,057		(2,058)	7		47,792		(3,634)	13
Municipal securities		49,628		(4,561)	34		—		—	—		49,628		(4,561)	34
Mortgage-backed securities (GSEs)		31,705		(1,472)	5		—		—	—		31,705		(1,472)	5
Total	$	253,407	$	(9,740)	49	$	24,057	$	(2,058)	7	$	277,464	$	(11,798)	56

	December 31, 2021
	Less than 12 Months					12 Months or Greater					Total
			Gross		Number			Gross		Number			Gross		Number
	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized		of
Available-for-sale:	Value		Losses		Securities	Value		Losses		Securities	Value		Losses		Securities
U.S. Treasury	$	99,959	$	(518)	11	$	—	$	—	—	$	99,959	$	(518)	11
U.S. Government-sponsored enterprises (GSEs)		14,156		(168)	2		579		(5)	2		14,735		(173)	4
Municipal securities		2,519		(2)	1		—		—	—		2,519		(2)	1
Other debt securities		5,983		(82)	6		—		—	—		5,983		(82)	6
Mortgage-backed securities (GSEs)		159,725		(1,002)	31		8,233		(126)	6		167,958		(1,128)	37
Total	$	282,342	$	(1,772)	51	$	8,812	$	(131)	8	$	291,154	$	(1,903)	59
	December 31, 2021
	Less than 12 Months					12 Months or Greater					Total
			Gross		Number			Gross		Number			Gross		Number
	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized		of
Held-to-maturity:	Value		Losses		Securities	Value		Losses		Securities	Value		Losses		Securities
U.S. Government-sponsored enterprises (GSEs)	$	21,901	$	(87)	8	$	—	$	—	—	$	21,901	$	(87)	8
Municipal securities		4,173		(19)	6		—		—	—		4,173		(19)	6
Total	$	26,074	$	(106)	14	$	—	$	—	—	$	26,074	$	(106)	14

The Company reviews the securities portfolio on a quarterly basis to monitor its exposure to other-than-temporary impairment. A determination as to whether a security’s decline in fair value is other-than-temporary takes into consideration numerous factors and the relative significance of any single factor can vary by security. Some factors the Company may consider in the other-than-temporary impairment analysis include the length of time and extent to which

the security has been in an unrealized loss position, changes in security ratings, financial condition and near-term prospects of the issuer, as well as security and industry specific economic conditions.

Based on this evaluation, the Company concluded that any unrealized losses at March 31, 2022, represented a temporary impairment, as these unrealized losses are primarily attributable to changes in interest rates and current market conditions, and not credit deterioration of the issuers. As of March 31, 2022, the Company does not intend, or be required, to sell any of the securities, and expects to recover the entire amortized cost of all of the securities.

Other Investments:

Our other investments consist of restricted non-marketable equity securities that have no readily determinable market value. Accordingly, when evaluating these securities for impairment, management considers the ultimate recoverability of the par value rather than recognizing temporary declines in value. As of March 31, 2022, the Company determined that there was no impairment on its other investment securities.

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

	March 31,		December 31,
	2022		2021
Federal Reserve Bank stock	$	9,698	$	9,693
Federal Home Loan Bank stock		6,451		6,451
First National Bankers Bank stock		350		350
Total	$	16,499	$	16,494

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Loans and Leases and Allowance for Loan and Lease Losses

3 Months Ended

Mar. 31, 2022

Receivables [Abstract]

Loans and Leases and Allowance for Loan and Lease Losses

Note 5. Loans and Leases and Allowance for Loan and Lease Losses

Portfolio Segmentation:

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

	March 31, 2022						December 31, 2021
	PCI		All Other				PCI		All Other
	Loans and Leases1		Loans and Leases		Total		Loans and Leases1		Loans and Leases		Total
Commercial real estate	$	20,270	$	1,455,586	$	1,475,856	$	20,875	$	1,363,281	$	1,384,156
Consumer real estate		9,791		473,438		483,229		11,833		465,439		477,272
Construction and land development		2,662		311,992		314,654		2,882		275,504		278,386
Commercial and industrial		2,479		458,674		461,153		2,516		485,508		488,024
Leases		2,230		57,662		59,892		3,170		50,538		53,708
Consumer and other		17		11,225		11,242		71		11,780		11,851
Total loans and leases		37,449		2,768,577		2,806,026		41,347		2,652,050		2,693,397
Less: Allowance for loan and lease losses		(187)		(19,891)		(20,078)		(179)		(19,173)		(19,352)
Loans and leases, net	$	37,262	$	2,748,686	$	2,785,948	$	41,168	$	2,632,877	$	2,674,045

¹ Purchased Credit Impaired loans and leases (“PCI loans and leases”) are loans and leases with evidence of credit deterioration at purchase.

For purposes of the disclosures required pursuant to ASC 310, the loan and lease 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 loan and lease losses. There are six loan and lease portfolio segments that include commercial real estate, consumer real estate, construction and land development, commercial and industrial, leases, and consumer and other.

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

Commercial Real Estate: Commercial real estate loans include owner-occupied commercial real estate loans and loans secured by income-producing properties. Owner-occupied commercial real estate loans to operating businesses are long-

term financing of land and buildings. These loans are repaid by cash flow generated from the business operation. Real estate loans for income-producing properties such as apartment buildings, office and industrial buildings, and retail shopping centers are repaid from rent income derived from the properties. Loans within this portfolio segment are particularly sensitive to the valuation of real estate.

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

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

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

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

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

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 and lease 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 and leases 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 and lease portfolio segments are measured and monitored regularly. Detailed reports, by product, collateral, accrual status, etc., are reviewed by Director, Management and Loan Committees.

The allowance for loan and lease losses is a valuation reserve established through provisions for loan and lease losses charged against income. The allowance for loan and lease losses, which is evaluated quarterly, is maintained at a level that management deems sufficient to absorb probable losses inherent in the loan and lease portfolio. Loans and leases deemed to be uncollectible are charged against the allowance for loan and lease losses, while recoveries of previously charged-off amounts are credited to the allowance for loan and lease losses. The allowance for loan and lease losses is comprised of

specific valuation allowances for loans and leases evaluated individually for impairment and general allocations for pools of homogeneous loans and leases with similar risk characteristics and trends.

The allowance for loan and lease losses related to specific loans and leases is based on management’s estimate of potential losses on impaired loans and leases as determined by (1) the present value of expected future cash flows; (2) the fair value of collateral if the loan or lease is determined to be collateral dependent or (3) the loan’s or leases’ observable market price. The Company’s homogeneous loan and lease pools include commercial real estate loans, consumer real estate loans, construction and land development loans, commercial and industrial loans, leases and consumer and other loans. The general allocations to these loan and lease pools are based on the historical loss rates for specific loan and lease 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 and lease portfolio volume; (4) the composition and concentrations of credit; (5) the impact of competition on loan and lease structuring and pricing; (6) the impact of the regulatory environment and changes in laws; (7) effectiveness of the Company’s loan and lease policies, procedures and internal controls; (8) COVID-19 loan modification factor and (9) COVID-19 Q factor, which is based upon active COVID cases within the Company’s footprint.  The total allowance established for each homogeneous loan and lease pool represents the product of the historical loss ratio adjusted for qualitative factors and the total dollar amount of the loans and leases in the pool.

The determination of the adequacy of the allowance for loan and lease 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 and leases, management obtains independent appraisals for significant collateral.

The Company’s loans and leases are generally secured by specific items of collateral including real property, consumer assets, and business assets. Although the Company has a diversified loan and lease 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 and leases, further reductions in the carrying amounts of loans and leases 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 and leases. 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 and leases may change materially in the near term.

At March 31, 2022, the net deferred fees outstanding was $972 thousand for the 2021 Paycheck Protection Program (“PPP“) loans and as of December 31, 2021, the net deferred fees outstanding for the 2021 PPP loans was $2.0 million.  PPP loans are included in the Commercial and Industrial loan segments. As of March 31, 2022, the Company had 273 PPP loans outstanding, with an outstanding principal balance of $27.9 million and as of December 31, 2021, the Company had 587 PPP loans outstanding, with an outstanding principal balance of $52.2 million.

The composition of loans and leases by loan classification for performing, impaired and PCI loan and leases status is summarized in the tables below (in thousands):

					Construction		Commercial
	Commercial		Consumer		and Land		and				Consumer
	Real Estate		Real Estate		Development		Industrial		Leases		and Other		Total
March 31, 2022:
Performing loans and leases	$	1,454,728	$	471,368	$	311,992	$	458,674	$	57,662	$	11,225	$	2,765,649
Impaired loans and leases		858		2,070		—		—		—		—		2,928
		1,455,586		473,438		311,992		458,674		57,662		11,225		2,768,577
PCI loans and leases		20,270		9,791		2,662		2,479		2,230		17		37,449
Total loans and leases	$	1,475,856	$	483,229	$	314,654	$	461,153	$	59,892	$	11,242	$	2,806,026
December 31, 2021:
Performing loans and leases	$	1,362,423	$	463,374	$	275,504	$	485,411	$	50,538	$	11,780	$	2,649,030
Impaired loans and leases		858		2,065		—		97		—		—		3,020
		1,363,281		465,439		275,504		485,508		50,538		11,780		2,652,050
PCI loans and leases		20,875		11,833		2,882		2,516		3,170		71		41,347
Total loans and leases	$	1,384,156	$	477,272	$	278,386	$	488,024	$	53,708	$	11,851	$	2,693,397

The following tables show the allowance for loan and lease losses allocation by loan and lease classification for impaired, PCI, and performing (in thousands):

					Construction		Commercial				Consumer
	Commercial		Consumer		and Land		and				and
	Real Estate		Real Estate		Development		Industrial		Leases		Other		Total
March 31, 2022:
Performing loans and leases	$	9,945	$	3,267	$	2,120	$	3,501	$	548	$	115	$	19,496
Impaired loans and leases		395		—		—		—		—		—		395
		10,340		3,267		2,120		3,501		548		115		19,891
PCI loans and leases		65		121		—		—		—		1		187
Total loans and leases	$	10,405	$	3,388	$	2,120	$	3,501	$	548	$	116	$	20,078
December 31, 2021:
Performing loans and leases	$	9,355	$	3,237	$	1,882	$	3,685	$	330	$	123	$	18,612
Impaired loans and leases		396		69		—		96		—		—		561
		9,751		3,306		1,882		3,781		330		123		19,173
PCI loans and leases		30		148		—		—		—		1		179
Total loans and leases	$	9,781	$	3,454	$	1,882	$	3,781	$	330	$	124	$	19,352

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

	Three Months Ended March 31, 2022
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and				Consumer
	Real Estate		Estate		Development		Industrial		Leases		and Other		Total
Beginning balance	$	9,781	$	3,454	$	1,882	$	3,781	$	330	$	124	$	19,352
Charged-off loans and leases		—		(33)		—		(188)		(85)		(182)		(488)
Recoveries of charge-offs		1		7		—		17		157		26		208
Provision charged to expense		623		(40)		238		(109)		146		148		1,006
Ending balance	$	10,405	$	3,388	$	2,120	$	3,501	$	548	$	116	$	20,078

	Three Months Ended March 31, 2021
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and				Consumer
	Real Estate		Estate		Development		Industrial		Leases		and Other		Total
Beginning balance	$	7,579	$	3,471	$	2,076	$	5,107	$	—	$	113	$	18,346
Charged-off loans and leases		—		—		—		—		—		(120)		(120)
Recoveries of charge-offs		3		16		—		3		—		55		77
Provision charged to expense		55		(179)		(108)		237		—		62		67
Ending balance	$	7,637	$	3,308	$	1,968	$	5,347	$	—	$	110	$	18,370

We maintain the allowance at a level that we deem appropriate to adequately cover the probable losses inherent in the loan and lease portfolio. Our provision for loan and lease losses for the three months ended March 31, 2022, is $1.0 million compared to $67 thousand in the same period in 2021, an increase of $939 thousand.  As of March 31, 2022, and December 31, 2021, our allowance for loan and lease losses was $20.1 million and $19.4 million, respectively, which we deemed to be adequate at each of the respective dates.  Our allowance for loan and lease losses as a percentage of total loans and leases was 0.72% at March 31, 2021 and December 31, 2021.

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

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

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

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

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

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

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

The Company evaluates the loan risk grading system definitions and allowance for loan loss methodology on an ongoing basis.  No significant changes have been made.

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

	March 31, 2022
					Construction		Commercial
	Commercial		Consumer		and Land		and				Consumer
Non PCI Loans and Leases:	Real Estate		Real Estate		Development		Industrial		Leases		and Other		Total
Pass	$	1,421,096	$	467,908	$	311,618	$	454,048	$	57,662	$	11,190	$	2,723,522
Watch		26,938		1,610		297		4,392		—		24		33,261
Special mention		6,524		1,512		69		109		—		—		8,214
Substandard		1,028		2,408		8		125		—		11		3,580
Doubtful		—		—		—		—		—		—		—
Total		1,455,586		473,438		311,992		458,674		57,662		11,225		2,768,577
PCI Loans and Leases:
Pass		15,490		8,063		2,119		2,479		2,230		17		30,398
Watch		1,228		483		89		—		—		—		1,800
Special mention		14		64		—		—		—		—		78
Substandard		3,538		1,181		454		—		—		—		5,173
Doubtful		—		—		—		—		—		—		—
Total		20,270		9,791		2,662		2,479		2,230		17		37,449
Total loans and leases	$	1,475,856	$	483,229	$	314,654	$	461,153	$	59,892	$	11,242	$	2,806,026

	December 31, 2021
					Construction		Commercial
	Commercial		Consumer		and Land		and				Consumer
Non PCI Loans and Leases:	Real Estate		Real Estate		Development		Industrial		Leases		and Other		Total
Pass	$	1,330,888	$	460,190	$	275,124	$	480,677	$	50,538	$	11,724	$	2,609,141
Watch		27,246		1,334		237		4,345		—		42		33,204
Special mention		4,120		1,525		70		228		—		—		5,943
Substandard		1,027		2,390		73		213		—		14		3,717
Doubtful		—		—		—		45		—		—		45
Total		1,363,281		465,439		275,504		485,508		50,538		11,780		2,652,050
PCI Loans and Leases:
Pass		16,019		9,714		2,335		2,516		3,170		71		33,825
Watch		1,271		539		91		—		—		—		1,901
Special mention		15		68		—		—		—		—		83
Substandard		3,570		1,512		456		—		—		—		5,538
Doubtful		—		—		—		—		—		—		—
Total		20,875		11,833		2,882		2,516		3,170		71		41,347
Total loans and leases	$	1,384,156	$	477,272	$	278,386	$	488,024	$	53,708	$	11,851	$	2,693,397

Past Due Loans and Leases:

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

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

	March 31, 2022
	30-60 Days		61-89 Days		Past Due 90				Total
	Past Due and		Past Due and		Days or More				Past Due and
	Accruing		Accruing		and Accruing		Nonaccrual		Nonaccrual		PCI		Current		Total
Commercial real estate	$	118	$	—	$	—	$	858	$	976	$	20,270	$	1,454,610	$	1,475,856
Consumer real estate		846		—		—		2,383		3,229		9,791		470,209		483,229
Construction and land development		—		—		—		—		—		2,662		311,992		314,654
Commercial and industrial		158		—		—		92		250		2,479		458,424		461,153
Leases		336		—		—		—		336		2,230		57,326		59,892
Consumer and other		308		—		—		9		317		17		10,908		11,242
Total	$	1,766	$	—	$	—	$	3,342	$	5,108	$	37,449	$	2,763,469	$	2,806,026

	December 31, 2021
	30-60 Days		61-89 Days		Past Due 90				Total
	Past Due and		Past Due and		Days or More				Past Due and
	Accruing		Accruing		and Accruing		Nonaccrual		Nonaccrual		PCI		Current		Total
Commercial real estate	$	172	$	—	$	—	$	858	$	1,030	$	20,875	$	1,362,251	$	1,384,156
Consumer real estate		884		10		—		2,139		3,033		11,833		462,406		477,272
Construction and land development		91		—		—		—		91		2,882		275,413		278,386
Commercial and industrial		1,191		119		45		116		1,471		2,516		484,037		488,024
Leases		361		—		—		—		361		3,170		50,177		53,708
Consumer and other		99		4		19		11		133		71		11,647		11,851
Total	$	2,798	$	133	$	64	$	3,124	$	6,119	$	41,347	$	2,645,931	$	2,693,397

Impaired Loans and Leases:

A loan or lease held for investment is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due (both principal and interest) according to the terms of the loan or lease agreement.

The following is an analysis of the impaired loan and lease portfolio, including PCI loans and leases, detailing the related allowance recorded (in thousands):

	March 31, 2022						December 31, 2021
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
Impaired loans and leases without a valuation allowance:
Commercial real estate	$	—	$	—	$	—	$	—	$	—	$	—
Consumer real estate		2,070		2,069		—		1,805		1,806		—
Construction and land development		—		—		—		—		—		—
Commercial and industrial		—		—		—		—		—		—
Leases		—		—		—		—		—		—
Consumer and other		—		—		—		—		—		—
		2,070		2,069		—		1,805		1,806		—
Impaired loans and leases with a valuation allowance:
Commercial real estate		858		858		395		858		859		396
Consumer real estate		—		—		—		260		262		69
Construction and land development		—		—		—		—		—		—
Commercial and industrial		—		—		—		97		96		96
Leases		—		—		—		—		—		—
Consumer and other		—		—		—		—		—		—
		858		858		395		1,215		1,217		561
PCI loans and leases:
Commercial real estate		1,232		1,513		65		707		926		30
Consumer real estate		901		865		121		1,129		1,251		148
Construction and land development		—		—		—		—		—		—
Commercial and industrial		—		—		—		—		—		—
Leases		—		—		—		—		—		—
Consumer and other		3		2		1		5		3		1
		2,136		2,380		187		1,841		2,180		179
Total impaired loans and leases	$	5,064	$	5,307	$	582	$	4,861	$	5,203	$	740

	Three Months Ended March 31,
	2022				2021
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Impaired loans and leases without a valuation allowance:
Commercial real estate	$	—	$	—	$	2,001	$	1
Consumer real estate		1,937		17		1,384		12
Construction and land development		—		—		—		—
Commercial and industrial		—		—		—		—
Leases		—		—		—		—
Consumer and other		—		—		—		—
		1,937		17		3,385		13
Impaired loans and leases with a valuation allowance:
Commercial real estate		858		—		1,577		102
Consumer real estate		130		—		444		5
Construction and land development		—		—		—		—
Commercial and industrial		49		—		128		2
Leases		—		—		—		—
Consumer and other		—		—		—		—
		1,037		—		2,149		109
PCI loans and leases:
Commercial real estate		1,231		24		—		—
Consumer real estate		901		16		1,215		22
Construction and land development		—		—		—		—
Commercial and industrial		—		—		268		1
Leases		—		—		—		—
Consumer and other		3		—		19		—
		2,135		40		1,502		23
Total impaired loans and leases	$	5,109	$	57	$	7,036	$	145

Troubled Debt Restructurings:

For the periods presented, impaired loans included loans that were classified as trouble debt restricting (“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, 2022 and December 31, 2021, management had approximately $625 thousand and $206 thousand, respectively, in loans that met the criteria for TDR, none of which were on nonaccrual. A loan is placed back on accrual status when both principal and interest are current, and it is probable that the Company will be able to collect all amounts due (both principal and interest) according to the terms of the loan agreement.

