10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 June 30, 2017

OR

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

For the transition period from to

Commission File Number: 333-205986

RIVER FINANCIAL CORPORATION

(Exact Name of Registrant as Specified in its Charter)

ALABAMA	46-1422125
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2611 Legends Drive Prattville, Alabama	36066
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (334) 290-1012

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

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

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

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

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

As of August 3, 2017, the registrant had 5,113,405 shares of common stock, $1.00 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	5
	Consolidated Statements of Financial Condition	5
	Consolidated Statements of Income	6
	Consolidated Statements of Comprehensive Income	7
	Consolidated Statements of Changes in Stockholders’ Equity	8
	Consolidated Statements of Cash Flows	9
	Notes to Unaudited Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	46
Item 4.	Controls and Procedures	46
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 3.	Defaults Upon Senior Securities	47
Item 4.	Mine Safety Disclosures	47
Item 5.	Other Information	47
Item 6.	Exhibits	48
Signatures		49

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q of River Financial Corporation (“we”, “our” or “us” on a consolidated basis) contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Such statements include projections, predictions, expectations or statements as to beliefs or future events or results or refer to other matters that are not historical facts. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from those contemplated by the statements. The forward-looking statements contained in this annual report are based on various factors and were derived using numerous assumptions. In some cases, you can identify these forward-looking statements by words like “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “intend”, “believe”, “estimate”, “predict”, “potential”, or “continue” or the negative of those words and other comparable words. You should be aware that those statements reflect only our predictions. If known or unknown risks or uncertainties should materialize, or if any one or more of our material underlying assumptions should prove inaccurate, actual results could differ materially from past results and those anticipated, estimated or projected. You should bear this in mind when reading this annual report and not place undue reliance on these forward-looking statements. Factors that might cause such differences include, but are not limited to:

• The businesses of any bank acquired by us may not be integrated successfully or the integration may be more difficult, time-consuming or costly than expected;

• The expected growth opportunities or costs savings from such transactions may not be fully realized or may take longer to realize than expected;

• Revenues following such transactions may be lower than expected as a result of losses of customers or other reasons;

• Deposit attrition, operating costs, customer loss and business disruption following such transactions, including difficulties in maintaining relationships with employees, may be greater than expected;

• Governmental approvals of such transactions may not be obtained on the proposed terms or expected timeframe;

• Reputational risks and the reaction of the companies’ customers to such transactions;

• Diversion of management time on merger related issues;

• Changes in asset quality and credit risk of our bank;

• Inflation;

• Customer acceptance of the our products and services;

• Customer borrowing, repayment, investment and deposit practices;

• The negative impact on profitability imposed on us by a compressed net interest margin on loans and other extensions of credit that affects our ability to lend profitably and to price loans effectively in the face of competitive pressures;

• Our liquidity requirements could be adversely affected by changes in our assets and liabilities;

• Our ability to attract, develop and retain qualified banking professionals;

• Failure to attract or retain stable deposits at reasonable cost that is competitive with the larger international, national, and regional financial service providers with which we compete;

• Significant reliance on loans secured by real estate and the associated vulnerability to downturns in the local real estate market, natural disasters and other variables impacting the value of real estate;

• The introduction, withdrawal, success and timing of business initiatives;

• The impact, extent, and timing of technological changes;

• A weakening of the economies in which we conduct operations may adversely affect our operating results;

• The U.S. legal and regulatory framework, or changes in such framework, could adversely affect our operating results;

• The interest rate environment may compress margins and adversely affect net interest income; and

• Competition from other financial services companies in our markets could adversely affect operations.

3

You should also consider carefully the risk factors discussed in Item 1A of Part IIof this Form 10-Q, which address additional factors that could cause our actual results to differ from those set forth in the forward-looking statements and could materially and adversely affect our business, operating results and financial condition. The risks discussed in this report are factors that, individually or in the aggregate, management believes could cause our actual results to differ materially from expected and historical results. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider such disclosures to be a complete discussion of all potential risks or uncertainties. Factors not here or there listed may develop or, if currently extant, we may not have yet recognized them.

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

4

PART I – FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements (Unaudited)

RIVER FINANCIAL CORPORATION

Consolidated Statements of Financial Condition

(in thousands except share data)

	June 30, 2017			December 31, 2016
	Unaudited			Audited
Assets
Cash and due from banks	$	16,332		$	17,329
Interest-bearing deposits in banks		5,812			25,170
Cash and cash equivalents		22,144			42,499
Certificates of deposit in banks		5,463			5,463
Securities available-for-sale		207,148			183,361
Loans held for sale		3,800			7,734
Loans, net of deferred fees and discounts		517,950			516,441
Less allowance for loan losses		(4,401	)		(4,007	)
Net loans		513,549			512,434
Premises and equipment, net		22,138			21,472
Accrued interest receivable		2,324			2,376
Bank owned life insurance		15,370			15,161
Foreclosed assets		1,557			1,151
Deferred income taxes		2,255			3,352
Core deposit intangible		1,828			2,119
Goodwill		10,050			10,050
Other assets		4,215			3,245
Total assets	$	811,841		$	810,417
Liabilities and Shareholders' Equity
Noninterest-bearing deposits	$	167,533		$	185,270
Interest-bearing deposits		520,733			519,643
Total deposits		688,266			704,913
Securities sold under agreements to repurchase		17,085			13,034
Federal Home Loan Bank advances		10,000			-
Note payable		5,893			6,428
Accrued interest payable and other liabilities		3,020			3,592
Total liabilities		724,264			727,967
Common stock related to 401(k) Employee Stock Ownership Plan		734			623
Stockholders' Equity:
Common stock ($1 par value; 10,000,000 shares authorized; 5,113,655 and 5,090,901    shares issued; 5,113,655 and 5,080,857 shares outstanding, respectively)		5,114			5,091
Additional paid in capital		64,909			64,656
Retained earnings		18,097			15,032
Accumulated other comprehensive loss		(543	)		(2,153	)
Treasury stock at cost (10,044 shares at December 31, 2016)		-			(176	)
Common stock related to 401(k) Employee Stock Ownership Plan		(734	)		(623	)
Total stockholders' equity		86,843			81,827
Total equity		87,577			82,450
Total liabilities and stockholders' equity	$	811,841		$	810,417

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

5

RIVER FINANCIAL CORPORATION

Unaudited Consolidated Statements of Income

(in thousands except per share data)

	For the Three Months Ended:				For the Six Months Ended:
	June 30,				June 30,
	2017		2016		2017		2016
Interest income:
Loans, including fees	$	6,976	$	6,788	$	13,761	$	13,267
Taxable securities		768		374		1,470		787
Nontaxable securities		279		272		565		543
Federal funds sold		-		8		-		14
Other interest income		48		53		111		100
Total interest income		8,071		7,495		15,907		14,711
Interest expense:
Deposits		547		506		1,066		1,015
Short-term borrowings		17		4		22		8
Federal Home Loan Bank advances		25		12		25		31
Note payable		63		64		124		127
Total interest expense		652		586		1,237		1,181
Net interest income		7,419		6,909		14,670		13,530
Provision for loan losses		360		215		720		447
Net interest income after provision for loan losses		7,059		6,694		13,950		13,083
Noninterest income:
Service charges and fees		714		593		1,413		1,193
Investment brokerage revenue		6		91		31		134
Mortgage operations		485		350		894		545
Bank owned life insurance income		103		108		209		214
Net gain on sale of investment securities		3		14		3		14
Other noninterest income		61		77		129		145
Total noninterest income		1,372		1,233		2,679		2,245
Noninterest expense:
Salaries and employee benefits		2,951		2,651		5,668		5,199
Occupancy expenses		354		363		684		714
Equipment rentals, depreciation, and maintenance		214		246		397		486
Telephone and communications		84		62		139		124
Advertising and business development		244		92		359		204
Data processing		431		435		873		915
Foreclosed assets, net		33		49		71		99
Federal deposit insurance and other regulatory assessments		83		116		175		222
Legal and other professional services		134		214		260		428
Other operating expense		809		852		1,607		1,617
Total noninterest expense		5,337		5,080		10,233		10,008
Income before income taxes		3,094		2,847		6,396		5,320
Provision for income taxes		986		865		2,059		1,616
Net income	$	2,108	$	1,982	$	4,337	$	3,704
Basic net earnings per common share	$	0.41	$	0.39	$	0.85	$	0.75
Diluted net earnings per common share	$	0.41	$	0.39	$	0.84	$	0.73
Dividends per common share	$	-	$	-	$	0.25	$	0.16