There was one loan for $516 thousand that was modified as a TDR during the three months ended March 31, 2022, and no loans were modified during the three months ended March 31, 2021. There were no loans that were modified as TDRs during the past three months and for which there was a subsequent payment default.

Foreclosure Proceedings and Balances:

As of March 31, 2022, there were no residential properties secured by real estate included in other real estate owned and  there were no residential real estate loans in the process of foreclosure.

Purchased Credit Impaired Loans and Leases:

The Company has acquired loans and leases where 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 and leases are as follows (in thousands):

	March 31,		December 31,
	2022		2021
Commercial real estate	$	30,981	$	31,600
Consumer real estate		11,954		14,215
Construction and land development		3,127		3,699
Commercial and industrial		3,467		3,424
Leases		2,542		3,557
Consumer and other		65		125
Total loans and leases		52,136		56,620
Less: Remaining purchase discount		(14,687)		(15,273)
Total loans and leases, net of purchase discount		37,449		41,347
Less: Allowance for loan and leases losses		(187)		(179)
Carrying amount, net of allowance	$	37,262	$	41,168

Activity related to the accretable yield on loans and leases acquired with deteriorated credit quality is as follows (in thousands):

	Three Months Ended
	March 31,
	2022		2021
Accretable yield, beginning of period	$	14,618	$	16,889
Additions		—		—
Accretion income		(1,096)		(1,931)
Reclassification		269		337
Other changes, net		7,490		(590)
Accretable yield, end of period	$	21,281	$	14,705

XML

Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Note 6. Goodwill and Intangible Assets

In accordance with FASB ASC 350, Goodwill and Other, regarding testing goodwill for impairment provides an entity the option to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The Company performs its annual goodwill impairment test as of December 31 of each year. For 2021, the results of the qualitative assessment provided no indication of potential impairment.

The Company’s other intangible assets consist of core deposit, customer relationships and tradename.  They are initially recognized based on a valuation performed as of the consummation date. The core deposit intangible is amortized over the average remaining life of the acquired customer deposits, the customer relationships are amortized over a weighted average of 8.6 years and the tradename is amortized over five years.

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

	March 31,		December 31,
	2022		2021
Goodwill:
Balance, beginning of period	$	91,565	$	74,135
Acquisition of PFG		—		323
Acquisition of Fountain		—		2,400
Acquisition of SCB		—		17,171
Adjustment, due to Sale		—		(2,464)
Balance, end of the period	$	91,565	$	91,565

	Core Deposit		Customer Relationships		Tradename
Amortized other intangible assets:	Intangibles		Intangibles		Intangibles		Total
March 31, 2022:
Beginning balance January 1, 2022, gross	$	17,470	$	3,722	$	63	$	21,255
Less: accumulated amortization		(6,671)		(908)		(26)		(7,605)
Balance, March 31, 2022, other intangible assets, net	$	10,799	$	2,814	$	37	$	13,650
December 31, 2021:
Beginning balance January 1, 2021, gross	$	15,920	$	1,064	$	63	$	17,047
Acquisition of Fountain		-		2,658		-		2,658
Acquisition of SCB		1,550		-		-		1,550
Balance, December 31, 2021, other intangible assets, gross		17,470		3,722		63		21,255
Less: accumulated amortization		(6,212)		(733)		(23)		(6,968)
Balance, December 31, 2021, other intangible assets, net	$	11,258	$	2,989	$	40	$	14,287

The aggregate amortization expense for other intangible assets for the three months ended March 31, 2022 and 2021, was $637 thousand and $444 thousand, respectively.

The estimated aggregate amortization expense for future periods for intangibles is as follows (in thousands):

Remainder of 2022	$	1,884
2023		2,356
2024		2,203
2025		2,041
2026		1,888
Thereafter		3,278
Total	$	13,650

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Borrowings and Line of Credit

3 Months Ended

Mar. 31, 2022

Borrowings, Line of Credit and Subordinated Debt [Abstract]

Borrowings, Line of Credit and Subordinated Debt

Note 7. Borrowings, Line of Credit and Subordinated Debt

Borrowings:

At March 31, 2022, total borrowings were $36.7 million compared to $87.6 million at December 31, 2021.  During the quarter ending March 31, 2022, the FHLB called a $50 million advance.  Borrowings consist of the following (dollars in thousands):

	March 31,		December 31,
	2022		2021
Securities sold under customer repurchase agreements	$	4,213	$	5,085
FHLB borrowings		25,000		75,000
Other borrowings		7,500		7,500
Total	$	36,713	$	87,585

Securities Sold Under Agreements to Repurchase:

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

The Company had securities sold under agreements to repurchase with commercial checking customers which were secured by government agency securities.  The carrying value of investment securities pledged as collateral under repurchase agreements was $9.8 million and $10.1 million at March 31, 2022 and December 31, 2021, respectively. The average balance during the three month period March 31, 2022 and 2021 was $5.0 million and $6.4 million, respectively.  The maximum month-end outstanding balance for the three month period March 31, 2022 and 2021 was $5.5 million and $7.2 million, respectively.

Line of Credit:

The Company has a Loan and Security Agreement and revolving note with ServisFirst Bank, pursuant to which ServisFirst Bank has made a $25.0 million revolving line of credit available to the Company. The maturity of the line of credit is March 24, 2023. At March 31, 2022, $7.5 million was outstanding under the line of credit, and $17.5 million of the line of credit remained available to the Company.

Subordinated Debt:

On September 28, 2018, the Company issued $40 million of 5.625% fixed-to-floating rate subordinated notes (the "Notes"), which was outstanding as of March 31, 2022 and December 31, 2021. Unamortized debt issuance cost was $548 thousand and $570 thousand at March 31, 2022 and December 31, 2021, respectively.

The Notes initially bears interest at a rate of 5.625% per annum from and including September 28, 2018, to but excluding October 2, 2023, with interest during this period payable semi-annually in arrears. From and including October 2, 2023, to but excluding the maturity date or early redemption date, the interest rate will reset quarterly to an annual floating rate equal to three-month LIBOR, or an alternative rate determined in accordance with the terms of the Notes if three-month LIBOR cannot be determined, plus 255 basis points, with interest during this period payable quarterly in arrears. The Notes are redeemable by the Company, in whole or in part, on or after October 2, 2023, and at any time, in whole but not in part, upon the occurrence of certain events. The Notes have been structured to qualify initially as Tier 2 capital for the Company for regulatory capital purposes.

The Notes unamortized debt issuance costs totaled $548 thousand at March 31, 2022, and will be amortized through the Notes’ maturity date. Amortization expense totaled $21 thousand for the three months ended March 31, 2022 and 2021, respectively

On September 1, 2021, the Company acquired $2.5 million of subordinated notes (“sub-debt”) from the acquisition of SCB. The sub-debt bears interest at a rate of 6.75% per annum until August 14, 2024, with the interest during this period payable semi-annually in arrears. From and including August 14, 2024, to but excluding the maturity date or early redemption date, the interest rate will reset quarterly to an annual floating rate equal to three-month LIBOR, or an alternative rate determined in accordance with the terms of the sub-debt if three-month LIBOR cannot be determined, plus 530.25 basis points, with interest during this period payable quarterly in arrears. The sub-debt is redeemable by the Company, in whole or in part, on or after August 14, 2024, and at any time, in whole but not in part, upon the occurrence of certain events. The sub-debt has been structured to qualify initially as Tier 2 capital for the Company for regulatory capital purposes.

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Employee Benefit Plans

3 Months Ended

Mar. 31, 2022

Defined Benefit Plan [Abstract]

Employee Benefit Plans

Note 8. Employee Benefit Plans

401(k) Plan:

The Company provides a deferred salary reduction plan (“Plan”) under Section 401(k) of the Internal Revenue Code covering substantially all employees. After 90 days of service, the Company matches 100% of employee contributions up to 3% of compensation and 50% of employee contributions on the next 2% of compensation. The Company’s contribution to the Plan for the three month periods ending March 31, 2022 and 2021, respectively, was $393 thousand and $288 thousand.    

Equity Incentive Plans:

The Compensation Committee of the Company’s Board of Directors may grant or award eligible participants stock options, restricted stock, restricted stock units, stock appreciation rights, and other stock-based awards or any combination of awards (collectively referred to herein as "Rights"). At March 31, 2022, the Company had one active equity incentive plan available for future grants, the 2015 Stock Incentive Plan, which has 1,767,518 Rights available for future grants or awards.

In addition, the Company has 33,500 Rights issued from the Cornerstone Non-Qualified Plan Options, and 2,266 Rights issued from the Capstone Stock Option Plan. These plans do not have any Rights available for future grants or awards.

Stock Options:

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

		Weighted
		Average
		Exercisable
	Number	Price
Outstanding at December 31, 2021	79,667	$	10.17
Granted	—		—
Exercised	(27,550)		7.90
Forfeited	—		—
Outstanding at March 31, 2022	52,117	$	11.37

Information pertaining to stock options outstanding at March 31, 2022, is as follows:

		Options Outstanding				Options Exercisable
			Weighted-
			Average	Weighted-			Weighted-
			Remaining	Average			Average
Exercise		Number	Contractual	Exercise		Number	Exercise
Prices		Outstanding	Life	Price		Exercisable	Price
$	9.48	15,500	0.95 years	$	9.48	15,500	$	9.48
	9.60	18,000	1.71 years		9.60	18,000		9.60
	11.76	2,266	0.25 years		11.76	2,266		11.76
	15.05	16,351	3.21 years		15.05	16,351		15.05
Outstanding, end of period		52,117	1.89 years	$	11.37	52,117	$	11.37

The Company did not recognize any stock option-based compensation expense during the three months ended March 31, 2022 and 2021, respectively, as all stock options issued are fully vested, and no future compensation cost will be recognized related to nonvested stock-based compensation arrangements granted under the Plans.

The intrinsic value of options exercised during the three months ended March 31, 2022 and 2021, was $506 thousand and $192 thousand, respectively.  The aggregate intrinsic value of total options outstanding and exercisable options at March 31, 2022, was $741 thousand. Cash received from options exercised under all share-based payment arrangements for the three months ended March 31, 2022 was $217 thousand.

Stock options of 27,550 and 15,965 shares were exercised during the three month periods ended March 31, 2022, and 2021, respectively.  The income tax benefit recognized for the exercise of options during the three months ended March 31, 2022, and 2021, was a $76 thousand and $1 thousand, respectively.

Restricted Stock Awards:

A summary of the activity of the Company’s unvested restricted stock awards for the period ended March 31, 2022 is presented below:

		Weighted
		Average
		Grant-Date
	Number	Fair Value
Balance at December 31, 2021	144,367	$	19.49
Granted	21,842		26.66
Vested	(4,167)		20.14
Forfeited/expired	—		—
Balance at March 31, 2022	162,042	$	20.44

The Company measures the fair value of restricted stock awards based on the price of the Company’s common stock on the grant date, and compensation expense is recorded over the vesting period. The compensation expense for restricted stock awards during the three months ended March 31, 2022 and 2021, was $312 thousand and $201 thousand, respectively. As of March 31, 2022, there was $1.7 million of unrecognized compensation cost related to non-vested restricted stock awards granted under the plan. The cost is expected to be recognized over a weighted average period of 2.20 years. The grant-date fair value of restricted stock awards vested was $84 thousand for the three months ended March 31, 2022.

Stock Appreciation Rights ("SARs"):

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

		Weighted
		Average
	Number	Exercisable Price
Outstanding at December 31, 2021	55,000	$	18.21
Granted	—		—
Exercised	(4,500)		18.12
Forfeited	—		—
Outstanding at March 31, 2022	50,500	$	18.21

Information pertaining to SARs outstanding at March 31, 2022, is as follows:

		SARs Outstanding				SARs Exercisable
			Weighted-
			Average	Weighted-
			Remaining	Average			Weighted- Average
Exercise		Number	Contractual	Exercise		Number	Exercise
Prices		Outstanding	Life		Price	Exercisable	Price
$	15.19	16,000	1.75 years	$	15.19	—	$	—
	18.12	14,500	0.75 years		18.12	14,500		18.12
	20.70	20,000	2.76 years		20.70	—		—
	Outstanding, end of period	50,500	1.86 years	$	18.21	14,500	$	18.12

SARs compensation expense of ($26) thousand and $49 thousand was recognized for the three month periods ended March 31, 2022 and 2021, respectively. The credit in expense for the three month period ended March 31, 2022, was due to adjustments related to the fair value evaluation of SARs.  

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 9. Commitments and Contingent Liabilities

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

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

	March 31,		December 31,
	2022		2021
Commitments to extend credit	$	723,380	$	669,770
Standby letters of credit		17,919		17,868

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if deemed

necessary by the Company upon extension of credit, is based on management’s credit evaluation of the customer. Collateral held varies, but may include accounts receivable, inventory, property and equipment, residential real estate, and income-producing commercial properties.

Standby letters of credit issued by the Company are conditional commitments to guarantee the performance of a customer to a third party. Those letters of credit are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. Collateral held varies and is required in instances which the Company deems necessary. At March 31, 2022 and December 31, 2021, the carrying amount of liabilities related to the Company’s obligation to perform under standby letters of credit was insignificant.

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

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Fair Value Disclosures

3 Months Ended

Mar. 31, 2022

Fair Value Disclosures [Abstract]

Fair Value Disclosures

Note 10. Fair Value Disclosures

Determination of Fair Value:

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

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

Fair Value Hierarchy:

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

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

Level 2 - Valuation is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The valuation may be based on quoted prices for similar assets or liabilities; quoted

prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

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

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

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

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

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

Recurring Measurements of Fair Value:

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

			Quoted Prices in		Significant		Significant
			Active Markets		Other		Other
			for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
Description	Fair Value		(Level 1)		(Level 2)		(Level 3)
March 31, 2022:
Assets:
Securities available-for-sale:
U.S. Treasury	$	229,913	$	—	$	229,913	$	—
U.S. Government-sponsored enterprises (GSEs)		506		—		506		—
Municipal securities		55,241		—		55,241		—
Other debt securities		28,540		—		28,540		—
Mortgage-backed securities (GSEs)		226,283		—		226,283		—
Total securities available-for-sale		540,483		—		540,483		—
Interest rate swaps agreements for customer loans		1,334		—		1,334		—
Total assets at fair value	$	541,817	$	—	$	541,817	$	—
Liabilities:
Derivative financial instruments and interest rate swap agreements	$	2,552	$	—	$	2,552	$	—
December 31, 2021:
Assets:
Securities available-for-sale:
U.S. Treasury	$	137,758			$	137,758	$	—
U.S. Government-sponsored enterprises (GSEs)		21,801		—		21,801		—
Municipal securities		67,820		—		67,820		—
Other debt securities		27,220		—		27,220		—
Mortgage-backed securities (GSEs)		227,854		—		227,854		—
Total securities available-for-sale		482,453		—		482,453		—
Interest rate swaps agreements for customer loans		1,326		—		1,326		—
Total assets at fair value	$	483,779	$	—	$	483,779	$	—
Liabilities:
Derivative financial instruments	$	4,893	$	—	$	4,893	$	—

During the three months ending March 31, 2022, there were no transfers between Level 1 and Level 2 in the fair value hierarchy.

Assets Measured at Fair Value on a Nonrecurring Basis:

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

			Quoted Prices in		Significant		Significant
			Active Markets		Other		Other
			for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
March 31, 2022:
Collateral dependent loans	$	2,412	$	—	$	—	$	2,412
Other real estate owned		696		—		—		696
December 31, 2021:
Collateral dependent loans	$	2,280	$	—	$	—	$	2,280
Other real estate owned		367		—		—		367

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

					Weighted
			Valuation	Significant Other	Average of
	Fair Value		Technique	Unobservable Input	Input
March 31, 2022:
Collateral dependent loans	$	2,412	Appraisal	Appraisal discounts	19	%
Other real estate owned		696	Appraisal	Appraisal discounts	21	%
December 31, 2021:
Collateral dependent loans	$	2,280	Appraisal	Appraisal discounts	25	%
Other real estate owned		367	Appraisal	Appraisal discounts	13	%

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

Other real estate owned: Other real estate owned, consisting of properties obtained through foreclosure or in satisfaction of loans, are initially recorded at fair value less estimated costs to sell upon transfer of the loans to other real estate. Subsequently, other real estate is carried at the lower of carrying value or fair value less costs to sell. Fair values are generally based on third party appraisals of the property and are classified within Level 3 of the fair value hierarchy. The appraisals are sometimes further discounted based on management’s historical knowledge, and/or changes in market conditions from the date of the most recent appraisal, and/or management’s expertise and knowledge of the customer and

the customer’s business. Such discounts are typically significant unobservable inputs for determining fair value. In cases where the carrying amount exceeds the fair value, less estimated costs to sell, the difference is recognized in noninterest expense.

Carrying value and estimated fair value:

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

	Fair Value Measurements Using
	Carrying								Estimated
	Amount		Level 1		Level 2		Level 3		Fair Value
March 31, 2022:
Assets:
Cash and cash equivalents	$	763,968	$	763,968	$	—	$	—	$	763,968
Securities available-for-sale		540,483		—		540,483		—		540,483
Securities held-to-maturity		289,532		—		277,734		—		277,734
Other investments		16,499		N/A		N/A		N/A		N/A
Loans and leases, net and loans held for sale		2,791,842		—		—		2,739,655		2,739,655
Interest rate swaps agreements for customer loans		1,334		—		1,334		—		1,334
Liabilities:
Noninterest-bearing demand deposits		1,093,933		—		1,093,933		—		1,093,933
Interest-bearing demand deposits		975,272		—		975,272		—		975,272
Money market and savings deposits		1,573,101		—		1,573,101		—		1,573,101
Time deposits		549,047		—		549,677		—		549,677
Borrowings		36,713		—		36,750		—		36,750
Subordinated debt		41,952		—		—		42,487		42,487
Derivative financial instruments and interest rate swap agreements		2,552		—		2,552		—		2,552
December 31, 2021:
Assets:
Cash and cash equivalents	$	1,045,077	$	1,045,077	$	—	$	—	$	1,045,077
Securities available-for-sale		482,453		—		482,453		—		482,453
Securities held-to-maturity		76,969		—		76,946				76,946
Other investments		16,494		N/A		N/A		N/A		N/A
Loans and leases, net and loans held for sale		2,679,148		—		—		2,676,181		2,676,181
Interest rate swaps agreements for customer loans		1,326		—		1,326		—		1,326
Liabilities:
Noninterest-bearing demand deposits		1,055,125		—		1,055,125		—		1,055,125
Interest-bearing demand deposits		899,158		—		899,158		—		899,158
Money market and savings deposits		1,493,007		—		1,493,007		—		1,493,007
Time deposits		574,648		—		576,598		—		576,598
Borrowings		87,585		—		88,082		—		88,082
Subordinated debt		41,930		—		—		43,374		43,374
Derivative financial instruments and interest rate swap agreements		4,893		—		4,893		—		4,893

Limitations:

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

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 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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Derivatives Financial Instruments

3 Months Ended

Mar. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives Financial Instruments

Note 11.Derivatives Financial Instruments

Derivatives designated as fair value hedges:

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

A summary of the Company’s fair value hedge relationships for the periods presented are as follows (dollars in thousands):

		Weighted
		Average
	Balance	Remaining	Weighted
	Sheet	Maturity	Average		Receive	Notional		Estimated
Liability derivatives	Location	(In Years)	Pay Rate		Rate	Amount		Fair Value
March 31, 2022:
Interest rate swap agreements - securities	Other liabilities	6.00	3.09	%	3 month LIBOR	$	36,000	$	(1,218)
December 31, 2021:
Interest rate swap agreements - securities	Other liabilities	6.20	3.09	%	3 month LIBOR	$	36,000	$	(3,567)

The effects of the Company’s fair value hedge relationships reported in interest income on tax-exempt available-for-sale securities on the consolidated income statement were as follows (in thousands):

	Three Months Ended
	March 31,
	2022		2021
Interest income on tax-exempt securities	$	393	$	564
Effects of fair value hedge relationships		(254)		(305)
Reported interest income on tax-exempt securities	$	139	$	259

	Three Months Ended
	March 31,
Gain (loss) on fair value hedging relationship	2022		2021
Interest rate swap agreements - securities:
Hedged items	$	(1,218)	$	(4,008)
Derivative designated as hedging instruments	$	1,218	$	4,008
Carry amount of hedged assets - securities available-for-sale	$	40,125	$	43,073

Non-hedged derivatives:

During the second quarter of 2021, the Company initiated a loan hedging program to certain loan customers. Through this program, the Company originates a variable rate loan with the customer. The Company and the customer will then enter into a fixed interest rate swap. Lastly, an identical offsetting swap is entered into by the Company with a dealer bank. These “back-to-back” swap arrangements are intended to offset each other and allow the Company to book a variable rate loan, while providing the customer with a contract for fixed interest payments. In these arrangements, the Company’s net cash flow is equal to the interest income received from the variable rate loan originated with the customer. These customer swaps are not designated as hedging instruments and are recorded at fair value in other assets and other liabilities. Since the income statement impact of the offsetting positions is limited, any changes in fair value is recognized as other noninterest income in the current period.

At March 31, 2022 and December 31, 2021, interest rate swaps related to the Company’s loan hedging program that were outstanding are presented in the following table (in thousands):

	March 31, 2022				December 31, 2021
		Notional		Estimated		Notional		Estimated
		Amount		Fair Value		Amount		Fair Value
Interest rate swap agreements:
Assets	$	84,141	$	1,334	$	48,125	$	1,326
Liabilities		84,141		(1,334)		48,125		(1,326)

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

	Three Months Ended
	March 31,
	2022		2021
Interest rate swap agreements	$	520	$	—

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Leases

3 Months Ended

Mar. 31, 2022

Leases [Abstract]

Leases

Note 12. Leases

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

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

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

		March 31,		December 31,
	Classification	2022		2021
Assets:
Operating lease right-of-use assets	Other assets	$	9,499	$	9,812
Liabilities:
Operating lease liabilities	Other liabilities	$	9,586	$	9,881

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

As of March 31, 2022, the weighted average remaining lease term was 9.77 years and the weighted average discount rate was 2.10%.

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

	Three Months Ended
	March 31,
	2022		2021
Lease costs:
Operating lease costs	$	414	$	240
Variable lease costs		25		24
Total	$	439	$	264
Other information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	396	$	233

Future minimum payments for operating leases with initial or remaining terms of one year or more as of March 31, 2022, were as follows (in thousands):

	Amounts
March 31, 2023	$	1,142
March 31, 2024		1,290
March 31, 2025		1,079
March 31, 2026		1,047
March 31, 2027		946
Thereafter		5,249
Total future minimum lease payments		10,753
Amounts representing interest		(1,167)
Present value of net future minimum lease payments	$	9,586

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Regulatory Matters

3 Months Ended

Mar. 31, 2022

Banking and Thrift [Abstract]

Regulatory Matters

Note 13. Regulatory Matters

Regulatory Capital Requirements:

The final rules implementing the Basel Committee on Banking Supervision's capital guidelines for U.S. banks (Basel III rules) became effective January 1, 2015. In order to avoid restrictions on capital distributions and discretionary bonus payments to executives, under the new rules a covered banking organization is also required to maintain a “capital conservation buffer” in addition to its minimum risk-based capital requirements. This buffer is required to consist solely of common equity Tier 1, and the buffer applies to all three risk-based measurements (CET1, Tier 1 capital and total capital).  As of January 1, 2019, an additional amount of Tier 1 common equity equal to 2.5% of risk-weighted assets is required for compliance with the capital conservation buffer. The ratios for the Company and the Bank are currently sufficient to satisfy the fully phased-in conservation buffer. At March 31, 2022, the Company and the Bank exceeded the minimum regulatory requirements and exceeded the threshold for the "well capitalized" regulatory classification.

Regulatory Restrictions on Dividends:

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

During the three months ended March 31, 2022, the Bank did not pay a dividend to the Company and the Company paid a quarterly common stock dividend of $0.07 per share.  The amount and timing of all future dividend payments by the Company, if any, is subject to discretion of the Company’s board of directors and will depend on the Company’s earnings, capital position, financial condition and other factors, including new regulatory capital requirements, as they become known to the Company.

Regulatory Capital Levels:

Actual and required capital levels at March 31, 2022, and December 31, 2021 are presented below (dollars in thousands):

									Minimum to be
									well
									capitalized under
					Minimum for				prompt
					capital				corrective action
		Actual			adequacy purposes				provisions1
	Amount		Ratio		Amount		Ratio		Amount		Ratio
March 31, 2022
SmartFinancial:
Total Capital (to Risk Weighted Assets)	$	395,523	12.22	%	$	258,996	8.00	%		N/A	N/A
Tier 1 Capital (to Risk Weighted Assets)		333,493	10.30	%		194,247	6.00	%		N/A	N/A
Common Equity Tier 1 Capital (to Risk Weighted Assets)		333,493	10.30	%		145,685	4.50	%		N/A	N/A
Tier 1 Capital (to Average Assets)2		333,493	7.41	%		180,085	4.00	%		N/A	N/A
SmartBank:
Total Capital (to Risk Weighted Assets)	$	390,953	12.08	%	$	258,990	8.00	%	$	323,737	10.00	%
Tier 1 Capital (to Risk Weighted Assets)		370,875	11.46	%		194,242	6.00	%		258,990	8.00	%
Common Equity Tier 1 Capital (to Risk Weighted Assets)		370,875	11.46	%		145,682	4.50	%		210,429	6.50	%
Tier 1 Capital (to Average Assets)2		370,875	8.24	%		180,011	4.00	%		225,013	5.00	%
December 31, 2021
SmartFinancial:
Total Capital (to Risk Weighted Assets)	$	386,627	12.55	%	$	246,483	8.00	%		N/A	N/A
Tier 1 Capital (to Risk Weighted Assets)		325,345	10.56	%		184,862	6.00	%		N/A	N/A
Common Equity Tier 1 Capital (to Risk Weighted Assets)		325,345	10.56	%		138,647	4.50	%		N/A	N/A
Tier 1 Capital (to Average Assets)		325,345	7.45	%		174,578	4.00	%		N/A	N/A
SmartBank:
Total Capital (to Risk Weighted Assets)	$	378,055	12.29	%	$	246,053	8.00	%	$	307,566	10.00	%
Tier 1 Capital (to Risk Weighted Assets)		358,703	11.66	%		184,539	6.00	%		246,053	8.00	%
Common Equity Tier 1 Capital (to Risk Weighted Assets)		358,703	11.66	%		138,405	4.50	%		199,918	6.50	%
Tier 1 Capital (to Average Assets)		358,703	8.23	%		174,384	4.00	%		217,980	5.00	%

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

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

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Other comprehensive income (loss)

3 Months Ended

Mar. 31, 2022

Equity [Abstract]

Other comprehensive income (loss)

Note 14. Other Comprehensive Income (Loss)

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

	Three Months Ended March 31, 2022
						Accumulated
	Securities		Securities	Fair Value		Other
	Available-for-		Transferred to	Municipal		Comprehensive
	Sale		Held-to-Maturity	Security Hedges		Income (Loss)
Beginning balance, December 31, 2021	$	25	665	$	753	$	1,443
Other comprehensive income (loss)		(15,092)	(1,490)		(409)		(16,991)
Reclassification of amounts included in net income		—	(8)		—		(8)
Net other comprehensive income (loss) during period		(15,092)	(1,498)		(409)		(16,999)
Ending balance, March 31, 2022	$	(15,067)	(833)	$	344	$	(15,556)
	Three Months Ended March 31, 2021
						Accumulated
	Securities		Securities	Fair Value		Other
	Available-for-		Transferred to	Municipal		Comprehensive
	Sale		Held-to-Maturity	Security Hedges		Income (Loss)
Beginning balance, December 31, 2020	$	2,968	—	$	(785)	$	2,183
Other comprehensive income (loss)		(2,070)	—		970		(1,100)
Reclassification of amounts included in net income		—	—		—		—
Net other comprehensive income (loss) during period		(2,070)	—		970		(1,100)
Ending balance, March 31, 2021	$	898	—	$	185	$	1,083

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Presentation of Financial Information (Policies)	3 Months Ended
	Mar. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Earnings Per Share	Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding. Diluted earnings per common share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding and dilutive common share equivalents using the treasury stock method. Dilutive common share equivalents include common shares issuable upon exercise of outstanding stock options and restricted stock.

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Business Combinations (Tables)

3 Months Ended

Mar. 31, 2022

Sevier County Bancshares Inc [Member]

Business Acquisition [Line Items]

Schedule of Business Acquisitions

The purchased assets and assumed liabilities were recorded at their acquisition date fair values ⁽¹⁾ and are summarized in the table below (in thousands).

			Initial
	As recorded		Fair value		Subsequent		As recorded
	by SCB		adjustments		Adjustments		by the Company
Assets:
Cash & cash equivalents	$	84,313	$	—	$	—	$	84,313
Investment securities available-for-sale		64,219		(614)		—		63,605
Restricted investments		533		—		—		533
Loans		304,620		(4,551)		(3,049)		297,020
Allowance for loan losses		(3,644)		3,644		—		—
Premises and equipment, net		15,579		(295)		(22)		15,262
Bank owned life insurance		7,116		—		—		7,116
Deferred tax asset, net		10,340		(4,007)		769		7,102
Core deposit intangible		—		1,550		—		1,550
Interest Receivable		884		—		—		884
Other assets		920		(272)		(533)		115
Total assets acquired	$	484,880	$	(4,545)	$	(2,835)	$	477,500
Liabilities:
Deposits	$	435,036	$	—	$	—	$	435,036
Time deposit premium		—		888		—		888
Subordinated debt		2,500		—		—		2,500
Payables and other liabilities		5,563		115		(1,254)		4,424
Total liabilities assumed		443,099		1,003		(1,254)		442,848
Excess of assets acquired over liabilities assumed	$	41,781
Aggregate fair value adjustments			$	(5,548)	$	(1,581)
Total identifiable net assets								34,652
Consideration transferred:
Cash								9,568
Common stock issued (1,692,168 shares)								42,255
Total fair value of consideration transferred								51,823
Goodwill							$	17,171

⁽¹⁾ Fair values are preliminary and are subject to refinement for a period of one year after the closing date of an acquisition as information relative to the closing date fair value becomes available.

Loans Acquired in Acquisition

The following table presents additional information related to the purchased credit impaired loans (ASC 310-30) of the acquired loan portfolio at the acquisition date (in thousands):

	September 1, 2021
Accounted for pursuant to ASC 310-30:
Contractually required principal and interest	$	30,293
Non-accretable differences		7,609
Cash flows expected to be collected		22,684
Accretable yield		3,552
Fair value	$	19,132

Fountain [Member]

Business Acquisition [Line Items]

Schedule of Business Acquisitions

The purchased assets and assumed liabilities were recorded at their acquisition date fair values ⁽¹⁾ and are summarized in the table below (in thousands).

	As recorded		Fair value		Subsequent		As recorded
	by Fountain		adjustments		Adjustments		by the Company
Assets:
Cash & cash equivalents	$	413	$	—	$	—	$	413
Leases		54,945		(720)		—		54,225
Allowance for lease losses		(1,796)		1,796		—		—
Customer list intangible		—		2,658		—		2,658
Other repossessed assets		319		—		—		319
Other assets		233		—		—		233
Total assets acquired	$	54,114	$	3,734	$	—	$	57,848
Liabilities:
Payables and other liabilities	$	683	$	(229)	$	—	$	454
Total liabilities assumed		683		(229)		—		454
Excess of assets acquired over liabilities assumed	$	53,431
Aggregate fair value adjustments			$	3,963	$	—
Total identifiable net assets								57,394
Consideration transferred:
Cash								59,794
Total fair value of consideration transferred								59,794
Goodwill							$	2,400

⁽¹⁾ Fair values are preliminary and are subject to refinement for a period of one year after the closing date of an acquisition as information relative to the closing date fair value becomes available.

Loans Acquired in Acquisition

The following table presents additional information related to the purchased credit impaired financing leases (ASC 310-30) of the acquired lease portfolio at the acquisition date (in thousands):

	May 3, 2021
Accounted for pursuant to ASC 310-30:
Contractually required principal and interest	$	6,018
Non-accretable differences		447
Cash flows expected to be collected		5,571
Accretable yield		649
Fair value	$	4,922

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Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2022

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

	Three Months Ended
	March 31,
	2022		2021
Basic earnings per share computation:
Net income available to common shareholders	$	8,259	$	9,756
Average common shares outstanding – basic		16,718,371		15,011,573
Basic earnings per share	$	0.49	$	0.65
Diluted earnings per share computation:
Net income available to common shareholders	$	8,259	$	9,756
Average common shares outstanding – basic		16,718,371		15,011,573
Incremental shares from assumed conversions:
Stock options and restricted stock		139,917		100,374
Average common shares outstanding - diluted		16,858,288		15,111,947
Diluted earnings per common share	$	0.49	$	0.65

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Securities (Tables)

3 Months Ended

Mar. 31, 2022

Securities [Abstract]

Schedule of Available-for-sale Securities Reconciliation

	March 31, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Available-for-sale:	Cost		Gains		Losses		Value
U.S. Treasury	$	239,056	$	—	$	(9,143)	$	229,913
U.S. Government-sponsored enterprises (GSEs)		512		—		(6)		506
Municipal securities		55,318		67		(144)		55,241
Other debt securities		28,982		139		(581)		28,540
Mortgage-backed securities (GSEs)		236,929		167		(10,813)		226,283
Total	$	560,797	$	373	$	(20,687)	$	540,483

	March 31, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Held-to-maturity:	Cost		Gains		Losses		Value
U.S. Treasury	$	150,471	$	—	$	(2,131)	$	148,340
U.S. Government-sponsored enterprises (GSEs)		51,425		—		(3,634)		47,791
Municipal securities		54,459		—		(4,561)		49,898
Mortgage-backed securities (GSEs)		33,177		—		(1,472)		31,705
Total	$	289,532	$	—	$	(11,798)	$	277,734

	December 31, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Available-for-sale:	Cost		Gains		Losses		Value
U.S. Treasury	$	138,212	$	64	$	(518)	$	137,758
U.S. Government-sponsored enterprises (GSEs)		21,898		76		(173)		21,801
Municipal securities		67,310		512		(2)		67,820
Other debt securities		26,989		313		(82)		27,220
Mortgage-backed securities (GSEs)		228,011		971		(1,128)		227,854
Total	$	482,420	$	1,936	$	(1,903)	$	482,453

	December 31, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Held-to-maturity:	Cost		Gains		Losses		Value
U.S. Government-sponsored enterprises (GSEs)	$	31,023	$	20	$	(87)	$	30,956
Municipal securities		45,946		63		(19)		45,990
Total	$	76,969	$	83	$	(106)	$	76,946

Investments Classified by Contractual Maturity Date

The amortized cost and estimated fair value of securities at March 31, 2022 by contractual maturity for non-mortgage backed securities are shown below (in thousands). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	March 31, 2022
	Amortized		Fair
Available-for-sale:	Cost		Value
Due in one year or less	$	902	$	903
Due from one year to five years		178,294		173,044
Due from five years to ten years		99,601		95,174
Due after ten years		45,071		45,079
		323,868		314,200
Mortgage-backed securities		236,929		226,283
Total	$	560,797	$	540,483
Held-to-maturity:
Due in one year or less	$	—	$	—
Due from one year to five years		150,471		148,339
Due from five years to ten years		28,250		26,931
Due after ten years		77,634		70,759
		256,355		246,029
Mortgage-backed securities		33,177		31,705
Total	$	289,532	$	277,734

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 and held-to-maturity have been in a continuous unrealized loss position (in thousands):

	March 31, 2022
	Less than 12 Months					12 Months or Greater					Total
			Gross		Number			Gross		Number			Gross		Number
	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized		of
Available-for-sale:	Value		Losses		Securities	Value		Losses		Securities	Value		Losses		Securities
U.S. Treasury	$	229,913	$	(9,143)	19	$	—	$	—	—	$	229,913	$	(9,143)	19
U.S. Government-sponsored enterprises (GSEs)		—		—	—		506		(6)	2		506		(6)	2
Municipal securities		9,885		(144)	17		—		—	—		9,885		(144)	17
Other debt securities		16,086		(505)	16		1,424		(76)	1		17,510		(581)	17
Mortgage-backed securities (GSEs)		201,144		(10,627)	70		7,701		(186)	6		208,845		(10,813)	76
Total	$	457,028	$	(20,419)	122	$	9,631	$	(268)	9	$	466,659	$	(20,687)	131
	March 31, 2022
	Less than 12 Months					12 Months or Greater					Total
			Gross		Number			Gross		Number			Gross		Number
	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized		of
Held-to-maturity:	Value		Losses		Securities	Value		Losses		Securities	Value		Losses		Securities
U.S. Treasury	$	148,339	$	(2,131)	4	$	—	$	—	—	$	148,339	$	(2,131)	4
U.S. Government-sponsored enterprises (GSEs)		23,735		(1,576)	6		24,057		(2,058)	7		47,792		(3,634)	13
Municipal securities		49,628		(4,561)	34		—		—	—		49,628		(4,561)	34
Mortgage-backed securities (GSEs)		31,705		(1,472)	5		—		—	—		31,705		(1,472)	5
Total	$	253,407	$	(9,740)	49	$	24,057	$	(2,058)	7	$	277,464	$	(11,798)	56

	December 31, 2021
	Less than 12 Months					12 Months or Greater					Total
			Gross		Number			Gross		Number			Gross		Number
	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized		of
Available-for-sale:	Value		Losses		Securities	Value		Losses		Securities	Value		Losses		Securities
U.S. Treasury	$	99,959	$	(518)	11	$	—	$	—	—	$	99,959	$	(518)	11
U.S. Government-sponsored enterprises (GSEs)		14,156		(168)	2		579		(5)	2		14,735		(173)	4
Municipal securities		2,519		(2)	1		—		—	—		2,519		(2)	1
Other debt securities		5,983		(82)	6		—		—	—		5,983		(82)	6
Mortgage-backed securities (GSEs)		159,725		(1,002)	31		8,233		(126)	6		167,958		(1,128)	37
Total	$	282,342	$	(1,772)	51	$	8,812	$	(131)	8	$	291,154	$	(1,903)	59
	December 31, 2021
	Less than 12 Months					12 Months or Greater					Total
			Gross		Number			Gross		Number			Gross		Number
	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized		of
Held-to-maturity:	Value		Losses		Securities	Value		Losses		Securities	Value		Losses		Securities
U.S. Government-sponsored enterprises (GSEs)	$	21,901	$	(87)	8	$	—	$	—	—	$	21,901	$	(87)	8
Municipal securities		4,173		(19)	6		—		—	—		4,173		(19)	6
Total	$	26,074	$	(106)	14	$	—	$	—	—	$	26,074	$	(106)	14

Schedule of Other Investments

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

	March 31,		December 31,
	2022		2021
Federal Reserve Bank stock	$	9,698	$	9,693
Federal Home Loan Bank stock		6,451		6,451
First National Bankers Bank stock		350		350
Total	$	16,499	$	16,494

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Loans and Leases and Allowance for Loan and Lease Losses (Tables)

3 Months Ended

Mar. 31, 2022

Receivables [Abstract]

Schedule of Loans

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

	March 31, 2022						December 31, 2021
	PCI		All Other				PCI		All Other
	Loans and Leases1		Loans and Leases		Total		Loans and Leases1		Loans and Leases		Total
Commercial real estate	$	20,270	$	1,455,586	$	1,475,856	$	20,875	$	1,363,281	$	1,384,156
Consumer real estate		9,791		473,438		483,229		11,833		465,439		477,272
Construction and land development		2,662		311,992		314,654		2,882		275,504		278,386
Commercial and industrial		2,479		458,674		461,153		2,516		485,508		488,024
Leases		2,230		57,662		59,892		3,170		50,538		53,708
Consumer and other		17		11,225		11,242		71		11,780		11,851
Total loans and leases		37,449		2,768,577		2,806,026		41,347		2,652,050		2,693,397
Less: Allowance for loan and lease losses		(187)		(19,891)		(20,078)		(179)		(19,173)		(19,352)
Loans and leases, net	$	37,262	$	2,748,686	$	2,785,948	$	41,168	$	2,632,877	$	2,674,045

¹ Purchased Credit Impaired loans and leases (“PCI loans and leases”) are loans and leases with evidence of credit deterioration at purchase.