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

6

RIVER FINANCIAL CORPORATION

Unaudited Consolidated Statements of Comprehensive Income

(in thousands)

	For the Three Months Ended						For the Six  Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Net income	$	2,108		$	1,982		$	4,337		$	3,704
Other comprehensive income, net of tax:
Investment securities available-for-sale:
Net unrealized gains		1,646			509			2,554			1,045
Reclassification adjustments for net gains realized in net income		(3	)		(14	)		(3	)		(14	)
Income tax effect		(606	)		(182	)		(941	)		(380	)
Other comprehensive income		1,037			313			1,610			651
Comprehensive income	$	3,145		$	2,295		$	5,947		$	4,355

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

7

RIVER FINANCIAL CORPORATION

Unaudited Consolidated Statements of Changes in Stockholders' Equity

(in thousands except share and per share data)

								Accumulated						Common
			Additional					Other						Stock			Total
	Common		Paid In		Retained			Comprehensive			Treasury			Related to			Stockholders'
	Stock		Capital		Earnings			Income (Loss)			Stock			KSOP			Equity
Balance at December 31, 2016	$	5,091	$	64,656	$	15,032		$	(2,153	)	$	(176	)	$	(623	)	$	81,827
Net income		-		-		4,337			-			-			-			4,337
Other comprehensive income		-		-		-			1,610			-			-			1,610
Exercise of stock options and warrants  (24,800 shares)		19		137		-			-			108			-			264
Purchase of treasury stock (1,757 shares)		-		-		-			-			(36	)		-			(36	)
Sale of treasury shares (5,551 shares)		-		8		-			-			104						112
Issuance of common stock (4,204 shares)		4		81		-			-			-			-			85
Dividends declared ($0.25 per share)		-		-		(1,272	)		-			-			-			(1,272	)
Stock compensation expense		-		27		-			-			-			-			27
Change for KSOP related shares		-		-		-			-			-			(111	)		(111	)
Balance at June 30, 2017	$	5,114	$	64,909	$	18,097		$	(543	)	$	-		$	(734	)	$	86,843

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

8

RIVER FINANCIAL CORPORATION

Unaudited Consolidated Statements of Cash Flows

(in thousands)

	For the Six  Months
	Ended June 30,
	2017			2016
Cash Flows From (Used For) Operating Activities:
Net Income	$	4,337		$	3,704
Adjustments to reconcile net income to net cash from operating activities:
Provision for loan losses		720			447
Provision for losses on foreclosed assets		60			90
Amortization of securities available-for-sale		1,136			804
Accretion of securities available-for-sale		(16	)		(16	)
Realized net gain on securities available-for-sale		(3	)		(14	)
Accretion of discount on acquired loans		(1,262	)		(1,040	)
Amortization of deferred loan fees		(525	)		(221	)
Amortization of core deposit intangible asset		291			333
Stock compensation expense		27			29
Bank owned life insurance income		(209	)		(214	)
Depreciation and amortization of premises and equipment		453			416
Loss (gain) on sale of foreclosed assets		(55	)		9
Deferred income tax (benefit)		157			478
(Increase) decrease in operating assets and (decrease) increase in operating liabilities:
Loans held-for-sale		3,934			(593	)
Accrued interest receivable		52			99
Other assets		(461	)		746
Accrued interest payable and other liabilities		(649	)		(1,533	)
Net cash from operating activities		7,987			3,524
Cash Flows From (Used For) Investing Activities:
Maturity of certificate of deposit		249			-
Purchase of certificate of deposit		(249	)		-
Activity in securities available-for-sale:
Sales		13,246			13,306
Maturities, payments, calls		12,143			7,564
Purchases		(47,743	)		(12,173	)
Loan principal originations, net		(2,476	)		(19,015	)
Proceeds from sale of foreclosed assets		2,017			304
Payment to Keystone shareholders		-			(7,274	)
Purchases of premises and equipment		(1,042	)		(868	)
(Purchase) sale of restricted equity securities, net		(509	)		62
Net cash used for investing activities		(24,364	)		(18,094	)
Cash Flows From (Used For) Financing Activities:
Net (decrease) increase in deposits		(16,647	)		30,103
Net decrease in securities sold under agreements to repurchase		4,051			(2,186	)
Proceeds from Federal Home Loan Bank advances		20,000			6,750
Repayment of Federal Home Loan Bank advances		(10,000	)		(15,250	)
Proceeds from issuance of note payable		-			7,500
Repayment of note payable		(535	)		(536	)
Proceeds from issuance of common stock		85			-
Proceeds from exercise of common stock options and warrants		264			2,457
Purchase of treasury stock		(36	)		(28	)
Sale of treasury stock		112			-
Cash dividends		(1,272	)		(812	)
Net cash from (used for) financing activities		(3,978	)		27,998
Net Change In Cash And Cash Equivalents		(20,355	)		13,428
Cash and Cash Equivalents At Beginning Of Period		42,499			31,002
Cash and Cash Equivalents At End Of Period	$	22,144		$	44,430
Supplemental Disclosures Of Cash Flows Information:
Cash Payments For:
Interest paid to depositors	$	1,186		$	1,141
Interest paid on borrowings	$	167		$	169
Income taxes	$	2,029		$	1,200
Non-cash investing and financing activities:
Transfer of loans to foreclosed assets	$	2,428		$	-

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

9

River Financial Corporation

Notes to Unaudited Consolidated Financial Statements

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

Note 1 – Basis of Presentation

General

The unaudited consolidated financial statements include the accounts of River Financial Corporation (“River” or the “Company”) and its wholly owned subsidiary, River Bank & Trust (“Bank”). The Bank provides a full range of commercial and consumer banking services primarily in the Montgomery, Alabama metropolitan area, Lee and Etowah counties and surrounding counties in Alabama. The Bank is primarily regulated by the Federal Deposit Insurance Corporation (“FDIC”) and undergoes periodic examinations by this regulatory agency and the Alabama Banking Department.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly River Financial Corporation’s consolidated statements of financial condition, statements of income, statements of comprehensive income, statements of changes in stockholders’ equity and statements of cash flows for the periods presented, and all such adjustments are of a normal recurring nature. All material intercompany transactions are eliminated. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the entire year.

These interim consolidated financial statements have been prepared according to the rules and regulations of the Securities and Exchange Commission and, therefore, certain information and note disclosures normally presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted or abbreviated. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes as of December 31, 2016, which are contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events and actions River may undertake in the future. Estimates are used in accounting for, among other items, the allowance for loan losses, foreclosed asset valuations, useful lives for depreciation and amortization, fair value of financial instruments, deferred taxes, and contingencies. Estimates that are particularly susceptible to significant change for River include the determination of the allowance for loan losses, investment securities impairment, assessment of deferred tax assets and liabilities, and business combination related fair value estimates, and therefore are critical accounting policies. Management does not anticipate any material changes to estimates in the near term. Factors that may cause sensitivity to the aforementioned estimates include but are not limited to: external market factors such as market interest rates and employment rates, changes to operating policies and procedures, economic conditions in our markets, and changes in applicable banking regulations. Actual results may ultimately differ from estimates, although management does not generally believe such differences would materially affect the consolidated financial statements in any individual reporting period presented.

Note 2 – Reclassifications

Certain prior period amounts have been reclassified to conform to the presentation used in 2017. These reclassifications had no material effect on the operations, financial condition or cash flows of the Company.