Schedule of Impaired and Performing Loans Receivable

The composition of loans and leases by loan classification for performing, impaired and PCI loan and leases status is summarized in the tables below (in thousands):

					Construction		Commercial
	Commercial		Consumer		and Land		and				Consumer
	Real Estate		Real Estate		Development		Industrial		Leases		and Other		Total
March 31, 2022:
Performing loans and leases	$	1,454,728	$	471,368	$	311,992	$	458,674	$	57,662	$	11,225	$	2,765,649
Impaired loans and leases		858		2,070		—		—		—		—		2,928
		1,455,586		473,438		311,992		458,674		57,662		11,225		2,768,577
PCI loans and leases		20,270		9,791		2,662		2,479		2,230		17		37,449
Total loans and leases	$	1,475,856	$	483,229	$	314,654	$	461,153	$	59,892	$	11,242	$	2,806,026
December 31, 2021:
Performing loans and leases	$	1,362,423	$	463,374	$	275,504	$	485,411	$	50,538	$	11,780	$	2,649,030
Impaired loans and leases		858		2,065		—		97		—		—		3,020
		1,363,281		465,439		275,504		485,508		50,538		11,780		2,652,050
PCI loans and leases		20,875		11,833		2,882		2,516		3,170		71		41,347
Total loans and leases	$	1,384,156	$	477,272	$	278,386	$	488,024	$	53,708	$	11,851	$	2,693,397

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

The following tables show the allowance for loan and lease losses allocation by loan and lease classification for impaired, PCI, and performing (in thousands):

					Construction		Commercial				Consumer
	Commercial		Consumer		and Land		and				and
	Real Estate		Real Estate		Development		Industrial		Leases		Other		Total
March 31, 2022:
Performing loans and leases	$	9,945	$	3,267	$	2,120	$	3,501	$	548	$	115	$	19,496
Impaired loans and leases		395		—		—		—		—		—		395
		10,340		3,267		2,120		3,501		548		115		19,891
PCI loans and leases		65		121		—		—		—		1		187
Total loans and leases	$	10,405	$	3,388	$	2,120	$	3,501	$	548	$	116	$	20,078
December 31, 2021:
Performing loans and leases	$	9,355	$	3,237	$	1,882	$	3,685	$	330	$	123	$	18,612
Impaired loans and leases		396		69		—		96		—		—		561
		9,751		3,306		1,882		3,781		330		123		19,173
PCI loans and leases		30		148		—		—		—		1		179
Total loans and leases	$	9,781	$	3,454	$	1,882	$	3,781	$	330	$	124	$	19,352

Schedule of Allowance for Loan Losses

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

	Three Months Ended March 31, 2022
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and				Consumer
	Real Estate		Estate		Development		Industrial		Leases		and Other		Total
Beginning balance	$	9,781	$	3,454	$	1,882	$	3,781	$	330	$	124	$	19,352
Charged-off loans and leases		—		(33)		—		(188)		(85)		(182)		(488)
Recoveries of charge-offs		1		7		—		17		157		26		208
Provision charged to expense		623		(40)		238		(109)		146		148		1,006
Ending balance	$	10,405	$	3,388	$	2,120	$	3,501	$	548	$	116	$	20,078

	Three Months Ended March 31, 2021
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and				Consumer
	Real Estate		Estate		Development		Industrial		Leases		and Other		Total
Beginning balance	$	7,579	$	3,471	$	2,076	$	5,107	$	—	$	113	$	18,346
Charged-off loans and leases		—		—		—		—		—		(120)		(120)
Recoveries of charge-offs		3		16		—		3		—		55		77
Provision charged to expense		55		(179)		(108)		237		—		62		67
Ending balance	$	7,637	$	3,308	$	1,968	$	5,347	$	—	$	110	$	18,370

Loan Credit Quality Indicators

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

	March 31, 2022
					Construction		Commercial
	Commercial		Consumer		and Land		and				Consumer
Non PCI Loans and Leases:	Real Estate		Real Estate		Development		Industrial		Leases		and Other		Total
Pass	$	1,421,096	$	467,908	$	311,618	$	454,048	$	57,662	$	11,190	$	2,723,522
Watch		26,938		1,610		297		4,392		—		24		33,261
Special mention		6,524		1,512		69		109		—		—		8,214
Substandard		1,028		2,408		8		125		—		11		3,580
Doubtful		—		—		—		—		—		—		—
Total		1,455,586		473,438		311,992		458,674		57,662		11,225		2,768,577
PCI Loans and Leases:
Pass		15,490		8,063		2,119		2,479		2,230		17		30,398
Watch		1,228		483		89		—		—		—		1,800
Special mention		14		64		—		—		—		—		78
Substandard		3,538		1,181		454		—		—		—		5,173
Doubtful		—		—		—		—		—		—		—
Total		20,270		9,791		2,662		2,479		2,230		17		37,449
Total loans and leases	$	1,475,856	$	483,229	$	314,654	$	461,153	$	59,892	$	11,242	$	2,806,026

	December 31, 2021
					Construction		Commercial
	Commercial		Consumer		and Land		and				Consumer
Non PCI Loans and Leases:	Real Estate		Real Estate		Development		Industrial		Leases		and Other		Total
Pass	$	1,330,888	$	460,190	$	275,124	$	480,677	$	50,538	$	11,724	$	2,609,141
Watch		27,246		1,334		237		4,345		—		42		33,204
Special mention		4,120		1,525		70		228		—		—		5,943
Substandard		1,027		2,390		73		213		—		14		3,717
Doubtful		—		—		—		45		—		—		45
Total		1,363,281		465,439		275,504		485,508		50,538		11,780		2,652,050
PCI Loans and Leases:
Pass		16,019		9,714		2,335		2,516		3,170		71		33,825
Watch		1,271		539		91		—		—		—		1,901
Special mention		15		68		—		—		—		—		83
Substandard		3,570		1,512		456		—		—		—		5,538
Doubtful		—		—		—		—		—		—		—
Total		20,875		11,833		2,882		2,516		3,170		71		41,347
Total loans and leases	$	1,384,156	$	477,272	$	278,386	$	488,024	$	53,708	$	11,851	$	2,693,397

Past Due Loans and Leases

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

	March 31, 2022
	30-60 Days		61-89 Days		Past Due 90				Total
	Past Due and		Past Due and		Days or More				Past Due and
	Accruing		Accruing		and Accruing		Nonaccrual		Nonaccrual		PCI		Current		Total
Commercial real estate	$	118	$	—	$	—	$	858	$	976	$	20,270	$	1,454,610	$	1,475,856
Consumer real estate		846		—		—		2,383		3,229		9,791		470,209		483,229
Construction and land development		—		—		—		—		—		2,662		311,992		314,654
Commercial and industrial		158		—		—		92		250		2,479		458,424		461,153
Leases		336		—		—		—		336		2,230		57,326		59,892
Consumer and other		308		—		—		9		317		17		10,908		11,242
Total	$	1,766	$	—	$	—	$	3,342	$	5,108	$	37,449	$	2,763,469	$	2,806,026

	December 31, 2021
	30-60 Days		61-89 Days		Past Due 90				Total
	Past Due and		Past Due and		Days or More				Past Due and
	Accruing		Accruing		and Accruing		Nonaccrual		Nonaccrual		PCI		Current		Total
Commercial real estate	$	172	$	—	$	—	$	858	$	1,030	$	20,875	$	1,362,251	$	1,384,156
Consumer real estate		884		10		—		2,139		3,033		11,833		462,406		477,272
Construction and land development		91		—		—		—		91		2,882		275,413		278,386
Commercial and industrial		1,191		119		45		116		1,471		2,516		484,037		488,024
Leases		361		—		—		—		361		3,170		50,177		53,708
Consumer and other		99		4		19		11		133		71		11,647		11,851
Total	$	2,798	$	133	$	64	$	3,124	$	6,119	$	41,347	$	2,645,931	$	2,693,397

Impaired Loans

The following is an analysis of the impaired loan and lease portfolio, including PCI loans and leases, detailing the related allowance recorded (in thousands):

	March 31, 2022						December 31, 2021
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
Impaired loans and leases without a valuation allowance:
Commercial real estate	$	—	$	—	$	—	$	—	$	—	$	—
Consumer real estate		2,070		2,069		—		1,805		1,806		—
Construction and land development		—		—		—		—		—		—
Commercial and industrial		—		—		—		—		—		—
Leases		—		—		—		—		—		—
Consumer and other		—		—		—		—		—		—
		2,070		2,069		—		1,805		1,806		—
Impaired loans and leases with a valuation allowance:
Commercial real estate		858		858		395		858		859		396
Consumer real estate		—		—		—		260		262		69
Construction and land development		—		—		—		—		—		—
Commercial and industrial		—		—		—		97		96		96
Leases		—		—		—		—		—		—
Consumer and other		—		—		—		—		—		—
		858		858		395		1,215		1,217		561
PCI loans and leases:
Commercial real estate		1,232		1,513		65		707		926		30
Consumer real estate		901		865		121		1,129		1,251		148
Construction and land development		—		—		—		—		—		—
Commercial and industrial		—		—		—		—		—		—
Leases		—		—		—		—		—		—
Consumer and other		3		2		1		5		3		1
		2,136		2,380		187		1,841		2,180		179
Total impaired loans and leases	$	5,064	$	5,307	$	582	$	4,861	$	5,203	$	740

	Three Months Ended March 31,
	2022				2021
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Impaired loans and leases without a valuation allowance:
Commercial real estate	$	—	$	—	$	2,001	$	1
Consumer real estate		1,937		17		1,384		12
Construction and land development		—		—		—		—
Commercial and industrial		—		—		—		—
Leases		—		—		—		—
Consumer and other		—		—		—		—
		1,937		17		3,385		13
Impaired loans and leases with a valuation allowance:
Commercial real estate		858		—		1,577		102
Consumer real estate		130		—		444		5
Construction and land development		—		—		—		—
Commercial and industrial		49		—		128		2
Leases		—		—		—		—
Consumer and other		—		—		—		—
		1,037		—		2,149		109
PCI loans and leases:
Commercial real estate		1,231		24		—		—
Consumer real estate		901		16		1,215		22
Construction and land development		—		—		—		—
Commercial and industrial		—		—		268		1
Leases		—		—		—		—
Consumer and other		3		—		19		—
		2,135		40		1,502		23
Total impaired loans and leases	$	5,109	$	57	$	7,036	$	145

Certain Loans Acquired In Transfer Not Accounted For As Debt Securities, Acquired During Period Carrying Amount Of Loans

The Company has acquired loans and leases where 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 and leases are as follows (in thousands):

	March 31,		December 31,
	2022		2021
Commercial real estate	$	30,981	$	31,600
Consumer real estate		11,954		14,215
Construction and land development		3,127		3,699
Commercial and industrial		3,467		3,424
Leases		2,542		3,557
Consumer and other		65		125
Total loans and leases		52,136		56,620
Less: Remaining purchase discount		(14,687)		(15,273)
Total loans and leases, net of purchase discount		37,449		41,347
Less: Allowance for loan and leases losses		(187)		(179)
Carrying amount, net of allowance	$	37,262	$	41,168

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

Activity related to the accretable yield on loans and leases acquired with deteriorated credit quality is as follows (in thousands):

	Three Months Ended
	March 31,
	2022		2021
Accretable yield, beginning of period	$	14,618	$	16,889
Additions		—		—
Accretion income		(1,096)		(1,931)
Reclassification		269		337
Other changes, net		7,490		(590)
Accretable yield, end of period	$	21,281	$	14,705

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Goodwill and Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

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

	March 31,		December 31,
	2022		2021
Goodwill:
Balance, beginning of period	$	91,565	$	74,135
Acquisition of PFG		—		323
Acquisition of Fountain		—		2,400
Acquisition of SCB		—		17,171
Adjustment, due to Sale		—		(2,464)
Balance, end of the period	$	91,565	$	91,565

Finite-lived Intangible Assets Amortization Expense

	Core Deposit		Customer Relationships		Tradename
Amortized other intangible assets:	Intangibles		Intangibles		Intangibles		Total
March 31, 2022:
Beginning balance January 1, 2022, gross	$	17,470	$	3,722	$	63	$	21,255
Less: accumulated amortization		(6,671)		(908)		(26)		(7,605)
Balance, March 31, 2022, other intangible assets, net	$	10,799	$	2,814	$	37	$	13,650
December 31, 2021:
Beginning balance January 1, 2021, gross	$	15,920	$	1,064	$	63	$	17,047
Acquisition of Fountain		-		2,658		-		2,658
Acquisition of SCB		1,550		-		-		1,550
Balance, December 31, 2021, other intangible assets, gross		17,470		3,722		63		21,255
Less: accumulated amortization		(6,212)		(733)		(23)		(6,968)
Balance, December 31, 2021, other intangible assets, net	$	11,258	$	2,989	$	40	$	14,287

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

The estimated aggregate amortization expense for future periods for intangibles is as follows (in thousands):

Remainder of 2022	$	1,884
2023		2,356
2024		2,203
2025		2,041
2026		1,888
Thereafter		3,278
Total	$	13,650

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Borrowings and Line of Credit (Tables)

3 Months Ended

Mar. 31, 2022

Borrowings, Line of Credit and Subordinated Debt [Abstract]

Schedule of debt

	March 31,		December 31,
	2022		2021
Securities sold under customer repurchase agreements	$	4,213	$	5,085
FHLB borrowings		25,000		75,000
Other borrowings		7,500		7,500
Total	$	36,713	$	87,585

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Employee Benefit Plans (Tables)

3 Months Ended

Mar. 31, 2022

Defined Benefit Plan [Abstract]

Schedule of Option Activity

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

		Weighted
		Average
		Exercisable
	Number	Price
Outstanding at December 31, 2021	79,667	$	10.17
Granted	—		—
Exercised	(27,550)		7.90
Forfeited	—		—
Outstanding at March 31, 2022	52,117	$	11.37

Schedule of Options Outstanding by Exercise Price Range

		Options Outstanding				Options Exercisable
			Weighted-
			Average	Weighted-			Weighted-
			Remaining	Average			Average
Exercise		Number	Contractual	Exercise		Number	Exercise
Prices		Outstanding	Life	Price		Exercisable	Price
$	9.48	15,500	0.95 years	$	9.48	15,500	$	9.48
	9.60	18,000	1.71 years		9.60	18,000		9.60
	11.76	2,266	0.25 years		11.76	2,266		11.76
	15.05	16,351	3.21 years		15.05	16,351		15.05
Outstanding, end of period		52,117	1.89 years	$	11.37	52,117	$	11.37

Schedule of Non-vested Restricted Stock Awards

		Weighted
		Average
		Grant-Date
	Number	Fair Value
Balance at December 31, 2021	144,367	$	19.49
Granted	21,842		26.66
Vested	(4,167)		20.14
Forfeited/expired	—		—
Balance at March 31, 2022	162,042	$	20.44

Share-based Payment Arrangement, Stock Appreciation Right, Activity

		Weighted
		Average
	Number	Exercisable Price
Outstanding at December 31, 2021	55,000	$	18.21
Granted	—		—
Exercised	(4,500)		18.12
Forfeited	—		—
Outstanding at March 31, 2022	50,500	$	18.21

		SARs Outstanding				SARs Exercisable
			Weighted-
			Average	Weighted-
			Remaining	Average			Weighted- Average
Exercise		Number	Contractual	Exercise		Number	Exercise
Prices		Outstanding	Life		Price	Exercisable	Price
$	15.19	16,000	1.75 years	$	15.19	—	$	—
	18.12	14,500	0.75 years		18.12	14,500		18.12
	20.70	20,000	2.76 years		20.70	—		—
	Outstanding, end of period	50,500	1.86 years	$	18.21	14,500	$	18.12

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Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Other Commitments

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

	March 31,		December 31,
	2022		2021
Commitments to extend credit	$	723,380	$	669,770
Standby letters of credit		17,919		17,868

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Fair Value Disclosures (Tables)

3 Months Ended

Mar. 31, 2022

Fair Value Disclosures [Abstract]

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

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

			Quoted Prices in		Significant		Significant
			Active Markets		Other		Other
			for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
Description	Fair Value		(Level 1)		(Level 2)		(Level 3)
March 31, 2022:
Assets:
Securities available-for-sale:
U.S. Treasury	$	229,913	$	—	$	229,913	$	—
U.S. Government-sponsored enterprises (GSEs)		506		—		506		—
Municipal securities		55,241		—		55,241		—
Other debt securities		28,540		—		28,540		—
Mortgage-backed securities (GSEs)		226,283		—		226,283		—
Total securities available-for-sale		540,483		—		540,483		—
Interest rate swaps agreements for customer loans		1,334		—		1,334		—
Total assets at fair value	$	541,817	$	—	$	541,817	$	—
Liabilities:
Derivative financial instruments and interest rate swap agreements	$	2,552	$	—	$	2,552	$	—
December 31, 2021:
Assets:
Securities available-for-sale:
U.S. Treasury	$	137,758			$	137,758	$	—
U.S. Government-sponsored enterprises (GSEs)		21,801		—		21,801		—
Municipal securities		67,820		—		67,820		—
Other debt securities		27,220		—		27,220		—
Mortgage-backed securities (GSEs)		227,854		—		227,854		—
Total securities available-for-sale		482,453		—		482,453		—
Interest rate swaps agreements for customer loans		1,326		—		1,326		—
Total assets at fair value	$	483,779	$	—	$	483,779	$	—
Liabilities:
Derivative financial instruments	$	4,893	$	—	$	4,893	$	—

Fair Value, Assets and Liabilities Measured on Nonrecurring Basis

			Quoted Prices in		Significant		Significant
			Active Markets		Other		Other
			for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
March 31, 2022:
Collateral dependent loans	$	2,412	$	—	$	—	$	2,412
Other real estate owned		696		—		—		696
December 31, 2021:
Collateral dependent loans	$	2,280	$	—	$	—	$	2,280
Other real estate owned		367		—		—		367

Fair Value Measurement Inputs and Valuation Techniques

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

					Weighted
			Valuation	Significant Other	Average of
	Fair Value		Technique	Unobservable Input	Input
March 31, 2022:
Collateral dependent loans	$	2,412	Appraisal	Appraisal discounts	19	%
Other real estate owned		696	Appraisal	Appraisal discounts	21	%
December 31, 2021:
Collateral dependent loans	$	2,280	Appraisal	Appraisal discounts	25	%
Other real estate owned		367	Appraisal	Appraisal discounts	13	%

Fair Value, by Balance Sheet Grouping

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

	Fair Value Measurements Using
	Carrying								Estimated
	Amount		Level 1		Level 2		Level 3		Fair Value
March 31, 2022:
Assets:
Cash and cash equivalents	$	763,968	$	763,968	$	—	$	—	$	763,968
Securities available-for-sale		540,483		—		540,483		—		540,483
Securities held-to-maturity		289,532		—		277,734		—		277,734
Other investments		16,499		N/A		N/A		N/A		N/A
Loans and leases, net and loans held for sale		2,791,842		—		—		2,739,655		2,739,655
Interest rate swaps agreements for customer loans		1,334		—		1,334		—		1,334
Liabilities:
Noninterest-bearing demand deposits		1,093,933		—		1,093,933		—		1,093,933
Interest-bearing demand deposits		975,272		—		975,272		—		975,272
Money market and savings deposits		1,573,101		—		1,573,101		—		1,573,101
Time deposits		549,047		—		549,677		—		549,677
Borrowings		36,713		—		36,750		—		36,750
Subordinated debt		41,952		—		—		42,487		42,487
Derivative financial instruments and interest rate swap agreements		2,552		—		2,552		—		2,552
December 31, 2021:
Assets:
Cash and cash equivalents	$	1,045,077	$	1,045,077	$	—	$	—	$	1,045,077
Securities available-for-sale		482,453		—		482,453		—		482,453
Securities held-to-maturity		76,969		—		76,946				76,946
Other investments		16,494		N/A		N/A		N/A		N/A
Loans and leases, net and loans held for sale		2,679,148		—		—		2,676,181		2,676,181
Interest rate swaps agreements for customer loans		1,326		—		1,326		—		1,326
Liabilities:
Noninterest-bearing demand deposits		1,055,125		—		1,055,125		—		1,055,125
Interest-bearing demand deposits		899,158		—		899,158		—		899,158
Money market and savings deposits		1,493,007		—		1,493,007		—		1,493,007
Time deposits		574,648		—		576,598		—		576,598
Borrowings		87,585		—		88,082		—		88,082
Subordinated debt		41,930		—		—		43,374		43,374
Derivative financial instruments and interest rate swap agreements		4,893		—		4,893		—		4,893

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Derivatives Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Fair Value Hedge Relationships in Balance Sheet

A summary of the Company’s fair value hedge relationships for the periods presented are as follows (dollars in thousands):

		Weighted
		Average
	Balance	Remaining	Weighted
	Sheet	Maturity	Average		Receive	Notional		Estimated
Liability derivatives	Location	(In Years)	Pay Rate		Rate	Amount		Fair Value
March 31, 2022:
Interest rate swap agreements - securities	Other liabilities	6.00	3.09	%	3 month LIBOR	$	36,000	$	(1,218)
December 31, 2021:
Interest rate swap agreements - securities	Other liabilities	6.20	3.09	%	3 month LIBOR	$	36,000	$	(3,567)

Schedule of Fair Value Hedge Relationships on Income Statement

The effects of the Company’s fair value hedge relationships reported in interest income on tax-exempt available-for-sale securities on the consolidated income statement were as follows (in thousands):

	Three Months Ended
	March 31,
	2022		2021
Interest income on tax-exempt securities	$	393	$	564
Effects of fair value hedge relationships		(254)		(305)
Reported interest income on tax-exempt securities	$	139	$	259

	Three Months Ended
	March 31,
Gain (loss) on fair value hedging relationship	2022		2021
Interest rate swap agreements - securities:
Hedged items	$	(1,218)	$	(4,008)
Derivative designated as hedging instruments	$	1,218	$	4,008
Carry amount of hedged assets - securities available-for-sale	$	40,125	$	43,073

Schedule of interest rate swaps related to loan hedging program

At March 31, 2022 and December 31, 2021, interest rate swaps related to the Company’s loan hedging program that were outstanding are presented in the following table (in thousands):

	March 31, 2022				December 31, 2021
		Notional		Estimated		Notional		Estimated
		Amount		Fair Value		Amount		Fair Value
Interest rate swap agreements:
Assets	$	84,141	$	1,334	$	48,125	$	1,326
Liabilities		84,141		(1,334)		48,125		(1,326)

Schedule of interest rate swap to facilitate customer's transactions

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

	Three Months Ended
	March 31,
	2022		2021
Interest rate swap agreements	$	520	$	—

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Leases (Tables)

3 Months Ended

Mar. 31, 2022

Leases [Abstract]

Summary of Lease Assets and Liabilities

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

		March 31,		December 31,
	Classification	2022		2021
Assets:
Operating lease right-of-use assets	Other assets	$	9,499	$	9,812
Liabilities:
Operating lease liabilities	Other liabilities	$	9,586	$	9,881

Summary of Lease Costs and Other Information

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

	Three Months Ended
	March 31,
	2022		2021
Lease costs:
Operating lease costs	$	414	$	240
Variable lease costs		25		24
Total	$	439	$	264
Other information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	396	$	233

Schedule of Remaining Minimum Lease Payments

Future minimum payments for operating leases with initial or remaining terms of one year or more as of March 31, 2022, were as follows (in thousands):

	Amounts
March 31, 2023	$	1,142
March 31, 2024		1,290
March 31, 2025		1,079
March 31, 2026		1,047
March 31, 2027		946
Thereafter		5,249
Total future minimum lease payments		10,753
Amounts representing interest		(1,167)
Present value of net future minimum lease payments	$	9,586

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Regulatory Matters (Tables)

3 Months Ended

Mar. 31, 2022

Banking and Thrift [Abstract]

Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations

Actual and required capital levels at March 31, 2022, and December 31, 2021 are presented below (dollars in thousands):

									Minimum to be
									well
									capitalized under
					Minimum for				prompt
					capital				corrective action
		Actual			adequacy purposes				provisions1
	Amount		Ratio		Amount		Ratio		Amount		Ratio
March 31, 2022
SmartFinancial:
Total Capital (to Risk Weighted Assets)	$	395,523	12.22	%	$	258,996	8.00	%		N/A	N/A
Tier 1 Capital (to Risk Weighted Assets)		333,493	10.30	%		194,247	6.00	%		N/A	N/A
Common Equity Tier 1 Capital (to Risk Weighted Assets)		333,493	10.30	%		145,685	4.50	%		N/A	N/A
Tier 1 Capital (to Average Assets)2		333,493	7.41	%		180,085	4.00	%		N/A	N/A
SmartBank:
Total Capital (to Risk Weighted Assets)	$	390,953	12.08	%	$	258,990	8.00	%	$	323,737	10.00	%
Tier 1 Capital (to Risk Weighted Assets)		370,875	11.46	%		194,242	6.00	%		258,990	8.00	%
Common Equity Tier 1 Capital (to Risk Weighted Assets)		370,875	11.46	%		145,682	4.50	%		210,429	6.50	%
Tier 1 Capital (to Average Assets)2		370,875	8.24	%		180,011	4.00	%		225,013	5.00	%
December 31, 2021
SmartFinancial:
Total Capital (to Risk Weighted Assets)	$	386,627	12.55	%	$	246,483	8.00	%		N/A	N/A
Tier 1 Capital (to Risk Weighted Assets)		325,345	10.56	%		184,862	6.00	%		N/A	N/A
Common Equity Tier 1 Capital (to Risk Weighted Assets)		325,345	10.56	%		138,647	4.50	%		N/A	N/A
Tier 1 Capital (to Average Assets)		325,345	7.45	%		174,578	4.00	%		N/A	N/A
SmartBank:
Total Capital (to Risk Weighted Assets)	$	378,055	12.29	%	$	246,053	8.00	%	$	307,566	10.00	%
Tier 1 Capital (to Risk Weighted Assets)		358,703	11.66	%		184,539	6.00	%		246,053	8.00	%
Common Equity Tier 1 Capital (to Risk Weighted Assets)		358,703	11.66	%		138,405	4.50	%		199,918	6.50	%
Tier 1 Capital (to Average Assets)		358,703	8.23	%		174,384	4.00	%		217,980	5.00	%

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

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

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Other comprehensive income (loss) (Tables)

3 Months Ended

Mar. 31, 2022

Equity [Abstract]

Summary of Accumulated Other Comprehensive Income (Loss)

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

	Three Months Ended March 31, 2022
						Accumulated
	Securities		Securities	Fair Value		Other
	Available-for-		Transferred to	Municipal		Comprehensive
	Sale		Held-to-Maturity	Security Hedges		Income (Loss)
Beginning balance, December 31, 2021	$	25	665	$	753	$	1,443
Other comprehensive income (loss)		(15,092)	(1,490)		(409)		(16,991)
Reclassification of amounts included in net income		—	(8)		—		(8)
Net other comprehensive income (loss) during period		(15,092)	(1,498)		(409)		(16,999)
Ending balance, March 31, 2022	$	(15,067)	(833)	$	344	$	(15,556)
	Three Months Ended March 31, 2021
						Accumulated
	Securities		Securities	Fair Value		Other
	Available-for-		Transferred to	Municipal		Comprehensive
	Sale		Held-to-Maturity	Security Hedges		Income (Loss)
Beginning balance, December 31, 2020	$	2,968	—	$	(785)	$	2,183
Other comprehensive income (loss)		(2,070)	—		970		(1,100)
Reclassification of amounts included in net income		—	—		—		—
Net other comprehensive income (loss) during period		(2,070)	—		970		(1,100)
Ending balance, March 31, 2021	$	898	—	$	185	$	1,083

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Business Combinations (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands			3 Months Ended		7 Months Ended	11 Months Ended
	Sep. 01, 2021	May 03, 2021	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Business Acquisition [Line Items]
Common stock, par value (in dollars per share)	$ 1.00		$ 1		$ 1	$ 1	$ 1
Goodwill			$ 91,565		$ 91,565	$ 91,565	$ 91,565	$ 74,135
Merger-related costs			$ 439	$ 103
Sevier County Bancshares Inc [Member]
Business Acquisition [Line Items]
Common stock, par value (in dollars per share)	0
Sevier County Bancshares Inc [Member]
Business Acquisition [Line Items]
Cash to be paid upon conversion (in dollars per share)	$ 10.17
Common shares to be converted (in shares)	0.4116
Number of shares issued (in shares)	1,692,168		1,692,168
Cash	$ 9,600				9,568
Assets acquired	484,880		$ 477,500		477,500	477,500
Liabilities assumed	443,099		442,848		442,848	442,848
Goodwill	17,200		17,171		17,171	17,171
Sevier County Bancshares Inc [Member] | Core Deposits [Member]
Business Acquisition [Line Items]
Intangible assets acquired	$ 1,600
Useful life	10 years
Sevier County Bancshares Inc [Member] | Sevier County Bancshares Inc [Member]
Business Acquisition [Line Items]
Threshold number of shares to be held by a shareholder to receive the per share stock consideration	20,000
Fountain [Member]
Business Acquisition [Line Items]
Cash		$ 14,000				59,794
Repayment of indebtedness		45,800
Future cash payments of performance-based earnout		6,000
Assets acquired		54,114	57,848		57,848	57,848
Liabilities assumed		683	454		454	454
Goodwill		2,400	$ 2,400		$ 2,400	$ 2,400
Fountain [Member] | Customer Relationships [Member]
Business Acquisition [Line Items]
Intangible assets acquired		$ 2,700
Useful life		8 years

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Business Combinations (Allocation of Purchase Price) (Details) - USD ($) $ in Thousands			3 Months Ended	7 Months Ended	11 Months Ended
	Sep. 01, 2021	May 03, 2021	Mar. 31, 2022	Mar. 31, 2022	Mar. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Consideration transferred:
Goodwill			$ 91,565	$ 91,565	$ 91,565	$ 91,565	$ 74,135
Sevier County Bancshares Inc [Member]
Assets:
Cash and cash equivalents	$ 84,313		84,313	84,313	84,313
Investment securities available-for-sale	64,219		63,605	63,605	63,605
Restricted investments	533		533	533	533
Loans	304,620		297,020	297,020	297,020
Allowance for loan losses	(3,644)
Premises and equipment	15,579		15,262	15,262	15,262
Core deposit intangible			1,550	1,550	1,550
Bank owned life insurance	7,116		7,116	7,116	7,116
Deferred tax asset, net	10,340		7,102	7,102	7,102
Interest Receivable	884		884	884	884
Other assets	920		115	115	115
Total assets acquired	484,880		477,500	477,500	477,500
Liabilities:
Deposits	435,036		435,036	435,036	435,036
Time deposit premium			888	888	888
Subordinated debt	2,500		2,500	2,500	2,500
Payables and other liabilities	5,563		4,424	4,424	4,424
Total liabilities assumed	443,099		442,848	442,848	442,848
Excess of assets acquired over liabilities assumed	41,781		$ 34,652	34,652	34,652
Cash	$ 9,600			9,568
Common stock issued				42,255
Number of shares issued (in shares)	1,692,168		1,692,168
Total fair value of consideration transferred				51,823
Assets:
Investment securities available-for-sale	$ (614)
Loans	(4,551)			(3,049)
Allowance for loan losses	3,644
Premises and equipment, net	(295)			(22)
Deferred tax asset, net	(4,007)			769
Core deposit intangible	1,550
Other assets	(272)			(533)
Total assets acquired	(4,545)			(2,835)
Liabilities:
Time deposit premium	888
Payables and other liabilities	115			(1,254)
Total liabilities assumed	1,003			(1,254)
Consideration transferred:
Aggregate fair value adjustments	(5,548)			(1,581)
Goodwill	$ 17,200		$ 17,171	17,171	17,171
Fountain [Member]
Assets:
Cash and cash equivalents		$ 413	413	413	413
Leases		54,945	54,225	54,225	54,225
Allowance for loan losses		(1,796)
Intangibles			2,658	2,658	2,658
Other repossessed assets		319	319	319	319
Other assets		233	233	233	233
Total assets acquired		54,114	57,848	57,848	57,848
Liabilities:
Payables and other liabilities		683	454	454	454
Total liabilities assumed		683	454	454	454
Excess of assets acquired over liabilities assumed		53,431	57,394	57,394	57,394
Cash		14,000			59,794
Total fair value of consideration transferred					59,794
Assets:
Leases		(720)
Allowance for loan losses		1,796
Intangibles		2,658
Total assets acquired		3,734
Liabilities:
Payables and other liabilities		(229)
Total liabilities assumed		(229)
Consideration transferred:
Aggregate fair value adjustments		3,963
Goodwill		$ 2,400	$ 2,400	$ 2,400	$ 2,400

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Business Combinations (Loans Acquired) (Details) - Purchased Credit Impaired Loans [Member] - USD ($) $ in Thousands	Sep. 01, 2021	May 03, 2021
Sevier County Bancshares Inc [Member]
Business Acquisition [Line Items]
Contractually required principal and interest	$ 30,293
Non-accretable differences	7,609
Cash flows expected to be collected	22,684
Accretable yield	3,552
Fair value	$ 19,132
Fountain [Member]
Business Acquisition [Line Items]
Contractually required principal and interest		$ 6,018
Non-accretable differences		447
Cash flows expected to be collected		5,571
Accretable yield		649
Fair value		$ 4,922

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Earnings per Share (Narrative) (Details) - shares	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Earnings Per Share [Abstract]
Anti-dilutive securities excluded from computation of earnings per share (in shares)	0	0

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Earnings per Share (Schedule of Earnings Per Share, Basic and Diluted) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Basic earnings per share computation:
Net income available to common shareholders	$ 8,259	$ 9,756
Average common shares outstanding - basic (in shares)	16,718,371	15,011,573
Basic earnings per share (in dollars per share)	$ 0.49	$ 0.65
Diluted earnings per share computation:
Net income available to common shareholders	$ 8,259	$ 9,756
Average common shares outstanding - basic (in shares)	16,718,371	15,011,573
Incremental shares from assumed conversions:
Stock options and restricted stock (in shares)	139,917,000	100,374,000
Average common shares outstanding - diluted	16,858,288	15,111,947
Diluted earnings per share (in dollars per share)	$ 0.49	$ 0.65

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Securities (Narrative) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Loans and Leases Receivable Disclosure [Line Items]
Available for sale securities transferred to held-to-maturity securities	$ 162,400,000
Reclassification of unrealized gain on securities transferred from available-for-sale to held-to-maturity	2,009,000
Gains or losses recognized as result of transfer	0
Collateral Pledged [Member]
Loans and Leases Receivable Disclosure [Line Items]
Available-for-sale securities pledged as collateral	$ 219,600,000	$ 201,200,000