The Company’s 401(k) employee stock ownership plan (KSOP) includes a "put option" for shares of the Company’s common stock distributed from the KSOP. Shares are distributed from the KSOP primarily to separate vested participants and certain eligible participants who elect to diversify their account balances. Since the Company’s common stock is not currently traded on an established securities market, if the owners of distributed shares desire to sell their shares, the Company is required to purchase the shares at fair value during two put option periods following the distribution of the shares from the KSOP. The first put option period is within sixty days following the distribution of the shares from the KSOP.  The second put option period begins on the first day of the fifth month of the plan year for a sixty day period.  The distributed shares subject to the put option and the shares held by the KSOP (KSOP shares) were previously recorded in permanent equity. Due to the Company’s obligation under the put option, the distributed shares and KSOP shares should be classified as temporary equity in the mezzanine section of the consolidated statements of financial condition. This change in classification resulted in the December 31, 2016 permanent equity decreasing $623 thousand and temporary equity increasing by $623 thousand from amounts previously reported. Based on an analysis of quantitative and qualitative factors, this change in classification was deemed immaterial for all periods previously reported. See Note 9.

10

Note 3 – Earnings Per Share

Basic earnings per common share are computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per common share are computed by dividing net income by the effect of the issuance of potential common shares that are dilutive and by the sum of the weighted-average number of shares of common stock outstanding. All shares owned by the Company’s 401(k) Employee Stock Ownership Plan (KSOP) are included in the earnings per share calculations.

The reconciliation of the components of the basic and diluted earnings per share is as follows:

	For the Three Months				For the Six  Months
	Ended June 30,				Ended June 30,
	2017			2016	2017			2016
Net earnings available to common shareholders	$	2,108	$	1,982	$	4,337	$	3,704
Weighted average common shares outstanding		5,093,273		5,077,167		5,088,971		4,971,608
Dilutive effect of stock options		69,766		60,884		73,223		69,625
Dilutive effect of stock warrants		2,202		3,183		2,987		27,985
Diluted common shares		5,165,241		5,141,234		5,165,181		5,069,218
Basic earnings per common share	$	0.41	$	0.39	$	0.85	$	0.75
Diluted earnings per common share	$	0.41	$	0.39	$	0.84	$	0.73

Note 4 – Investment Securities

Securities available-for-sale at June 30, 2017 and December 31, 2016 are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair  Value
June 30, 2017:
Securities available-for-sale:
Residential mortgage-backed	$	134,241	$	185	$	(1,692	)	$	132,734
U.S. govt. sponsored enterprises		17,126		97		(107	)		17,116
State, county, and municipal		54,817		881		(187	)		55,511
Corporate debt obligations		1,825		9		(47	)		1,787
Totals	$	208,009	$	1,172	$	(2,033	)	$	207,148

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair  Value
December 31, 2016:
Securities available-for-sale:
Residential mortgage-backed	$	111,611	$	63	$	(2,999	)	$	108,675
U.S. govt. sponsored enterprises		15,506		44		(223	)		15,327
State, county, and municipal		57,837		562		(813	)		57,586
Corporate debt obligations		1,819		4		(50	)		1,773
Totals	$	186,773	$	673	$	(4,085	)	$	183,361

Management evaluates securities for other-than-temporary impairment on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

11

Details concerning investment securities with unrealized losses as of June 30, 2017 and December 31, 2016 are as follows:

	Less Than 12 Months				More Than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
June 30, 2017:
Securities available-for-sale:
Residential mortgage-backed	$	90,885	$	1,590	$	5,128	$	102	$	96,013	$	1,692
U.S. govt. sponsored enterprises		4,022		69		1,306		38		5,328		107
State, county & municipal		14,896		154		6,458		33		21,354		187
Corporate debt obligations		345		29		983		18		1,328		47
Totals	$	110,148	$	1,842	$	13,875	$	191	$	124,023	$	2,033
December 31, 2016:
Securities available-for-sale:
Residential mortgage-backed	$	98,033	$	2,999	$	-	$	-	$	98,033	$	2,999
U.S. govt. sponsored enterprises		10,733		149		1,376		74		12,109		223
State, county & municipal		35,062		813		-		-		35,062		813
Corporate debt obligations		1,319		50		-		-		1,319		50
Totals	$	145,147	$	4,011	$	1,376	$	74	$	146,523	$	4,085

As of June 30, 2017, management does not consider securities with unrealized losses to be other-than-temporarily impaired. The unrealized losses in each category have occurred as a result of changes in interest rates, market spreads and market conditions subsequent to purchase. River has the ability and intent to hold its securities for a period of time sufficient to allow for a recovery in fair value. There were no other-than-temporary impairments charged to earnings during the six months ended June 30, 2017 or 2016.  The Company owned a total of 114 securities with unrealized losses of $2,033 at June 30, 2017. As of June 30, 2017 and December 31, 2016, securities with a carrying value of approximately $24,357 and $29,873, respectively, were pledged to secure public deposits as required by law. At June 30, 2017 and December 31, 2016, the carrying value of securities pledged to secure repurchase agreements was approximately $22,055 and $18,392, respectively.    

During the six months ended June 30, 2017, River sold investment securities for proceeds of $13,246 and realized gains of $3.  During the six months ended June 30, 2016, River sold investment securities for proceeds of $13,306 and realized gains of $14.  

The amortized cost and estimated fair value of securities available-for-sale at June 30, 2017, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities for residential mortgage backed securities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties.  These securities are therefore not presented by maturity classification.  

	Amortized Cost		Fair Value
	(In Thousands)
Securities available-for-sale
Less than 1 year	$	6,165	$	6,161
1 to 5 years		19,828		19,874
5 to 10 years		14,069		14,128
After 10 years		33,706		34,251
		73,768		74,414
Residential mortgage-backed securities		134,241		132,734
Totals	$	208,009	$	207,148

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Note 5 – Loans, Allowance for Loan Losses and Credit Quality

Major classifications of loans at June 30, 2017 and December 31, 2016 are summarized as follows:

	June 30, 2017						December 31, 2016
	Amount			% of Total			Amount			% of Total
Residential real estate:
Closed-end 1-4 family - first lien	$	112,018			21.8	%	$	113,807			22.2	%
Closed-end 1-4 family - junior lien		4,104			0.8	%		4,791			0.9	%
Multi-family		14,907			2.9	%		17,043			3.3	%
Total residential real estate		131,029			25.5	%		135,641			26.4	%
Commercial real estate:
Nonfarm nonresidential		162,387			31.6	%		161,198			31.5	%
Farmland		13,255			2.6	%		13,344			2.6	%
Total commercial real estate		175,642			34.2	%		174,542			34.1	%
Construction and land development:
Residential		22,928			4.5	%		27,228			5.3	%
Other		37,437			7.3	%		37,221			7.3	%
Total construction and land development		60,365			11.8	%		64,449			12.6	%
Home equity lines of credit		34,028			6.6	%		35,761			7.0	%
Commercial loans:
Other commercial loans		90,846			17.7	%		81,198			15.8	%
Agricultural		935			0.2	%		887			0.2	%
State, county, and municipal loans		8,290			1.6	%		8,719			1.7	%
Total commercial loans		100,071			19.5	%		90,804			17.7	%
Consumer loans		21,087			4.1	%		20,858			4.1	%
Total gross loans		522,222			101.7	%		522,055			101.9	%
Allowance for loan losses		(4,401	)		-0.9	%		(4,007	)		-0.8	%
Net deferred loan fees and discounts		(4,272	)		-0.8	%		(5,614	)		-1.1	%
Net loans	$	513,549			100.0	%	$	512,434			100.0	%

The Bank grants loans and extensions of credit to individuals and a variety of businesses and corporations located in its general trade area. Although the Bank has a diversified loan portfolio, a substantial portion of the loan portfolio is collateralized by improved and unimproved real estate and is dependent upon the real estate market. Relevant risk characteristics for these portfolio segments generally include debt service coverage, loan-to-value ratios and financial performance on non-consumer loans and credit scores, debt-to-income, collateral type and loan-to-value ratios for consumer loans.