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Securities (Schedule of Available-for-sale Securities Reconciliation) (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Debt Securities, Available-for-sale [Line Items]
Total	$ 560,797	$ 482,420
Gross Unrealized Gains	373	1,936
Gross Unrealized Losses	(20,687)	(1,903)
Fair Value	540,483	482,453
US Treasury Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Total	239,056	138,212
Gross Unrealized Gains		64
Gross Unrealized Losses	(9,143)	(518)
Fair Value	229,913	137,758
US Government-sponsored Enterprises Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Total	512	21,898
Gross Unrealized Gains		76
Gross Unrealized Losses	(6)	(173)
Fair Value	506	21,801
Municipal securities [Member]
Debt Securities, Available-for-sale [Line Items]
Total	55,318	67,310
Gross Unrealized Gains	67	512
Gross Unrealized Losses	(144)	(2)
Fair Value	55,241	67,820
Other Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Total	28,982	26,989
Gross Unrealized Gains	139	313
Gross Unrealized Losses	(581)	(82)
Fair Value	28,540	27,220
Mortgage-backed securities (GSEs) [Member]
Debt Securities, Available-for-sale [Line Items]
Total	236,929	228,011
Gross Unrealized Gains	167	971
Gross Unrealized Losses	(10,813)	(1,128)
Fair Value	$ 226,283	$ 227,854

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Securities (Schedule of Held-to-maturity Securities Reconciliation) (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Held-to-maturity
Amortized Cost	$ 289,532	$ 76,969
Gross Unrealized Gains		83
Gross Unrealized Losses	(11,798)	(106)
Fair Value	277,734	76,946
US Treasury Securities [Member]
Held-to-maturity
Amortized Cost	150,471
Gross Unrealized Losses	(2,131)
Fair Value	148,340
US Government-sponsored Enterprises Debt Securities [Member]
Held-to-maturity
Amortized Cost	51,425	31,023
Gross Unrealized Gains		20
Gross Unrealized Losses	(3,634)	(87)
Fair Value	47,791	30,956
Municipal securities [Member]
Held-to-maturity
Amortized Cost	54,459	45,946
Gross Unrealized Gains		63
Gross Unrealized Losses	(4,561)	(19)
Fair Value	49,898	$ 45,990
Mortgage-backed securities (GSEs) [Member]
Held-to-maturity
Amortized Cost	33,177
Gross Unrealized Losses	(1,472)
Fair Value	$ 31,705

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Securities (Available-for-sale by Contractual Maturity Date) (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Amortized Cost
Due in one year or less	$ 902
Due from one year to five years	178,294
Due from five years to ten years	99,601
Due after ten years	45,071
Securities available for sale, amortized cost	323,868
Mortgage-backed securities	236,929
Total	560,797	$ 482,420
Fair Value
Due in one year or less	903
Due from one year to five years	173,044
Due from five years to ten years	95,174
Due after ten years	45,079
Securities available for sale, fair value	314,200
Mortgage-backed securities	226,283
Total	$ 540,483	$ 482,453

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Securities (Held-to-maturity by Contractual Maturity Date) (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Amortized Cost
Due from one year to five years	$ 150,471
Due from five years to ten years	28,250
Due after ten years	77,634
Securities held to maturity, amortized cost	256,355
Mortgage-backed securities	33,177
Total	289,532	$ 76,969
Fair Value
Due from one year to five years	148,339
Due from five years to ten years	26,931
Due after ten years	70,759
Securities held to maturity, fair value	246,029
Mortgage-backed securities	31,705
Total	$ 277,734	$ 76,946

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Securities (Schedule of Available-for-sale, Unrealized Loss on Investments) (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Debt Securities, Available-for-sale [Line Items]
Less than 12 Months, Fair Value	$ 457,028	$ 282,342
Less than 12 Months, Gross Unrealized Losses	$ (20,419)	$ (1,772)
Less than 12 Months, Number of Securities	122	51
12 Months or Greater, Fair Value	$ 9,631	$ 8,812
12 Months or Greater, Gross Unrealized Losses	$ (268)	$ (131)
12 Months or Greater, Number of Securities	9	8
Total, Fair Value	$ 466,659	$ 291,154
Total, Gross Unrealized Losses	$ (20,687)	$ (1,903)
Total, Number of Securities	131	59
US Treasury Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Less than 12 Months, Fair Value	$ 229,913	$ 99,959
Less than 12 Months, Gross Unrealized Losses	$ (9,143)	$ (518)
Less than 12 Months, Number of Securities	19	11
Total, Fair Value	$ 229,913	$ 99,959
Total, Gross Unrealized Losses	$ (9,143)	$ (518)
Total, Number of Securities	19	11
US Government-sponsored Enterprises Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Less than 12 Months, Fair Value		$ 14,156
Less than 12 Months, Gross Unrealized Losses		$ (168)
Less than 12 Months, Number of Securities		2
12 Months or Greater, Fair Value	$ 506	$ 579
12 Months or Greater, Gross Unrealized Losses	$ (6)	$ (5)
12 Months or Greater, Number of Securities	2	2
Total, Fair Value	$ 506	$ 14,735
Total, Gross Unrealized Losses	$ (6)	$ (173)
Total, Number of Securities	2	4
Municipal securities [Member]
Debt Securities, Available-for-sale [Line Items]
Less than 12 Months, Fair Value	$ 9,885	$ 2,519
Less than 12 Months, Gross Unrealized Losses	$ (144)	$ (2)
Less than 12 Months, Number of Securities	17	1
Total, Fair Value	$ 9,885	$ 2,519
Total, Gross Unrealized Losses	$ (144)	$ (2)
Total, Number of Securities	17	1
Other Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Less than 12 Months, Fair Value	$ 16,086	$ 5,983
Less than 12 Months, Gross Unrealized Losses	$ (505)	$ (82)
Less than 12 Months, Number of Securities	16	6
12 Months or Greater, Fair Value	$ 1,424
12 Months or Greater, Gross Unrealized Losses	$ (76)
12 Months or Greater, Number of Securities	1
Total, Fair Value	$ 17,510	$ 5,983
Total, Gross Unrealized Losses	$ (581)	$ (82)
Total, Number of Securities	17	6
Mortgage-backed securities (GSEs) [Member]
Debt Securities, Available-for-sale [Line Items]
Less than 12 Months, Fair Value	$ 201,144	$ 159,725
Less than 12 Months, Gross Unrealized Losses	$ (10,627)	$ (1,002)
Less than 12 Months, Number of Securities	70	31
12 Months or Greater, Fair Value	$ 7,701	$ 8,233
12 Months or Greater, Gross Unrealized Losses	$ (186)	$ (126)
12 Months or Greater, Number of Securities	6	6
Total, Fair Value	$ 208,845	$ 167,958
Total, Gross Unrealized Losses	$ (10,813)	$ (1,128)
Total, Number of Securities	76	37

XML

Securities (Schedule of Held-to-maturity, Unrealized Loss on Investments) (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Held-to-maturity:
Less than 12 Months, Fair Value	$ 253,407	$ 26,074
Less than 12 Months, Gross Unrealized Losses	$ (9,740)	$ (106)
Less than 12 Months, Number of Securities	49	14
12 Months or Greater, Fair Value	$ 24,057
12 Months or Greater, Gross Unrealized Losses	$ (2,058)
12 Months or Greater, Number of Securities	7
Total, Fair Value	$ 277,464	$ 26,074
Total, Gross Unrealized Losses	$ (11,798)	$ (106)
Total, Number of Securities	56	14
US Treasury Securities [Member]
Held-to-maturity:
Less than 12 Months, Fair Value	$ 148,339
Less than 12 Months, Gross Unrealized Losses	$ (2,131)
Less than 12 Months, Number of Securities	4
Total, Fair Value	$ 148,339
Total, Gross Unrealized Losses	$ (2,131)
Total, Number of Securities	4
US Government-sponsored Enterprises Debt Securities [Member]
Held-to-maturity:
Less than 12 Months, Fair Value	$ 23,735	$ 21,901
Less than 12 Months, Gross Unrealized Losses	$ (1,576)	$ (87)
Less than 12 Months, Number of Securities	6	8
12 Months or Greater, Fair Value	$ 24,057
12 Months or Greater, Gross Unrealized Losses	$ (2,058)
12 Months or Greater, Number of Securities	7
Total, Fair Value	$ 47,792	$ 21,901
Total, Gross Unrealized Losses	$ (3,634)	$ (87)
Total, Number of Securities	13	8
Municipal securities [Member]
Held-to-maturity:
Less than 12 Months, Fair Value	$ 49,628	$ 4,173
Less than 12 Months, Gross Unrealized Losses	$ (4,561)	$ (19)
Less than 12 Months, Number of Securities	34	6
Total, Fair Value	$ 49,628	$ 4,173
Total, Gross Unrealized Losses	$ (4,561)	$ (19)
Total, Number of Securities	34	6
Mortgage-backed securities (GSEs) [Member]
Held-to-maturity:
Less than 12 Months, Fair Value	$ 31,705
Less than 12 Months, Gross Unrealized Losses	$ (1,472)
Less than 12 Months, Number of Securities	5
Total, Fair Value	$ 31,705
Total, Gross Unrealized Losses	$ (1,472)
Total, Number of Securities	5

XML

Securities (Other Investments) (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Debt Securities, Available-for-sale [Line Items]
Other investments	$ 16,499	$ 16,494
Federal Reserve Bank Stock [Member]
Debt Securities, Available-for-sale [Line Items]
Other investments	9,698	9,693
Federal Home Loan Bank stock [Member]
Debt Securities, Available-for-sale [Line Items]
Other investments	6,451	6,451
First National Bankers Bank Stock [Member]
Debt Securities, Available-for-sale [Line Items]
Other investments	$ 350	$ 350

XML

Loans and Leases and Allowance for Loan and Lease Losses (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases	$ 2,806,026	$ 2,693,397
Less: Allowance for loan and leases losses	(20,078)	(19,352)
Loans and leases, net	2,785,948	2,674,045
Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases	37,449	41,347
Less: Allowance for loan and leases losses	(187)	(179)
Loans and leases, net	37,262	41,168
All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases	2,768,577	2,652,050
Less: Allowance for loan and leases losses	(19,891)	(19,173)
Loans and leases, net	2,748,686	2,632,877
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases	1,475,856	1,384,156
Commercial Real Estate [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases	20,270	20,875
Commercial Real Estate [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases	1,455,586	1,363,281
Consumer Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases	483,229	477,272
Consumer Real Estate [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases	9,791	11,833
Consumer Real Estate [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases	473,438	465,439
Construction and Land Development [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases	314,654	278,386
Construction and Land Development [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases	2,662	2,882
Construction and Land Development [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases	311,992	275,504
Commercial and Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases	461,153	488,024
Commercial and Industrial [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases	2,479	2,516
Commercial and Industrial [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases	458,674	485,508
Consumer and Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases	11,242	11,851
Consumer and Other [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases	17	71
Consumer and Other [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases	11,225	11,780
Leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases	59,892	53,708
Leases [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases	2,230	3,170
Leases [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases	$ 57,662	$ 50,538

XML

Loans and Allowance for Loan Losses - Narrative (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2022 USD ($) property loan segment	Mar. 31, 2021 USD ($) loan	Dec. 31, 2021 USD ($) loan
Financing Receivable, Modifications [Line Items]
Loan portfolio segments | segment	6
Troubled debt restructuring	$ 516
Number of contracts | loan	1	0
Number of loans modified as troubled debt restructurings with subsequent default | loan	0
Provision (recovery) charged to expense	$ 1,006	$ 67
Increase (decrease) provision for loan expensed	939
Allowance for loan losses	$ 20,078		$ 19,352
Percentage of allowance for credit losses to aggregate loans	0.72%
Consumer Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Number of properties in other real estate owned | property	0
Provision (recovery) charged to expense	$ (40)	$ (179)
Trouble Debt Restructuring [Member]
Financing Receivable, Modifications [Line Items]
Troubled debt restructuring	$ 625		$ 206
Number of contracts, nonaccrual | loan	0		0
COVID-19 [Member]
Financing Receivable, Modifications [Line Items]
Number of loans related to payroll protection program | loan	273		587
Payroll Protection Program Loans Outstanding	$ 27,900		$ 52,200
Financing Receivable Paycheck Protection Program Cares Act For 2020 Loans [Member]
Financing Receivable, Modifications [Line Items]
Payroll protection program loans net deferred fees receivable			$ 2,000
Financing Receivable Paycheck Protection Program Cares Act For 2021 Loans [Member]
Financing Receivable, Modifications [Line Items]
Payroll protection program loans net deferred fees receivable	$ 972

XML

Loans and Leases and Allowance for Loan and Lease Losses - Performing and Impaired Loans (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 2,806,026	$ 2,693,397
All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	2,768,577	2,652,050
Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	37,449	41,347
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	1,475,856	1,384,156
Commercial Real Estate [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	1,455,586	1,363,281
Commercial Real Estate [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	20,270	20,875
Consumer Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	483,229	477,272
Consumer Real Estate [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	473,438	465,439
Consumer Real Estate [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	9,791	11,833
Construction and Land Development [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	314,654	278,386
Construction and Land Development [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	311,992	275,504
Construction and Land Development [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	2,662	2,882
Commercial and Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	461,153	488,024
Commercial and Industrial [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	458,674	485,508
Commercial and Industrial [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	2,479	2,516
Leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	59,892	53,708
Leases [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	57,662	50,538
Leases [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	2,230	3,170
Consumer and Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	11,242	11,851
Consumer and Other [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	11,225	11,780
Consumer and Other [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	17	71
Performing [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	2,765,649	2,649,030
Performing [Member] | Commercial Real Estate [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	1,454,728	1,362,423
Performing [Member] | Consumer Real Estate [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	471,368	463,374
Performing [Member] | Construction and Land Development [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	311,992	275,504
Performing [Member] | Commercial and Industrial [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	458,674	485,411
Performing [Member] | Leases [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	57,662	50,538
Performing [Member] | Consumer and Other [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	11,225	11,780
Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	2,928
Impaired Loans [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans		3,020
Impaired Loans [Member] | Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	858
Impaired Loans [Member] | Commercial Real Estate [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans		858
Impaired Loans [Member] | Consumer Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 2,070
Impaired Loans [Member] | Consumer Real Estate [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans		2,065
Impaired Loans [Member] | Commercial and Industrial [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans		$ 97

XML

Loans and Leases and Allowance for Loan and Lease Losses - ALL by Loan Classification (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021	Mar. 31, 2021	Dec. 31, 2020
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan and lease losses	$ 20,078	$ 19,352	$ 18,370	$ 18,346
All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan and lease losses	19,891	19,173
Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan and lease losses	187	179
Performing [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan and lease losses	19,496	18,612
Impaired Loans [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan and lease losses	395	561
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan and lease losses	10,405	9,781	7,637	7,579
Commercial Real Estate [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan and lease losses	10,340	9,751
Commercial Real Estate [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan and lease losses	65	30
Commercial Real Estate [Member] | Performing [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan and lease losses	9,945	9,355
Commercial Real Estate [Member] | Impaired Loans [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan and lease losses	395	396
Consumer Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan and lease losses	3,388	3,454	3,308	3,471
Consumer Real Estate [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan and lease losses	3,267	3,306
Consumer Real Estate [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan and lease losses	121	148
Consumer Real Estate [Member] | Performing [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan and lease losses	3,267	3,237
Consumer Real Estate [Member] | Impaired Loans [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan and lease losses		69
Construction and Land Development [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan and lease losses	2,120	1,882	1,968	2,076
Construction and Land Development [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan and lease losses	2,120	1,882
Construction and Land Development [Member] | Performing [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan and lease losses	2,120	1,882
Commercial and Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan and lease losses	3,501	3,781	5,347	5,107
Commercial and Industrial [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan and lease losses	3,501	3,781
Commercial and Industrial [Member] | Performing [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan and lease losses	3,501	3,685
Commercial and Industrial [Member] | Impaired Loans [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan and lease losses		96
Leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan and lease losses	548	330
Leases [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan and lease losses	548	330
Leases [Member] | Performing [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan and lease losses	548	330
Consumer and Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan and lease losses	116	124	$ 110	$ 113
Consumer and Other [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan and lease losses	115	123
Consumer and Other [Member] | Purchased Credit Impaired Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan and lease losses	1	1
Consumer and Other [Member] | Performing [Member] | All Other Loans and leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan and lease losses	$ 115	$ 123

XML

Loans and Leases and Allowance for Loan and Lease Losses - ALL Roll Forward (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	$ 19,352	$ 18,346
Charged off loans	(488)	(120)
Recoveries of charge-offs	208	77
Provision (recovery) charged to expense	1,006	67
Ending balance	20,078	18,370
Commercial Real Estate [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	9,781	7,579
Recoveries of charge-offs	1	3
Provision (recovery) charged to expense	623	55
Ending balance	10,405	7,637
Consumer Real Estate [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	3,454	3,471
Charged off loans	(33)
Recoveries of charge-offs	7	16
Provision (recovery) charged to expense	(40)	(179)
Ending balance	3,388	3,308
Construction and Land Development [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	1,882	2,076
Provision (recovery) charged to expense	238	(108)
Ending balance	2,120	1,968
Commercial and Industrial [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	3,781	5,107
Charged off loans	(188)
Recoveries of charge-offs	17	3
Provision (recovery) charged to expense	(109)	237
Ending balance	3,501	5,347
Leases [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	330
Charged off loans	(85)
Recoveries of charge-offs	157
Provision (recovery) charged to expense	146
Ending balance	548
Consumer and Other [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	124	113
Charged off loans	(182)	(120)
Recoveries of charge-offs	26	55
Provision (recovery) charged to expense	148	62
Ending balance	$ 116	$ 110

XML

Loans and Leases and Allowance for Loan and Lease Losses - Loan Risk Rating (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Financing Receivable, Recorded Investment [Line Items]
Total loans	$ 2,806,026	$ 2,693,397
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,475,856	1,384,156
Consumer Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	483,229	477,272
Construction and Land Development [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	314,654	278,386
Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	461,153	488,024
Leases [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	59,892	53,708
Consumer and Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	11,242	11,851
All Other Loans and leases [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	2,768,577	2,652,050
All Other Loans and leases [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	2,723,522	2,609,141
All Other Loans and leases [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	33,261	33,204
All Other Loans and leases [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	8,214	5,943
All Other Loans and leases [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	3,580	3,717
All Other Loans and leases [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans		45
All Other Loans and leases [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,455,586	1,363,281
All Other Loans and leases [Member] | Commercial Real Estate [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,421,096	1,330,888
All Other Loans and leases [Member] | Commercial Real Estate [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	26,938	27,246
All Other Loans and leases [Member] | Commercial Real Estate [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	6,524	4,120
All Other Loans and leases [Member] | Commercial Real Estate [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,028	1,027
All Other Loans and leases [Member] | Consumer Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	473,438	465,439
All Other Loans and leases [Member] | Consumer Real Estate [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	467,908	460,190
All Other Loans and leases [Member] | Consumer Real Estate [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,610	1,334
All Other Loans and leases [Member] | Consumer Real Estate [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,512	1,525
All Other Loans and leases [Member] | Consumer Real Estate [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	2,408	2,390
All Other Loans and leases [Member] | Construction and Land Development [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	311,992	275,504
All Other Loans and leases [Member] | Construction and Land Development [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	311,618	275,124
All Other Loans and leases [Member] | Construction and Land Development [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	297	237
All Other Loans and leases [Member] | Construction and Land Development [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	69	70
All Other Loans and leases [Member] | Construction and Land Development [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	8	73
All Other Loans and leases [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	458,674	485,508
All Other Loans and leases [Member] | Commercial and Industrial [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	454,048	480,677
All Other Loans and leases [Member] | Commercial and Industrial [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	4,392	4,345
All Other Loans and leases [Member] | Commercial and Industrial [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	109	228
All Other Loans and leases [Member] | Commercial and Industrial [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	125	213
All Other Loans and leases [Member] | Commercial and Industrial [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans		45
All Other Loans and leases [Member] | Leases [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	57,662	50,538
All Other Loans and leases [Member] | Leases [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	57,662	50,538
All Other Loans and leases [Member] | Consumer and Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	11,225	11,780
All Other Loans and leases [Member] | Consumer and Other [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	11,190	11,724
All Other Loans and leases [Member] | Consumer and Other [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	24	42
All Other Loans and leases [Member] | Consumer and Other [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	11	14
Purchased Credit Impaired Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	37,449	41,347
Purchased Credit Impaired Loans [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	30,398	33,825
Purchased Credit Impaired Loans [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,800	1,901
Purchased Credit Impaired Loans [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	78	83
Purchased Credit Impaired Loans [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	5,173	5,538
Purchased Credit Impaired Loans [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	20,270	20,875
Purchased Credit Impaired Loans [Member] | Commercial Real Estate [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	15,490	16,019
Purchased Credit Impaired Loans [Member] | Commercial Real Estate [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,228	1,271
Purchased Credit Impaired Loans [Member] | Commercial Real Estate [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	14	15
Purchased Credit Impaired Loans [Member] | Commercial Real Estate [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	3,538	3,570
Purchased Credit Impaired Loans [Member] | Consumer Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	9,791	11,833
Purchased Credit Impaired Loans [Member] | Consumer Real Estate [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	8,063	9,714
Purchased Credit Impaired Loans [Member] | Consumer Real Estate [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	483	539
Purchased Credit Impaired Loans [Member] | Consumer Real Estate [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	64	68
Purchased Credit Impaired Loans [Member] | Consumer Real Estate [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,181	1,512
Purchased Credit Impaired Loans [Member] | Construction and Land Development [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	2,662	2,882
Purchased Credit Impaired Loans [Member] | Construction and Land Development [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	2,119	2,335
Purchased Credit Impaired Loans [Member] | Construction and Land Development [Member] | Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	89	91
Purchased Credit Impaired Loans [Member] | Construction and Land Development [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	454	456
Purchased Credit Impaired Loans [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	2,479	2,516
Purchased Credit Impaired Loans [Member] | Commercial and Industrial [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	2,479	2,516
Purchased Credit Impaired Loans [Member] | Leases [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	2,230	3,170
Purchased Credit Impaired Loans [Member] | Leases [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	2,230	3,170
Purchased Credit Impaired Loans [Member] | Consumer and Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	17	71
Purchased Credit Impaired Loans [Member] | Consumer and Other [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	$ 17	$ 71

XML

Loans and Leases and Allowance for Loan and Lease Losses - Past Due Loans (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual restructured loans	$ 3,342	$ 3,124
Total Past Due	5,108	6,119
Total loans	2,806,026	2,693,397
Financial Asset, Not Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Accruing and Current Loans	2,763,469	2,645,931
Financial Asset, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Accruing and Current Loans	1,766	2,798
Financial Asset, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Accruing and Current Loans		133
Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Accruing and Current Loans		64
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual restructured loans	858	858
Total Past Due	976	1,030
Total loans	1,475,856	1,384,156
Commercial Real Estate [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Accruing and Current Loans	1,454,610	1,362,251
Commercial Real Estate [Member] | Financial Asset, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Accruing and Current Loans	118	172
Consumer Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual restructured loans	2,383	2,139
Total Past Due	3,229	3,033
Total loans	483,229	477,272
Consumer Real Estate [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Accruing and Current Loans	470,209	462,406
Consumer Real Estate [Member] | Financial Asset, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Accruing and Current Loans	846	884
Consumer Real Estate [Member] | Financial Asset, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Accruing and Current Loans		10
Construction and Land Development [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		91
Total loans	314,654	278,386
Construction and Land Development [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Accruing and Current Loans	311,992	275,413
Construction and Land Development [Member] | Financial Asset, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Accruing and Current Loans		91
Commercial and Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual restructured loans	92	116
Total Past Due	250	1,471
Total loans	461,153	488,024
Commercial and Industrial [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Accruing and Current Loans	458,424	484,037
Commercial and Industrial [Member] | Financial Asset, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Accruing and Current Loans	158	1,191
Commercial and Industrial [Member] | Financial Asset, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Accruing and Current Loans		119
Commercial and Industrial [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Accruing and Current Loans		45
Leases [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	336	361
Total loans	59,892	53,708
Leases [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Accruing and Current Loans	57,326	50,177
Leases [Member] | Financial Asset, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Accruing and Current Loans	336	361
Consumer and Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual restructured loans	9	11
Total Past Due	317	133
Total loans	11,242	11,851
Consumer and Other [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Accruing and Current Loans	10,908	11,647
Consumer and Other [Member] | Financial Asset, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Accruing and Current Loans	308	99
Consumer and Other [Member] | Financial Asset, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Accruing and Current Loans		4
Consumer and Other [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Accruing and Current Loans		19
Purchased Credit Impaired Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Accruing and Current Loans	37,449	41,347
Total loans	37,449	41,347
Purchased Credit Impaired Loans [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Accruing and Current Loans	20,270	20,875
Total loans	20,270	20,875
Purchased Credit Impaired Loans [Member] | Consumer Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Accruing and Current Loans	9,791	11,833
Total loans	9,791	11,833
Purchased Credit Impaired Loans [Member] | Construction and Land Development [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Accruing and Current Loans	2,662	2,882
Total loans	2,662	2,882
Purchased Credit Impaired Loans [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Accruing and Current Loans	2,479	2,516
Total loans	2,479	2,516
Purchased Credit Impaired Loans [Member] | Leases [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Accruing and Current Loans	2,230	3,170
Total loans	2,230	3,170
Purchased Credit Impaired Loans [Member] | Consumer and Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Accruing and Current Loans	17	71
Total loans	$ 17	$ 71

XML

Loans and Leases and Allowance for Loan and Lease Losses - Impaired Loan Portfolio (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Financing Receivable, Impaired [Line Items]
Impaired loans with a valuation allowance, Related Allowance	$ 582		$ 740
Total impaired loans, Recorded Investment	5,064		4,861
Total impaired loans, Unpaid Principal Balance	5,307		5,203
Total impaired loans, Average Recorded Investment	5,109	$ 7,036
Total impaired loans, Interest Income Recognized	57	145
All Other Loans and leases [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans without a valuation allowance, Recorded Investment	2,070		1,805
Impaired loans without a valuation allowance, Unpaid Principal Balance	2,069		1,806
Impaired loans with a valuation allowance, Recorded Investment	858		1,215
Impaired loans with a valuation allowance, Unpaid Principal Balance	858		1,217
Impaired loans with a valuation allowance, Related Allowance	395		561
Impaired loans without a valuation allowance, Average Recorded Investment	1,937	3,385
Impaired loans without a valuation allowance, Interest Income Recognized	17	13
Impaired loans with a valuation allowance, Average Recorded Investment	1,037	2,149
Impaired loans with a valuation allowance, Interest Income Recognized		109
All Other Loans and leases [Member] | Commercial Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with a valuation allowance, Recorded Investment	858		858
Impaired loans with a valuation allowance, Unpaid Principal Balance	858		859
Impaired loans with a valuation allowance, Related Allowance	395		396
Impaired loans without a valuation allowance, Average Recorded Investment		2,001
Impaired loans without a valuation allowance, Interest Income Recognized		1
Impaired loans with a valuation allowance, Average Recorded Investment	858	1,577
Impaired loans with a valuation allowance, Interest Income Recognized		102
All Other Loans and leases [Member] | Consumer Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans without a valuation allowance, Recorded Investment	2,070		1,805
Impaired loans without a valuation allowance, Unpaid Principal Balance	2,069		1,806
Impaired loans with a valuation allowance, Recorded Investment			260
Impaired loans with a valuation allowance, Unpaid Principal Balance			262
Impaired loans with a valuation allowance, Related Allowance			69
Impaired loans without a valuation allowance, Average Recorded Investment	1,937	1,384
Impaired loans without a valuation allowance, Interest Income Recognized	17	12
Impaired loans with a valuation allowance, Average Recorded Investment	130	444
Impaired loans with a valuation allowance, Interest Income Recognized		5
All Other Loans and leases [Member] | Commercial and Industrial [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with a valuation allowance, Recorded Investment			97
Impaired loans with a valuation allowance, Unpaid Principal Balance			96
Impaired loans with a valuation allowance, Related Allowance			96
Impaired loans with a valuation allowance, Average Recorded Investment	49	128
Impaired loans with a valuation allowance, Interest Income Recognized		2
Purchased Credit Impaired Loans [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans without a valuation allowance, Recorded Investment	2,136		1,841
Impaired loans with a valuation allowance, Unpaid Principal Balance	2,380		2,180
Impaired loans with a valuation allowance, Related Allowance	187		179
Impaired loans with a valuation allowance, Average Recorded Investment	2,135	1,502
Impaired loans with a valuation allowance, Interest Income Recognized	40	23
Purchased Credit Impaired Loans [Member] | Commercial Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans without a valuation allowance, Recorded Investment	1,232		707
Impaired loans with a valuation allowance, Unpaid Principal Balance	1,513		926
Impaired loans with a valuation allowance, Related Allowance	65		30
Impaired loans with a valuation allowance, Average Recorded Investment	1,231
Impaired loans with a valuation allowance, Interest Income Recognized	24
Purchased Credit Impaired Loans [Member] | Consumer Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans without a valuation allowance, Recorded Investment	901		1,129
Impaired loans with a valuation allowance, Unpaid Principal Balance	865		1,251
Impaired loans with a valuation allowance, Related Allowance	121		148
Impaired loans with a valuation allowance, Average Recorded Investment	901	1,215
Impaired loans with a valuation allowance, Interest Income Recognized	16	22
Purchased Credit Impaired Loans [Member] | Commercial and Industrial [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with a valuation allowance, Average Recorded Investment		268
Impaired loans with a valuation allowance, Interest Income Recognized		1
Purchased Credit Impaired Loans [Member] | Consumer and Other [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans without a valuation allowance, Recorded Investment	3		5
Impaired loans with a valuation allowance, Unpaid Principal Balance	2		3
Impaired loans with a valuation allowance, Related Allowance	1		$ 1
Impaired loans with a valuation allowance, Average Recorded Investment	$ 3	$ 19

XML

Loans and Leases and Allowance for Loan and Lease Losses - Purchased Credit Impaired Loans (Details) - Purchased Credit Impaired Loans [Member] - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Line Items]
Total loans	$ 52,136	$ 56,620
Less remaining purchase discount	(14,687)	(15,273)
Total loans, net of purchase discount	37,449	41,347
Less: Allowance for loan losses	(187)	(179)
Carrying amount, net of allowance	37,262	41,168
Commercial Real Estate [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Line Items]
Total loans	30,981	31,600
Consumer Real Estate [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Line Items]
Total loans	11,954	14,215
Construction and Land Development [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Line Items]
Total loans	3,127	3,699
Commercial and Industrial [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Line Items]
Total loans	3,467	3,424
Leases [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Line Items]
Total loans	2,542	3,557
Consumer and Other [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Line Items]
Total loans	$ 65	$ 125

XML

Loans and Leases and Allowance for Loan and Lease Losses - Accretable Yield Roll Forward (Details) - Purchased Credit Impaired Loans [Member] - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Accretable yield, beginning of period	$ 14,618	$ 16,889
Accretion income	(1,096)	(1,931)
Reclassification	269	337
Other changes, net	7,490	(590)
Accretable yield, end of period	$ 21,281	$ 14,705

XML

Goodwill and Intangible Assets (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Dec. 31, 2020
Amortization of intangibles	$ 637	$ 444
Goodwill	91,565		$ 91,565	$ 74,135
Adjustment, due to Sale			$ 2,464
Other Intangible Assets [Member]
Amortization of intangibles	$ 637	$ 444
Customer Relationships [Member]
Intangible asset, useful life	8 years 7 months 6 days
Trade Names [Member]
Intangible asset, useful life	5 years

XML

Goodwill and Intangible Assets - Schedule of Goodwill (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2021 USD ($)
Goodwill [Roll Forward]
Goodwill, Beginning Balance	$ 74,135
Adjustment, due to Sale	(2,464)
Goodwill, Ending Balance	91,565
Fountain Leasing Limited Liability Company [Member]
Goodwill [Roll Forward]
Acquisition of business	2,400
Progressive Financial Group Inc. [Member]
Goodwill [Roll Forward]
Acquisition of business	323
Sevier County Bancshares Inc [Member]
Goodwill [Roll Forward]
Acquisition of business	$ 17,171

XML

Goodwill and Intangible Assets - Schedule of Finite-Lived Intangible Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Mar. 31, 2022
Finite-lived Intangible Assets [Roll Forward]
Balance, beginning of period	$ 17,047
Balance, end of period	21,255
Less: accumulated amortization	(6,968)	$ (7,605)
Total	14,287	13,650
Fountain Leasing Limited Liability Company [Member]
Finite-lived Intangible Assets [Roll Forward]
Acquisition of business	2,658
Sevier County Bancshares Inc [Member]
Finite-lived Intangible Assets [Roll Forward]
Acquisition of business	1,550
Core Deposits [Member]
Finite-lived Intangible Assets [Roll Forward]
Balance, beginning of period	15,920
Balance, end of period	17,470
Less: accumulated amortization	(6,212)	(6,671)
Total	11,258	10,799
Core Deposits [Member] | Sevier County Bancshares Inc [Member]
Finite-lived Intangible Assets [Roll Forward]
Acquisition of business	1,550
Customer Relationships [Member]
Finite-lived Intangible Assets [Roll Forward]
Balance, beginning of period	1,064
Balance, end of period	3,722
Less: accumulated amortization	(733)	(908)
Total	2,989	2,814
Customer Relationships [Member] | Fountain Leasing Limited Liability Company [Member]
Finite-lived Intangible Assets [Roll Forward]
Acquisition of business	2,658
Trade Names [Member]
Finite-lived Intangible Assets [Roll Forward]
Balance, beginning of period	63
Balance, end of period	63
Less: accumulated amortization	(23)	(26)
Total	$ 40	$ 37

XML

Goodwill and Intangible Assets - Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]
Remainder of 2022	$ 1,884
2023	2,356
2024	2,203
2025	2,041
2026	1,888
Thereafter	3,278
Total	$ 13,650	$ 14,287

XML

Borrowings, Line of Credit and Subordinated Debt - Additional Information (Details) - USD ($) $ in Thousands		3 Months Ended		15 Months Ended
	Sep. 01, 2021	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Dec. 31, 2021	Sep. 28, 2018
Debt Instrument [Line Items]
Borrowings		$ 36,700		$ 36,700	$ 87,600
Other borrowings		7,500		7,500	7,500
Securities sold under agreements to repurchase		4,213		4,213	5,085
Carrying value of securities pledged as collateral		9,800		9,800	10,100
Repayment borrowings		50,000	$ 4
Securities sold under agreements to repurchase, average balance		5,000	6,400	5,000
Securities sold under agreements to repurchase, maximum month-end balance		5,500	$ 7,200	5,500
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity		25,000		25,000
Outstanding borrowings		7,500		7,500
Remaining borrowing capacity		17,500		17,500
Federal Home Loan Bank Advances [Member]
Debt Instrument [Line Items]
Repayment borrowings		50,000
Subordinated Debt [Member]
Debt Instrument [Line Items]
Principal amount						$ 40,000
Interest rate						5.625%
Debt issuance costs		$ 548		548	$ 570
Amortization expense of debt issuance costs				$ 21
Subordinated Debt [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)		2.55%
Subordinated Debt [Member] | Sevier County Bancshares Inc [Member]
Debt Instrument [Line Items]
Interest rate	6.75%
Subordinated Debt [Member] | Sevier County Bancshares Inc [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)	5.3025%

XML

Borrowings and Line of Credit - Schedule of debt (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Borrowings, Line of Credit and Subordinated Debt [Abstract]
Securities sold under agreements to repurchase	$ 4,213	$ 5,085
Long-term federal home loan bank advances	25,000	75,000
Other Borrowings	7,500	7,500
Total	$ 36,713	$ 87,585

XML

Employee Benefit Plans (Narrative) (Details) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2022 USD ($) plan $ / shares shares	Mar. 31, 2021 USD ($) shares
Defined Benefit Plan Disclosure [Line Items]
Contribution to the Plan	$ 393	$ 288
Number of stock option plans | plan	1
Deferred tax benefit from stock options exercised	$ 76	$ 1
Exercise of options | shares	27,550	15,965
Stock Options [Member]
Defined Benefit Plan Disclosure [Line Items]
Options, exercises in period, intrinsic value	$ 506	$ 192
Options, outstanding, intrinsic value	741,000
Proceeds from options exercised	217
Stock Appreciation Rights (SARs) [Member]
Defined Benefit Plan Disclosure [Line Items]
Share-based compensation expense	$ (26)	49
Exercise of options | shares	4,500
Restricted Stock [Member]
Defined Benefit Plan Disclosure [Line Items]
Share-based compensation expense	$ 312	$ 201
Unrecognized compensation cost	$ 1,700
Unrecognized compensation costs, period for recognition	2 years 8 months 26 days
Grant-date fair value	$ 84
Vested (in shares) | shares	4,167
Nonvested, beginning of period (in shares) | shares	144,367
Nonvested, beginning balance (in dollars per share) | $ / shares	$ 19.49
2015 Stock Incentive Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Rights available for grant (in shares) | shares	1,767,518
Cornerstone Non-Qualified Plan Options [Member]
Defined Benefit Plan Disclosure [Line Items]
Rights issued (in shares) | shares	33,500
Capstone Stock Option Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Rights issued (in shares) | shares	2,266
401 (k) Matching Range One [Member] | Deferred Salary Reduction Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Employer matching contribution, percent of match	100.00%
Employer matching contribution, percent of employees gross pay	3.00%
401 (k) Matching Range Two [Member] | Deferred Salary Reduction Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Employer matching contribution, percent of match	50.00%
Employer matching contribution, percent of employees gross pay	2.00%

XML

Employee Benefit Plans - Stock Option Activity (Details) - $ / shares	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Number
Exercised (in shares)	(27,550)	(15,965)
Officer and Employee Plans [Member]
Number
Outstanding (in shares)	79,667
Exercised (in shares)	(27,550)
Outstanding (in shares)	52,117
Weighted Average Exercisable Price
Weighted Average Exercisable Price, Outstanding (in dollars per share)	$ 10.17
Weighted Average Exercisable Price Exercised (in dollars per share)	7.90
Weighted Average Exercise Price, Outstanding (in dollars per share)	$ 11.37