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The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method for the periods indicated:

	Real Estate Mortgage Loans
						Construction			Home Equity
						and Land			Lines
Allowance for Loan Losses	Residential		Commercial			Development			Of Credit			Commercial			Consumer			Total
Balance - December 31, 2016	$	563	$	1,506		$	723		$	187		$	829		$	199		$	4,007
Provision for loan losses		252		76			(42	)		206			151			77			720
Loan charge-offs		-		(115	)		-			(100	)		(114	)		(85	)		(414	)
Loan recoveries		6		9			6			2			52			13			88
Balance - June 30, 2017	$	821	$	1,476		$	687		$	295		$	918		$	204		$	4,401
Ending balance:
Individually evaluated for impairment	$	279	$	380		$	-		$	-		$	408		$	26		$	1,093
Collectively evaluated for impairment		542		1,096			687			295			510			178			3,308
Total	$	821	$	1,476		$	687		$	295		$	918		$	204		$	4,401
Loans:
Individually evaluated for impairment	$	2,459	$	2,701		$	-		$	100		$	592		$	48		$	5,900
Collectively evaluated for impairment		128,570		172,941			60,365			33,928			99,479			21,039			516,322
Total	$	131,029	$	175,642		$	60,365		$	34,028		$	100,071		$	21,087		$	522,222

	Real Estate Mortgage Loans
						Construction		Home Equity
						and Land		Lines
Allowance for Loan Losses	Residential		Commercial			Development		Of Credit			Commercial			Consumer			Total
Balance - December 31, 2015	$	368	$	1,302		$	569	$	150		$	1,250		$	188		$	3,827
Provision for loan losses		106		(282	)		576		(23	)		22			48			447
Loan charge-offs		-		-			-		(10	)		(206	)		(9	)		(225	)
Loan recoveries		-		-			7		20			38			7			72
Balance - June 30, 2016	$	474	$	1,020		$	1,152	$	137		$	1,104		$	234		$	4,121
Ending balance:
Individually evaluated for  impairment	$	73	$	333		$	5	$	-		$	751		$	-		$	1,162
Collectively evaluated for impairment		401		687			1,147		137			353			234			2,959
Total	$	474	$	1,020		$	1,152	$	137		$	1,104		$	234		$	4,121
Loans:
Individually evaluated for impairment	$	1,215	$	4,937		$	78	$	100		$	838		$	-		$	7,168
Collectively evaluated for impairment		131,372		165,957			65,774		33,189			82,701			20,168			499,161
Total	$	132,587	$	170,894		$	65,852	$	33,289		$	83,539		$	20,168		$	506,329

Among other loans, the Bank individually evaluates for impairment all nonaccrual loans and troubled debt restructured loans.  A loan is considered impaired when, based on current events and circumstances it is probable that all amounts due according to the contractual terms of the loan will not be collected. Impaired loans are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate, at the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent. Management may also elect to apply an additional collective reserve to groups of impaired loans based on current economic or market factors. Interest payments received on impaired loans are generally applied as a reduction of the outstanding principal balance.

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The following table presents impaired loans by class of loans as of June 30, 2017.

Nonaccruing Impaired Loans	Total Impaired Loans		Impaired Loans With No Allowance		Impaired Loans With Allowance		Allowance for Loan Losses
Mortgage loans on real estate:
Residential	$	1,509	$	90	$	1,419	$	279
Commercial real estate		848		255		593		87
Construction and land development		-		-		-		-
Total mortgage loans on real estate		2,357		345		2,012		366
Home equity lines of credit		-		-		-		-
Commercial loans		54		54		-		-
Consumer loans		-		-		-		-
Total Loans	$	2,411	$	399	$	2,012	$	366

Accruing Impaired Loans	Total Impaired Loans		Impaired Loans With No Allowance		Impaired Loans With Allowance		Allowance for Loan Losses
Mortgage loans on real estate:
Residential	$	950	$	950	$	-	$	-
Commercial real estate		1,853		563		1,290		293
Construction and land development		-		-		-		-
Total mortgage loans on real estate		2,803		1,513		1,290		293
Home equity lines of credit		100		100		-		-
Commercial loans		538		132		406		408
Consumer loans		48		-		48		26
Total Loans	$	3,489	$	1,745	$	1,744	$	727

Total Impaired Loans	Total Impaired Loans		Impaired Loans With No Allowance		Impaired Loans With Allowance		Allowance for Loan Losses
Mortgage loans on real estate:
Residential	$	2,459	$	1,040	$	1,419	$	279
Commercial real estate		2,701		818		1,883		380
Construction and land development		-		-		-		-
Total mortgage loans on real estate		5,160		1,858		3,302		659
Home equity lines of credit		100		100		-		-
Commercial loans		592		186		406		408
Consumer loans		48		-		48		26
Total Loans	$	5,900	$	2,144	$	3,756	$	1,093

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The following table presents impaired loans by class of loans as of December 31, 2016.

Nonaccruing Impaired Loans	Total Impaired Loans		Impaired Loans With No Allowance		Impaired Loans With Allowance		Allowance for Loan Losses
Mortgage loans on real estate:
Residential	$	223	$	96	$	127	$	53
Commercial real estate		3,470		1,010		2,460		430
Construction and land development		-		-		-		-
Total mortgage loans on real estate		3,693		1,106		2,587		483
Home equity lines of credit		100		100		-		-
Commercial loans		93		93		-		-
Consumer loans		-		-		-		-
Total Loans	$	3,886	$	1,299	$	2,587	$	483

Accruing Impaired Loans	Total Impaired Loans		Impaired Loans With No Allowance		Impaired Loans With Allowance		Allowance for Loan Losses
Mortgage loans on real estate:
Residential	$	978	$	978	$	-	$	-
Commercial real estate		1,905		589		1,316		317
Construction and land development		31		31		-		-
Total mortgage loans on real estate		2,914		1,598		1,316		317
Home equity lines of credit		100		100		-		-
Commercial loans		592		136		456		456
Consumer loans		39		-		39		19
Total Loans	$	3,645	$	1,834	$	1,811	$	792

Total Impaired Loans	Total Impaired Loans		Impaired Loans With No Allowance		Impaired Loans With Allowance		Allowance for Loan Losses
Mortgage loans on real estate:
Residential	$	1,201	$	1,074	$	127	$	53
Commercial real estate		5,375		1,599		3,776		747
Construction and land development		31		31		-		-
Total mortgage loans on real estate		6,607		2,704		3,903		800
Home equity lines of credit		200		200		-		-
Commercial loans		685		229		456		456
Consumer loans		39		-		39		19
Total Loans	$	7,531	$	3,133	$	4,398	$	1,275

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The following table presents the average recorded investment in impaired loans and the interest income recognized on impaired loans in the six months ended June 30, 2017 and 2016 by loan category.

	Six  Months Ended						Six  Months Ended
	June 30, 2017						June 30, 2016
	Average		Ending				Average		Ending
	Recorded		Recorded		Interest		Recorded		Recorded		Interest
	Investment		Investment		Income		Investment		Investment		Income
Mortgage loans on real estate:
Residential real estate	$	1,966	$	2,459	$	35	$	1,221	$	1,215	$	37
Commercial real estate		3,275		2,701		49		4,035		4,937		71
Construction and land development		10		-		-		83		78		3
Total mortgage loans on real estate		5,251		5,160		84		5,339		6,230		111
Home equity lines of credit		67		100		3		100		100		2
Commercial loans		586		592		13		1,137		838		13
Consumer loans		24		48		1		-		-		-
Total Loans	$	5,928	$	5,900	$	101	$	6,576	$	7,168	$	126

The following tables present the aging of loans and non-accrual loan balances as of June 30, 2017 and December 31, 2016, by class of loans.