XML

Employee Benefit Plans (Options Outstanding by Exercise Price Range) (Details) - Officer and Employee Plans [Member] - $ / shares	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Prices (in dollars per share)	$ 11.37	$ 10.17
Number Outstanding (in shares)	52,117	79,667
Options Outstanding, Weighted Average Remaining Life	1 year 10 months 20 days
Options Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 11.37
Exercisable (in shares)	52,117
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 11.37
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)	15,500
Options Outstanding, Weighted Average Remaining Life	11 months 12 days
Options Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 9.48
Exercisable (in shares)	15,500
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 9.48
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)	18,000
Options Outstanding, Weighted Average Remaining Life	1 year 8 months 15 days
Options Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 9.60
Exercisable (in shares)	18,000
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 9.60
11.76 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Prices (in dollars per share)	$ 11.76
Number Outstanding (in shares)	2,266
Options Outstanding, Weighted Average Remaining Life	3 months
Options Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 11.76
Exercisable (in shares)	2,266
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 11.76
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)	16,351
Options Outstanding, Weighted Average Remaining Life	3 years 2 months 15 days
Options Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 15.05
Exercisable (in shares)	16,351
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 15.05

XML

Employee Benefit Plans (Schedule of Non-vested Restricted Stock) (Details) - Restricted Stock [Member]	3 Months Ended
	Mar. 31, 2022 $ / shares shares
Number
Nonvested, beginning of period (in shares) | shares	144,367
Granted (in shares) | shares	21,842
Vested (in shares) | shares	(4,167)
Nonvested, end of period (in shares) | shares	162,042
Weighted Average Grant-Date Fair Value
Nonvested, beginning balance (in dollars per share) | $ / shares	$ 19.49
Granted (in dollars per share) | $ / shares	26.66
Vested (in dollars per share) | $ / shares	20.14
Nonvested, ending balance (in dollars per share) | $ / shares	$ 20.44

XML

Employee Benefit Plans - Stock Appreciation Right Activity (Details) - $ / shares	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Number
Exercised (in shares)	(27,550)	(15,965)
Stock Appreciation Rights (SARs) [Member]
Number
Outstanding (in shares)	55,000
Exercised (in shares)	(4,500)
Outstanding (in shares)	50,500
Weighted Average Exercisable Price
Weighted Average Exercisable Price, Outstanding (in dollars per share)	$ 18.21
Weighted Average Exercisable Price Exercised (in dollars per share)	18.12
Weighted Average Exercise Price, Outstanding (in dollars per share)	$ 18.21

XML

Employee Benefit Plans - SARs Outstanding by Exercise Price Range (Details) - Stock Appreciation Rights (SARs) [Member] - $ / shares	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Prices (in dollars per share)	$ 18.21	$ 18.21
Number Outstanding (in shares)	50,500	55,000
SARs Outstanding, Weighted Average Remaining Life	1 year 10 months 9 days
SARs Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 18.21
SARs Exercisable, Number Exercisable (in shares)	14,500
SARs Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 18.12
15.19 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Prices (in dollars per share)	$ 15.19
Number Outstanding (in shares)	16,000
SARs Outstanding, Weighted Average Remaining Life	1 year 9 months
SARs Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 15.19
18.12 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Prices (in dollars per share)	$ 18.12
Number Outstanding (in shares)	14,500
SARs Outstanding, Weighted Average Remaining Life	9 months
SARs Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 18.12
SARs Exercisable, Number Exercisable (in shares)	14,500
SARs Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 18.12
20.70 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Prices (in dollars per share)	$ 20.70
Number Outstanding (in shares)	20,000
SARs Outstanding, Weighted Average Remaining Life	2 years 9 months 3 days
SARs Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 20.70

XML

Commitments and Contingencies (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Commitments and Contingencies Disclosure [Abstract]
Commitments to extend credit	$ 723,380	$ 669,770
Standby letters of credit	$ 17,919	$ 17,868

XML

Fair Value Disclosures - Assets and Liabilities Measured on Recurring Basis (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	$ 540,483	$ 482,453
Fair Value, Assets, Level 1 to Level 2 Transfers, Amount	0
Fair Value, Assets, Level 2 to Level 1 Transfers, Amount	0
Fair Value, Liabilities, Level 1 to Level 2 Transfers, Amount	0
Fair Value, Liabilities, Level 2 to Level 1 Transfers, Amount	0
Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	540,483	482,453
Interest rate swaps agreements for customer loans	1,334	1,326
Derivative financial instruments and interest rate swap agreements	2,552	4,893
US Treasury Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	229,913	137,758
US Government-sponsored Enterprises Debt Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	506	21,801
Municipal securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	55,241	67,820
Other Debt Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	28,540	27,220
Mortgage-backed securities (GSEs) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	226,283	227,854
Fair Value, Recurring [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	540,483	482,453
Total assets at fair value	541,817	483,779
Derivative financial instruments and interest rate swap agreements	2,552	4,893
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	540,483	482,453
Total assets at fair value	541,817	483,779
Derivative financial instruments and interest rate swap agreements	2,552	4,893
Fair Value, Recurring [Member] | US Treasury Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	229,913	137,758
Fair Value, Recurring [Member] | US Treasury Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	229,913	137,758
Fair Value, Recurring [Member] | US Government-sponsored Enterprises Debt Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	506	21,801
Fair Value, Recurring [Member] | US Government-sponsored Enterprises Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	506	21,801
Fair Value, Recurring [Member] | Municipal securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	55,241	67,820
Fair Value, Recurring [Member] | Municipal securities [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	55,241	67,820
Fair Value, Recurring [Member] | Other Debt Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	28,540	27,220
Fair Value, Recurring [Member] | Other Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	28,540	27,220
Fair Value, Recurring [Member] | Mortgage-backed securities (GSEs) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	226,283	227,854
Fair Value, Recurring [Member] | Mortgage-backed securities (GSEs) [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	226,283	227,854
Fair Value, Recurring [Member] | Interest Rate Swap [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value		1,326
Interest rate swaps agreements for customer loans	1,334
Fair Value, Recurring [Member] | Interest Rate Swap [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value		$ 1,326
Interest rate swaps agreements for customer loans	$ 1,334

XML

Fair Value Disclosures (Assets and Liabilities Measured on Nonrecurring Basis) (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
OREO	$ 696	$ 367
Collateral dependent loans	2,412	2,280
Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
OREO	696	367
Collateral dependent loans	$ 2,412	$ 2,280

XML

Fair Value Disclosures - Unobservable Inputs (Details) $ in Thousands	Mar. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Collateral dependent loans	$ 2,412	$ 2,280
OREO	696	367
Fair Value, Inputs, Level 3 [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Collateral dependent loans	2,412	2,280
OREO	696	367
Appraisal And Discounted Cash Flow [Member] | Fair Value, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Collateral dependent loans	2,412	2,280
OREO	$ 696	$ 367
Appraisal And Discounted Cash Flow [Member] | Measurement Input, Discount Rate [Member] | Weighted Average [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Collateral dependent, measurement input	19	25
OREO, measurement input	21	13

XML

Fair Value Disclosures - Carrying Amount and Estimated Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Assets:
Securities available-for-sale, at fair value	$ 540,483	$ 482,453
Securities held to maturity, fair value	277,734	76,946
Liabilities:
Noninterest-bearing demand deposits	1,093,933	1,055,125
Interest-bearing demand deposits	975,272	899,158
Time deposits	549,047	574,648
Carrying Amount [Member]
Assets:
Cash and cash equivalents	763,968	1,045,077
Securities available-for-sale, at fair value	540,483	482,453
Securities held to maturity, fair value	289,532	76,969
Other investments	16,499	16,494
Loans, net and loans held for sale	2,791,842	2,679,148
Interest rate swaps agreements for customer loans	1,334	1,326
Liabilities:
Noninterest-bearing demand deposits	1,093,933	1,055,125
Interest-bearing demand deposits	975,272	899,158
Money market and savings deposits	1,573,101	1,493,007
Time deposits	549,047	574,648
Borrowings	36,713	87,585
Subordinated debt	41,952	41,930
Derivative financial instruments and interest rate swap agreements	2,552	4,893
Estimated Fair Value [Member]
Assets:
Cash and cash equivalents	763,968	1,045,077
Securities available-for-sale, at fair value	540,483	482,453
Securities held to maturity, fair value	277,734	76,946
Loans, net and loans held for sale	2,739,655	2,676,181
Interest rate swaps agreements for customer loans	1,334	1,326
Liabilities:
Noninterest-bearing demand deposits	1,093,933	1,055,125
Interest-bearing demand deposits	975,272	899,158
Money market and savings deposits	1,573,101	1,493,007
Time deposits	549,677	576,598
Borrowings	36,750	88,082
Subordinated debt	42,487	43,374
Derivative financial instruments and interest rate swap agreements	2,552	4,893
Fair Value, Inputs, Level 1 [Member]
Assets:
Cash and cash equivalents	763,968	1,045,077
Fair Value, Inputs, Level 2 [Member]
Assets:
Securities available-for-sale, at fair value	540,483	482,453
Securities held to maturity, fair value	277,734	76,946
Interest rate swaps agreements for customer loans	1,334	1,326
Liabilities:
Noninterest-bearing demand deposits	1,093,933	1,055,125
Interest-bearing demand deposits	975,272	899,158
Money market and savings deposits	1,573,101	1,493,007
Time deposits	549,677	576,598
Borrowings	36,750	88,082
Derivative financial instruments and interest rate swap agreements	2,552	4,893
Fair Value, Inputs, Level 3 [Member]
Assets:
Loans, net and loans held for sale	2,739,655	2,676,181
Liabilities:
Subordinated debt	$ 42,487	$ 43,374

XML

Derivatives Financial Instruments - Fair Value Hedges on Balance Sheet (Details) - Interest Rate Swap Liability [Member] - Designated as Hedging Instrument [Member] - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Derivatives, Fair Value [Line Items]
Weighted Average Remaining Maturity (In Years)	6 years	6 years 2 months 12 days
Weighted Average Pay Rate	3.09%	3.09%
Notional Amount	$ 36,000	$ 36,000
Estimated Fair Value	$ (1,218)	$ (3,567)

XML

Derivatives Financial Instruments - Fair Value Hedges on Income Statement (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Derivative Instruments, Gain (Loss) [Line Items]
Reported interest income on tax-exempt securities	$ 368	$ 259
Carrying amount of hedged asset	40,125	43,073
Interest Rate Swap [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Interest income on tax-exempt securities		564
Effects of fair value hedge relationships		(305)
Reported interest income on tax-exempt securities		259
Gain (loss) on fair value hedging relationship	(1,218)	(4,008)
Interest Rate Swap [Member] | Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Interest income on tax-exempt securities	393
Effects of fair value hedge relationships	(254)
Reported interest income on tax-exempt securities	139
Gain (loss) on fair value hedging relationship	$ 1,218	$ 4,008

XML

Derivatives Financial Instruments - Interest Rate Swaps related to Loan Hedging Program (Details) - Interest Rate Swap [Member] - Non-hedged derivatives [Member] - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Derivatives, Fair Value [Line Items]
Notional Amount, Asset	$ 84,141	$ 48,125
Estimated Fair Value, Asset	1,334	1,326
Notional Amount, Liability	84,141	48,125
Estimated Fair Value, Liability	$ (1,334)	$ (1,326)

XML

Derivatives Financial Instruments - Interest Rate Swaps to Facilitate Customer's Transactions (Details) - Interest Rate Swap [Member] - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Derivative Instruments, Gain (Loss) [Line Items]
Transaction on income statement	$ (1,218)	$ (4,008)
Non-hedged derivatives [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Transaction on income statement	$ 520

XML

Leases - Lease Assets and Liabilities (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Leases [Abstract]
Operating lease right-of-use assets	$ 9,499	$ 9,812
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	Other Assets	Other Assets
Operating lease liabilities	$ 9,586	$ 9,881
Operating Lease, Liability, Statement of Financial Position [Extensible List]	Other Liabilities	Other Liabilities
Lessee, Operating Lease, Existence of Option to Extend [true false]	true

XML

Leases (Narrative) (Details)	Mar. 31, 2022
Leases [Abstract]
Weighted average remaining lease term	9 years 9 months 7 days
Weighted average discount rate	2.10%

XML

Leases - Lease Costs and Other Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Lease costs:
Operating lease costs	$ 414	$ 240
Variable lease costs	25	24
Total	439	264
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$ 396	$ 233

XML

Leases - Future Minimum Payments (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Leases [Abstract]
March 31, 2023	$ 1,142
March 31, 2024	1,290
March 31, 2025	1,079
March 31, 2026	1,047
March 31, 2027	946
Thereafter	5,249
Total future minimum lease payments	10,753
Amounts representing interest	(1,167)
Present value of net future minimum lease payments	$ 9,586	$ 9,881

XML

Regulatory Matters (Narrative) (Details)	3 Months Ended
	Mar. 31, 2022 $ / shares
Banking and Thrift [Abstract]
Common stock dividends, quarterly (in dollars per share)	$ 0.07

XML

Regulatory Matters (Regulatory Capital Levels) (Details) $ in Thousands	Mar. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)
SmartFinancial, Inc. [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total Capital (to Risk-Weighted Assets), Actual Amount	$ 395,523	$ 386,627
Tier 1 Capital (to Risk-Weighted Assets), Actual Amount	333,493	325,345
Common Equity Tier 1 Capital (to Risk-Weighted Assets), Actual Amount	333,493	325,345
Tier 1 Capital (to Average Assets), Actual Amount	$ 333,493	$ 325,345
Total Capital (to Risk-Weighted Assets), Actual Ratio (as a percent)	12.22	12.55
Tier 1 Capital (to Risk-Weighted Assets), Actual Ratio (as a percent)	10.30	10.56
Common Equity Tier 1 Capital (to Risk-Weighted Assets), Actual Ratio (as a percent)	10.30%	10.56%
Tier 1 Capital (to Average Assets), Actual Ratio (as a percent)	7.41	7.45
Total Capital (to Risk-Weighted Assets), Minimum for capital adequacy purposes Amount	$ 258,996	$ 246,483
Tier 1 Capital (to Risk-Weighted Assets), Minimum for capital adequacy purposes Amount	194,247	184,862
Common Equity Tier 1 Capital (to Risk-Weighted Assets), Minimum for capital adequacy purposes Amount	145,685	138,647
Tier 1 Capital (to Average Assets), Minimum for capital adequacy purposes Amount	$ 180,085	$ 174,578
Total Capital (to Risk-Weighted Assets), Minimum for capital adequacy purposes Ratio (as a percent)	8.00	8.00
Tier 1 Capital (to Risk-Weighted Assets), Minimum for capital adequacy purposes Ratio (as a percent)	6.00	6.00
Common Equity Tier 1 Capital (to Risk-Weighted Assets), Minimum for capital adequacy purposes Ratio (as a percent)	4.50%	4.50%
Tier 1 Capital (to Average Assets), Minimum for capital adequacy purposes Ratio (as a percent)	4.00	4.00
Smart Bank [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total Capital (to Risk-Weighted Assets), Actual Amount	$ 390,953	$ 378,055
Tier 1 Capital (to Risk-Weighted Assets), Actual Amount	370,875	358,703
Common Equity Tier 1 Capital (to Risk-Weighted Assets), Actual Amount	370,875	358,703
Tier 1 Capital (to Average Assets), Actual Amount	$ 370,875	$ 358,703
Total Capital (to Risk-Weighted Assets), Actual Ratio (as a percent)	12.08	12.29
Tier 1 Capital (to Risk-Weighted Assets), Actual Ratio (as a percent)	11.46	11.66
Common Equity Tier 1 Capital (to Risk-Weighted Assets), Actual Ratio (as a percent)	11.46%	11.66%
Tier 1 Capital (to Average Assets), Actual Ratio (as a percent)	8.24	8.23
Total Capital (to Risk-Weighted Assets), Minimum for capital adequacy purposes Amount	$ 258,990	$ 246,053
Tier 1 Capital (to Risk-Weighted Assets), Minimum for capital adequacy purposes Amount	194,242	184,539
Common Equity Tier 1 Capital (to Risk-Weighted Assets), Minimum for capital adequacy purposes Amount	145,682	138,405
Tier 1 Capital (to Average Assets), Minimum for capital adequacy purposes Amount	$ 180,011	$ 174,384
Total Capital (to Risk-Weighted Assets), Minimum for capital adequacy purposes Ratio (as a percent)	8.00	8.00
Tier 1 Capital (to Risk-Weighted Assets), Minimum for capital adequacy purposes Ratio (as a percent)	6.00	6.00
Common Equity Tier 1 Capital (to Risk-Weighted Assets), Minimum for capital adequacy purposes Ratio (as a percent)	4.50%	4.50%
Tier 1 Capital (to Average Assets), Minimum for capital adequacy purposes Ratio (as a percent)	4.00	4.00
Total Capital (to Risk-Weighted Assets), Minimum to be well capitalized under prompt corrective action provisions Amount	$ 323,737	$ 307,566
Tier 1 Capital (to Risk-Weighted Assets), Minimum to be well capitalized under prompt corrective action provisions Amount	258,990	246,053
Common Equity Tier 1 Capital (to Risk-Weighted Assets), Minimum to be well capitalized under prompt corrective action provisions Amount	210,429	199,918
Tier 1 Capital (to Average Assets), Minimum to be well capitalized under prompt corrective action provisions Amount	$ 225,013	$ 217,980
Total Capital (to Risk-Weighted Assets), Minimum to be well capitalized under prompt corrective action provisions Ratio (as a percent)	10.00	10.00
Tier 1 Capital (to Risk-Weighted Assets), Minimum to be well capitalized under prompt corrective action provisions Ratio (as a percent)	8.00	8.00
Common Equity Tier 1 Capital (to Risk-Weighted Assets), Minimum to be well capitalized under prompt corrective action provisions Ratio (as a percent)	6.50%	6.50%
Tier 1 Capital (to Average Assets), Minimum to be well capitalized under prompt corrective action provisions Ratio (as a percent)	5.00	5.00

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Other comprehensive income (loss) (Activity in Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
AOCI Attributable to Parent, Net of Tax [Roll Forward]
BALANCE	$ 429,430	$ 357,168
BALANCE	420,042	364,058
AOCI, Accumulated Gain (Loss), Debt Securities, Available-for-sale, Parent [Member]
AOCI Attributable to Parent, Net of Tax [Roll Forward]
BALANCE	25	2,968
Other comprehensive income (loss)	(15,092)	(2,070)
Net other comprehensive income (loss) during period	(15,092)	(2,070)
BALANCE	(15,067)	898
AOCI, Available-for-Sale Securities Transfer to Held-to-Maturity [Member]
AOCI Attributable to Parent, Net of Tax [Roll Forward]
BALANCE	665
Other comprehensive income (loss)	(1,490)
Reclassification of amounts included in net income	(8)
Net other comprehensive income (loss) during period	(1,498)
BALANCE	(833)
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent [Member]
AOCI Attributable to Parent, Net of Tax [Roll Forward]
BALANCE	753	(785)
Other comprehensive income (loss)	(409)	970
Net other comprehensive income (loss) during period	(409)	970
BALANCE	344	185
AOCI Attributable to Parent [Member]
AOCI Attributable to Parent, Net of Tax [Roll Forward]
BALANCE	1,443	2,183
Other comprehensive income (loss)	(16,991)	(1,100)
Reclassification of amounts included in net income	(8)
Net other comprehensive income (loss) during period	(16,999)	(1,100)
BALANCE	$ (15,556)	$ 1,083