	Accruing Loans
As of June 30, 2017	Current		30-89 Days Past Due		90+ Days Past Due		Nonaccrual Loans		Total Loans
Mortgage loans on real estate:
Residential	$	128,043	$	1,273	$	71	$	1,642	$	131,029
Commercial real estate		174,005		715		1		921		175,642
Construction and land development		60,235		71		-		59		60,365
Total mortgage loans on real estate		362,283		2,059		72		2,622		367,036
Home equity lines of credit		33,911		55		-		62		34,028
Commercial loans		99,007		1,010		-		54		100,071
Consumer loans		20,808		139		91		49		21,087
Total Loans	$	516,009	$	3,263	$	163	$	2,787	$	522,222

	Accruing Loans
As of December 31, 2016	Current		30-89 Days Past Due		90+ Days Past Due		Nonaccrual Loans		Total Loans
Mortgage loans on real estate:
Residential	$	132,603	$	2,585	$	-	$	453	$	135,641
Commercial real estate		170,363		708		-		3,471		174,542
Construction and land development		64,111		312		-		26		64,449
Total mortgage loans on real estate		367,077		3,605		-		3,950		374,632
Home equity lines of credit		35,257		320		-		184		35,761
Commercial loans		90,579		76		19		130		90,804
Consumer loans		20,431		285		20		122		20,858
Total Loans	$	513,344	$	4,286	$	39	$	4,386	$	522,055

The Bank categorizes loans in risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Bank analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a continuous basis. The Bank uses the following definitions for its risk ratings:

Special Mention - Weakness exists that could cause future impairment, including the deterioration of financial ratios, past due status and questionable management capabilities. Collateral values generally afford adequate coverage but may not be immediately marketable.

Substandard - Specific and well-defined weaknesses exist that may include poor liquidity and deterioration of financial ratios. The loan may be past due and related deposit accounts experiencing overdrafts. Immediate corrective action is necessary.

17

Doubtful - Specific weaknesses characterized as Substandard that are severe enough to make collection in full unlikely. There is no reliable secondary source of full repayment. Loans classified as doubtful will be placed on non-accrual, analyzed and fully or partially charged-off based on review of collateral and other relevant factors.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be Pass rated loans. As of June 30, 2017 and December 31, 2016, and based on the most recent analysis performed as of those dates, the risk category of loans by class of loans is as follows:

As of June 30, 2017	Pass		Special Mention		Substandard		Doubtful		Total
Mortgage loans on real estate:
Residential	$	125,150	$	2,794	$	3,085	$	-	$	131,029
Commercial real estate		166,493		6,555		2,594		-		175,642
Construction and land development		59,446		771		148		-		60,365
Total mortgage loans on real estate		351,089		10,120		5,827		-		367,036
Home equity lines of credit		33,734		108		186		-		34,028
Commercial loans		97,257		2,189		625		-		100,071
Consumer loans		20,697		187		203		-		21,087
Total Loans	$	502,777	$	12,604	$	6,841	$	-	$	522,222

As of December 31, 2016	Pass		Special Mention		Substandard		Doubtful		Total
Mortgage loans on real estate:
Residential	$	125,983	$	6,272	$	3,386	$	-	$	135,641
Commercial real estate		165,381		3,837		5,324		-		174,542
Construction and land development		63,151		605		451		242		64,449
Total mortgage loans on real estate		354,515		10,714		9,161		242		374,632
Home equity lines of credit		35,344		109		308		-		35,761
Commercial loans		87,684		2,357		649		114		90,804
Consumer loans		20,433		211		214		-		20,858
Total Loans	$	497,976	$	13,391	$	10,332	$	356	$	522,055

Note 6 – Fair Value Measurements and Disclosures

River utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Securities available-for-sale are recorded at fair value on a recurring basis. Additionally, from time to time, River may be required to record at fair value other assets on a nonrecurring basis, such as impaired loans and foreclosed assets. These nonrecurring fair value adjustments typically involve application of the lower of cost or market accounting or write-downs of individual assets.

Fair Value Hierarchy

River groups assets and liabilities 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. These levels are:

Level 1 – Valuation is based upon quoted prices for identical instruments traded in active markets.

Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

18

Following is a description of valuation methodologies used for assets and liabilities recorded or disclosed at fair value.

Cash and cash equivalents – For disclosure purposes, for cash, due from banks, interest-bearing deposits and federal funds sold, the carrying amount is a reasonable estimate of fair value.

Certificates of deposit – For disclosure purposes, the carrying amount of certificates of deposit is a reasonable estimate of fair value.

Securities available-for-sale – Securities available-for-sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, repayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange and U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter market funds. Level 2 securities included mortgage-backed securities issued by government sponsored enterprises and municipal bonds. Securities classified as Level 3 include asset-backed securities in less liquid markets.

Restricted equity securities - It is not practical to determine the fair value of restricted equity securities due to restrictions placed on transferability.

Loans – River Financial Corporation does not record loans at fair value on a recurring basis. However, from time to time, a loan is considered impaired and an allowance for loan losses is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. When a loan is identified as individually impaired, management measures impairment using one of three methods, including collateral value, market value of similar debt, and discounted cash flows. Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. As of June 30, 2017 and December 31, 2016, impaired loans were evaluated based on the fair value of the collateral. Impaired loans for which an allowance is established based on the fair value of collateral, or loans that were charged down according to the fair value of collateral, require classification in the fair value hierarchy. When the fair value of the collateral is based on an observable market price, River Financial Corporation records the impaired loan as nonrecurring Level 2. When the fair value is based on an appraised value, River Financial Corporation records the impaired loan as nonrecurring Level 3.

For disclosure purposes, the fair value of fixed rate loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings. For variable rate loans, the carrying amount is a reasonable estimate of fair value.

Cash value of bank owned life insurance – For disclosure purposes, the fair value of the cash surrender value of bank owned life insurance policies is equivalent to the carrying value.

Deposit liabilities – For disclosure purposes, the fair value for demand deposits, savings accounts, and certain money market deposits is the amount payable on demand at the reporting date. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered for deposits of similar remaining maturities.

Securities sold under agreements to repurchase – For disclosure purposes, the carrying amounts of securities sold under agreements to repurchase approximate their fair values.

Federal Home Loan Bank advances – For disclosure purposes the fair value of Federal Home Loan Bank advances is estimated using discounted cash flow analyses using interest rates offered for borrowings with similar maturities.

Note Payable – For disclosure purposes the carrying amount of the floating rate note payable approximates fair value.

19

Assets and liabilities measured at fair value on a recurring basis - The only assets and liabilities measured at fair value on a recurring basis are our securities available-for-sale.  Information related to River’s assets and liabilities measured at fair value on a recurring basis at June 30, 2017 and December 31, 2016 is as follows:

	Fair Value Measurements At Reporting Date Using:
June 30, 2017	Fair Value		Quoted Prices In Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Securities available-for-sale:
Residential mortgage -backed	$	132,734	$	-	$	132,734	$	-
U.S. government sponsored enterprises		17,116		-		17,116		-
State, county, and municipal		55,511		-		55,511		-
Corporate debt obligations		1,787		-		1,787		-
Totals	$	207,148	$	-	$	207,148	$	-

	Fair Value Measurements At Reporting Date Using:
December 31, 2016	Fair Value		Quoted Prices In Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Securities available-for-sale:
Residential mortgage -backed	$	108,675	$	-	$	108,675	$	-
U.S. government sponsored enterprises		15,327		-		15,327		-
State, county, and municipal		57,586		-		57,586		-
Corporate debt obligations		1,773		-		1,773		-
Totals	$	183,361	$	-	$	183,361	$	-

Assets measured at fair value on a nonrecurring basis - River has assets that, under certain conditions, are subject to measurement at fair value on a non-recurring basis.  The following table presents the financial instruments carried on the statement of financial position by caption and by level in the fair value hierarchy, for which a non-recurring change in fair value has been recorded as of June 30, 2017 and December 31, 2016:

	Fair Value Measurements At Reporting Date Using:
June 30, 2017	Fair Value		Quoted Prices In Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans	$	4,807	$	-	$	-	$	4,807
Foreclosed assets		1,557		-		-		1,557
Totals	$	6,364	$	-	$	-	$	6,364

December 31, 2016	Fair Value		Quoted Prices In Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans	$	6,256	$	-	$	-	$	6,256
Foreclosed assets		1,151		-		-		1,151
Totals	$	7,407	$	-	$	-	$	7,407

River has estimated the fair values of these assets using Level 3 inputs, specifically the appraised value of the collateral. Impaired loan balances represent those collateral dependent impaired loans where management has estimated the credit loss by comparing the loan’s carrying value against the expected realizable fair value of the impaired loan for the amount of the credit loss.

20

The estimated fair values, and related carrying or notional amounts, of River’s financial instruments as of June 30, 2017 and December 31, 2016 are as follows:

			Estimated Fair Value
June 30, 2017	Carrying Amount		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	22,144	$	22,144	$	-	$	-
Certificates of deposit in banks		5,463		-		5,463		-
Securities available-for-sale		207,148		-		207,148		-
Loans held-for-sale		3,800		-		3,800		-
Restricted equity securities		1,259		-		-		1,259
Loans receivable		513,549		-		511,250		4,807
Bank owned life insurance		15,370		-		15,370		-
Accrued interest receivable		2,324		-		2,324		-
Financial liabilities:
Deposits		688,266		-		687,453		-
Accrued interest payable		113		-		113		-
Securities sold under agreements to repurchase		17,085		-		17,085		-
Federal Home Loan Bank advances		10,000		-		9,998		-
Note payable		5,893		-		5,893		-

			Estimated Fair Value
December 31, 2016	Carrying Amount		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	42,499	$	42,499	$	-	$	-
Certificates of deposit in banks		5,463		-		5,463		-
Securities available-for-sale		183,361		-		183,361		-
Loans held-for-sale		7,734		-		7,734		-
Restricted equity securities		751		-		-		751
Loans receivable		512,434		-		506,178		6,256
Bank owned life insurance		15,161		-		15,161		-
Accrued interest receivable		2,376		-		2,376		-
Financial liabilities:
Deposits		704,913		-		688,591		-
Accrued interest payable		130		-		130		-
Securities sold under agreements to repurchase		13,034		-		13,034		-
Note payable		6,428		-		6,428		-

The estimated fair values of the standby letters of credit and loan commitments on which the committed interest rate is less than the current market rate are insignificant at June 30, 2017 and December 31, 2016.

River assumes interest rate risk (the risk that general interest rate levels will change) as a result of its normal operations.  As a result, the fair values of River’s financial instruments will change when interest rate levels change and that change may be either favorable or unfavorable to River. Management attempts to match maturities of assets and liabilities to the extent believed necessary to minimize interest rate risk.  However, borrowers with fixed-rate obligations are less likely to prepay in a rising rate environment and more likely to prepay in a falling rate environment. Conversely, depositors who are receiving fixed-rates are more likely to withdraw funds before maturity in a rising rate environment and less likely to do so in a falling-rate environment.  Management monitors rates and maturities of assets and liabilities, and attempts to minimize interest rate risk by adjusting terms of new loans and deposits and by investing in securities with terms that mitigate the Company’s overall interest rate risk.

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Note 7 – Acquisition

On December 31, 2015, Keystone Bancshares, Inc. (“Keystone”) was merged with and into River. Concurrent with the merger of River and Keystone, Keystone Bank was merged with and into River Bank & Trust. Under the terms of the merger agreement, shareholders of Keystone immediately prior to the effective time of the merger received one share of River common stock in exchange for each outstanding share of Keystone common stock held and $4.00 in cash. In addition, persons holding options or warrants to acquire Keystone common stock received options or warrants to acquire 1.25 shares of River common stock for each option or warrant at a purchase price equal to the original exercise price divided by 1.25. River issued 1,818,492 shares of River common stock to Keystone shareholders and made cash payments to Keystone shareholders of approximately $7,274.    

Note 8 – Recently Issued Accounting Pronouncements

In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718).  ASU 2016-09 amended existing guidance to simplify the accounting for share-based payment award transactions, including:  a) income tax consequences; b) classification of awards as either equity or liabilities; c) classification on the statement of cash flows; and d) policy election to estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur.  For public business entities, the amendments of this ASU are effective fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The adoption of this standard did not have a material effect on the Company’s operating results or financial condition.

In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606)—Deferral of the Effective Date. ASU 2015-14 defers the effective date of ASU 2014-09, Revenue from Contracts with Customers, which supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, by one year. ASU 2014-09 is based on the principle that revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. Under ASU 2015-14, ASU 2014-09 is now effective for annual periods beginning after December 15, 2017 and interim periods within those years. The Company is currently evaluating the effects of ASU 2014-09 on its financial statements and disclosures, if any. 

In January 2016, the FASB issued ASU 2016-01 Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This will enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The ASU addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Some of the amendments include the following: 1) Require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; 2)Simplify the impairment assessment of equity investment’s without readily determinable fair values by requiring a qualitative assessment to identify impairment; 3) Require public business entities to use exit price notion when measuring fair value of financial instruments for disclosure purposes; 4)Require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting in a change in the fair value of a liability resulting in a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value; among others. For public business entities, the amendments of this ASU are effective fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements. 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This will require lessees to recognize assets and liabilities that arise from leases on the balance sheet. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right of use asset representing its right to use the underlying asset for lease term. The new guidance is effective for annual and interim reporting periods beginning after December 15, 2018. The amendment should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements. 

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In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The new guidance will apply to most financial assets measured at amortized cost and certain other instruments including loans, debt securities held to maturity, net investments in leases and off-balance-sheet credit exposures. The guidance will replace the current incurred loss accounting model that delays recognition of a loss until it is probable a loss has been incurred with an expected loss model that reflects expected credit losses based upon a broader range of estimates including consideration of past events, current conditions and supportable forecasts. The guidance also eliminates the current accounting model for purchased credit impaired loans and debt securities. For securities available for sale, credit losses are to be recognized as allowances rather than reductions in the amortized cost of the securities, which will require re-measurement of the related allowance at each reporting period. The guidance includes enhanced disclosure requirements intended to help financial statement users better understand estimates and judgments used in estimating credit losses. The guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. However, entities can apply these amendments as early as fiscal years beginning after December 15, 2018. The Company is evaluating the impact to its consolidated financial statements upon adoption. 

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350):  Simplifying the Test for Goodwill Impairment. ASU 2017-04 was issued to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under the amendments in this Update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The amendments in this Update modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. An entity no longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. Because these amendments eliminate Step 2 from the goodwill impairment test, they should reduce the cost and complexity of evaluating goodwill for impairment. An entity should apply the amendments in this Update on a prospective basis. An entity is required to disclose the nature of and reason for the change in accounting principle upon transition. That disclosure should be provided in the first annual period and in the interim period within the first annual period when the entity initially adopts the amendments in this Update. A public business entity that is a U.S. Securities and Exchange Commission (SEC) filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019.  Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the effects of this update on its financial statements and disclosures, if any. 

In March 2017, the FASB issued ASU 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20):  Premium Amortization on Purchased Callable Debt Securities.   ASU 2017-08 will shorten the amortization period for certain callable debt securities held at a premium.  Specifically, the amendments require the premium to be amortized to the earliest call date whereas under current GAAP, the amortization is to the maturity. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The amendments in this Update more closely align the amortization period of premiums and discounts to expectations incorporated in market pricing on the underlying securities. Market participants generally price securities to the call date that produces the worst yield when the coupon is above current market rates (that is, the security is trading at a premium) and price securities to maturity when the coupon is below market rates (that is, the security is trading at a discount) in anticipation that the borrower will act in its economic best interest. As a result, the amendments more closely align interest income recorded on bonds held at a premium or a discount with the economics of the underlying instrument. An entity should apply the amendments in this Update on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Additionally, in the period of adoption, an entity should provide disclosures about a change in accounting principle. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.  Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The Company is currently evaluating the effects of this update on its financial statements and disclosures, if any.

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Note 9 – Defined Contribution Plan

The Company provides a 401(k) employee stock ownership plan (KSOP), which covers substantially all of the Company’s employees who are eligible, as to age and length of service. A participant may elect to make contributions up to $18,000 of the participant’s annual compensation in 2017 and 2016. The Company makes contributions up to 3% of each participant’s annual compensation and the Company matches 50% of the next 2% contributed by the employee. Contributions to the plan by Company were approximately $162 thousand and $137 thousand for the six months ended June 30, 2017 and 2016, respectively.  Outstanding shares of the Company’s common stock allocated to participants at June 30, 2017 and December 31, 2016 totaled 43,477 and 38,933, respectively, and there were no unallocated shares. These shares are treated as outstanding for purposes of calculating earnings per share and dividends on these shares are included in the Consolidated Statements of Stockholders’ Equity.

The Company’s KSOP includes a put option for shares of the Company’s common stock distributed from the KSOP. Shares are distributed from the KSOP primarily to separated vested participants and certain eligible participants who elect to diversify their account balances. Since the Company’s common stock is not currently traded on an established securities market, if the owners of distributed shares desire to sell their shares, the Company is required to purchase the shares at fair value during two put option periods following the distribution of the shares from the KSOP. The first put option period is within sixty days following the distribution of the shares from the KSOP.  The second put option period begins on the first day of the fifth month of the plan year for a sixty day period. The fair value of distributed shares subject to the put option totaled $0 and $0 as of June 30, 2017 and December 31, 2016, respectively. The cost of the KSOP shares totaled $734 thousand and $623 thousand as of June 30, 2017 and December 31, 2016, respectively. Due to the Company’s obligation under the put option, the distributed shares and KSOP shares are classified as temporary equity in the mezzanine section of the consolidated statements of financial condition and totaled $734 thousand and $623 thousand as of June 30, 2017 and December 31, 2016, respectively. The fair value of the KSOP shares totaled $989 thousand and $672 thousand as of June 30, 2017 and December 31, 2016, respectively.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read together with our condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes thereto for the year ended December 31, 2016, which are contained in the Annual Report on Form 10-K for the year ended December 31, 2016. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results could differ materially from those contained in forward-looking statements as a result of many factors, including those discussed in our 2016 Annual Report on Form 10-K under “Part I, Item 1A - Risk Factors,” as well as other unknown risks and uncertainties.

All dollar amounts in the tables in this section are in in thousands of dollars, except per share data, yields, percentages and rates or when specifically identified. As used in this Item, the words “we,” “us,” “our,” the “Company,” “RFC,” “River” and similar terms refer to River Financial Corporation and its consolidated affiliate, unless the context indicates otherwise.

Our Business

River is a bank holding company headquartered in Prattville, Alabama. We engage in the business of banking through our wholly-owned banking subsidiary, River Bank & Trust, which we may refer to as the “Bank,” or “River Bank.” Through the Bank, we provide a broad array of financial services to businesses, business owners, professionals, and consumers. As of June 30, 2017, we operated ten full-service banking offices in Alabama in the cities of Montgomery, Prattville, Millbrook, Wetumpka, Auburn, Opelika, Gadsden and Alexander City.

Overview of Second Quarter 2017 Results

Net income was $2,108 in the quarter ended June 30, 2017, compared with $1,982 in the quarter ended June 30, 2016. Several significant measures from the 2017 second quarter include:

• Net interest margin (taxable equivalent) of 4.13%, compared with 4.26% for the second quarter of 2016.

• Net interest income increase of $510 for the quarter ended June 30, 2017, representing a 7.38% rate of increase over the quarter ended June 30, 2016.

• Annualized return on average assets for the quarter ended June 30, 2017 of 1.05% compared with 1.08% for the quarter ended June 30, 2016.

• Annualized return on average equity for the quarter ended June 30, 2017 of 9.87% compared with 9.86 % for the quarter ended June 30, 2016.

• Loan increase of $7,855 during the quarter, representing a 3.08% annualized growth rate.

• Deposit decrease of $13,672 during the quarter, representing a -3.9% annualized growth rate.

• Stockholders’ equity growth of $3,441 during the quarter representing a 8.25% annualized growth rate.

• Book value per share of $17.13 at June 30, 2017, compared with $16.23 per share at December 31, 2016.

• Tangible book value per share of $14.80 at June 30, 2017, compared with $13.83 at December 31, 2016.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared based on the application of certain accounting policies, the most significant of which are described in the notes to the financial statements for the year ended December 31, 2016, which are contained in our Annual Report filed on Form 10-K. Certain of these policies require numerous estimates and strategic or economic assumptions that may prove inaccurate or subject to variation and may significantly affect our reported results and financial position for the current period or future periods. The use of estimates, assumptions, and judgment is necessary when financial assets and liabilities are required to be recorded at, or adjusted to reflect fair value. Assets carried at fair value inherently result in more financial statement volatility. Fair values and information used to record valuation adjustments for certain assets and liabilities are based on quoted market prices or are provided by other independent third-party sources, when available. When such information is not available, management estimates valuation adjustments. Changes in underlying factors, assumptions or estimates in any of these areas could have a material impact on our future financial condition and results of operations.

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The following briefly describes the more complex policies involving a significant amount of judgments about valuation and the application of complex accounting standards and interpretations.

Allowance for Loan Losses

We record estimated probable inherent credit losses in the loan portfolio as an allowance for loan losses. The methodologies and assumptions for determining the adequacy of the overall allowance for loan losses involve significant judgments to be made by management. Some of the more critical judgments supporting our allowance for loan losses include judgments about: creditworthiness of borrowers, estimated value of underlying collateral, assumptions about cash flow, determination of loss factors for estimating credit losses, and the impact of current events, conditions and other factors impacting the level of inherent losses. Under different conditions or using different assumptions, the actual or estimated credit losses that we may ultimately realize may be different than our estimates. In determining the allowance, we estimate losses on individual impaired loans, or groups of loans that are not impaired, where the probable loss can be identified and reasonably estimated. On a quarterly basis, we assess the risk inherent in our loan portfolio based on qualitative and quantitative trends in the portfolio, including the internal risk classification of loans, historical loss rates, changes in the nature and volume of the loan portfolio, industry or borrower concentrations, delinquency trends, detailed reviews of significant loans with identified weaknesses and the impact of local, regional and national economic factors on the quality of the loan portfolio. Based on this analysis, we may record a provision for loan losses in order to maintain the allowance at appropriate levels. For a more complete discussion of the methodology employed to calculate the allowance for loan losses, see note 1 to our consolidated financial statements for the year ended December 31, 2016, which are contained in our Annual Report on Form 10-K.

Investment Securities Impairment

We assess, on a quarterly basis, whether there have been any events or economic circumstances to indicate that a security on which there is an unrealized loss is impaired on an other-than-temporary basis. In such instance, we would consider many factors, including the severity and duration of the impairment, our intent and ability to hold the security for a period of time sufficient for a recovery in value, recent events specific to the issuer or industry, and for debt securities, external credit ratings and recent downgrades. Securities on which there is an unrealized loss that is deemed to be other-than-temporary are written down to fair value through current earnings.  

Income Taxes

Deferred income tax assets and liabilities are computed using the asset and liability method, which recognizes a liability or asset representing the tax effects, based on current tax law, of future deductible or taxable amounts attributable to events recognized in the financial statements. A valuation allowance may be established to the extent necessary to reduce the deferred tax asset to a level at which it is “more likely than not” that the tax assets or benefits will be realized. Realization of tax benefits depends on having sufficient taxable income, available tax loss carrybacks or credits, the reversing of taxable temporary differences and/or tax planning strategies within the reversal period and that current tax law allows for the realization of recorded tax benefits.

Business Combinations

Assets purchased and liabilities assumed in a business combination are recorded at their fair value. The fair value of a loan portfolio acquired in a business combination requires greater levels of management estimates and judgment than the remainder of purchased assets or assumed liabilities. On the date of acquisition, when the loans have evidence of credit deterioration since origination and it is probable at the date of acquisition that we will not collect all contractually required principal and interest payments, the difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as non-accretable difference. We must estimate cash flows at each reporting date. Subsequent decreases to the expected cash flows will generally result in a provision for loan losses. Subsequent increase in cash flows result in a reversal of the provision for loan losses to the extent of prior charges and adjusted accretable yield, which will have a positive impact on interest income. In addition, purchased loans with evidence of credit deterioration are also handled under this method.

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Comparison of the Results of Operations for the three and six months ended June 30, 2017 and 2016

The following is a narrative discussion and analysis of significant changes in our results of operations for the three and six months ended June 30, 2017 compared to the three and six months ended June 30, 2016.

Net Income

During the three months ended June 30, 2017, our net income was $2,108, compared to $1,982 for the three months ended June 30, 2016, an increase of $126, or 6.36%.

The primary reason for the increase in net income for the second quarter of 2017 as compared to the second quarter of 2016 was an increase in net interest income and an increase in noninterest income. During the three months ended June 30, 2017, net interest income was $7,419 compared to $6,909 for the three months ended June 30, 2016, an increase of $510, or 7.38%. This increase is a result of higher levels of loan volume and other earning assets from organic growth. Total noninterest income for the second quarter of 2017 was $1,372 compared to $1,233 for the quarter ended June 30, 2016. This increase was primarily the result of an increase of $135 and $121 in revenue from mortgage operations and service charges and fees, respectively. These increases were offset by a decrease in investment brokerage revenue of $85.  Total noninterest expense in the second quarter of 2017 increased $257, or 5.06%, from the second quarter of 2016. This increase was due to an increase of $300 and $152 in salaries and employee benefits and advertising and business development, respectively.  These increases were partially offset by decreases across several expense categories mainly related to expense savings resulting from the Keystone merger.

During the six months ended June 30, 2017, our net income was $4,337, compared to $3,704 for the six months ended June 30, 2016, an increase of $633, or 17.09%.

The primary reason for the increase in net income for the first half of 2017 as compared to the first half of 2016 was an increase in net interest income and an increase in noninterest income. During the first half of 2017, net interest income was $14,670 compared to $13,530 in the first half of 2016, an increase of $1,140, or 8.43%. This increase is a result of higher levels of loan volume and other earning assets from organic growth. Total noninterest income for the first half of 2017 was $2,679 compared to $2,245 in the first half of 2016. This increase was primarily the result of an increase of $349 and $220 in revenue from mortgage operations and service charges and fees, respectively. These increases were offset by a decrease in investment brokerage revenue of $103.  Total noninterest expense in the first half of 2017 increased $225, or 2.25%, from the first half of 2016. This increase was due to an increase of $469 and $155 in salaries and employee benefits and advertising and business development, respectively.  These increases were partially offset by decreases across several expense categories mainly related to expense savings resulting from the Keystone merger, including a $168 savings in legal and other professional services.

Net Interest Income and Net Interest Margin Analysis

The largest component of our net income is net interest income – the difference between the income earned on interest earning assets and the interest paid on deposits and borrowed funds used to support assets. Net interest income divided by average interest earning assets represents RFC’s net interest margin. The major factors that affect net interest income and net interest margin are changes in volumes, the yield on interest earning assets and the cost of interest bearing liabilities. Our net interest margin can also be affected by economic conditions, the competitive environment, loan demand, and deposit flow. Management’s ability to respond to changes in these factors by using effective asset-liability management techniques is critical to maintaining the stability of the net interest margin and the primary source of earnings. This is discussed in greater detail under the heading “Interest Sensitivity and Market Risk”

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Comparison of net interest income for the three months ended June 30, 2017 and 2016

The following table shows, for the three months ended June 30, 2017 and 2016, the average balances of each principal category of our earning assets and interest bearing liabilities and the average taxable equivalent yields on assets and average costs of liabilities. These yields and costs are calculated by dividing the income or expense by the average daily balance of the associated assets or liabilities.

	Three Months Ended June 30, 2017								Three Months Ended June 30, 2016
			Interest								Interest
	Average		Income/			Average			Average		Income/			Average
	Balance		Expense			Yield/Rate			Balance		Expense			Yield/Rate
Interest earning assets
Loans	$	511,845	$	6,975			5.47	%	$	495,466	$	6,805			5.52	%
Mortgage loans held for sale		4,745		30			2.54	%		3,942		5			0.51	%
Investment securities:
Taxable securities		154,806		768			1.99	%		82,422		374			1.83	%
Tax-exempt securities		53,043		408			3.08	%		55,902		405			2.91	%
Interest bearing balances in other banks		13,489		48			1.43	%		22,539		53			0.95	%
Federal funds sold		-		-			0.00	%		6,450		8			0.50	%
Total interest earning assets	$	737,928	$	8,229			4.47	%	$	666,721	$	7,650			4.61	%
Interest bearing liabilities
Interest bearing transaction accounts	$	189,157	$	114			0.24	%	$	174,032	$	108			0.25	%
Savings and money market accounts		191,181		174			0.37	%		178,434		164			0.37	%
Time deposits		138,924		259			0.75	%		137,399		234			0.68	%
Short-term debt		16,567		17			0.41	%		10,600		4			0.15	%
Federal Home Loan Bank advances		10,055		25			1.00	%		7,043		12			0.69	%
Note payable		6,158		63			4.05	%		7,229		64			3.50	%
Total interest bearing liabilities	$	552,042	$	652			0.48	%	$	514,737	$	586			0.46	%
Noninterest-bearing funding of earning assets		185,886		-			0.00	%		151,984		-			0.00	%
Total cost of funding earning assets	$	737,928	$	652			0.36	%	$	666,721	$	586			0.35	%
Net interest rate spread							4.00	%							4.16	%
Net interest income/margin (taxable equivalent)			$	7,577			4.13	%			$	7,064			4.26	%
Tax equivalent adjustment				(158	)							(155	)
Net interest income/margin			$	7,419			4.04	%			$	6,909			4.17	%

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The following table reflects, for the three months ended June 30, 2017 and 2016, the changes in our net interest income due to variances in the volume of interest earning assets and interest bearing liabilities and variances in the associated rates earned or paid on these assets and liabilities.

	Three Months Ended June 30, 2017 vs.
	Three Months Ended June 30, 2016
				Variance
				due to
	Volume			Yield/Rate			Total
Interest earning assets
Loans	$	239		$	(69	)	$	170
Mortgage loans held for sale		1			24			25
Investment securities:		-			-
Taxable securities		331			63			394
Tax-exempt securities		(19	)		22			3
Interest bearing balances in other banks		(21	)		16			(5	)
Federal funds sold		(8	)		-			(8	)
Total interest earning assets	$	523		$	56		$	579
Interest bearing liabilities
Interest bearing transaction accounts	$	10		$	(4	)	$	6
Savings and money market accounts		13			(3	)		10
Time deposits		1			24			25
Short-term debt		2			11			13
Federal Home Loan Bank advances		5			8			13
Note payable		(9	)		8			(1	)
Total interest bearing liabilities	$	22		$	44		$	66
Net interest income
Net interest income (taxable equivalent)	$	501		$	12		$	513
Taxable equivalent adjustment		(63	)		60			(3	)
Net interest income	$	438		$	72		$	510

Total interest income for the three months ended June 30, 2017 was $8,071 and total interest expense was $652, resulting in net interest income of $7,419 for the period. For the same period of 2016, total interest income was $7,495 and total interest expense was $586, resulting in net interest income of $6,909 for the period. This represents a 7.38% increase in net interest income when comparing the same period from 2017 and 2016. When comparing the variances related to interest income for the three months ended June 30, 2017 and 2016, the increase was primarily attributed to increases in average volumes in loans and taxable securities. When comparing variances related to interest expense for the three months ended June 30, 2017 and 2016, the increase resulted primarily from an increase in the effective rates paid on time deposit accounts.

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Comparison of net interest income for the six months ended June 30, 2017 and 2016

The following table shows, for the six months ended June 30, 2017 and 2016, the average balances of each principal category of our earning assets and interest bearing liabilities and the average taxable equivalent yields on assets and average costs of liabilities. These yields and costs are calculated by dividing the income or expense by the average daily balance of the associated assets or liabilities.

	Six Months Ended June 30, 2017								Six Months Ended June 30, 2016
			Interest								Interest
	Average		Income/			Average			Average		Income/			Average
	Balance		Expense			Yield/Rate			Balance		Expense			Yield/Rate
Interest earning assets
Loans	$	511,471	$	13,787			5.45	%	$	487,884	$	13,304			5.48	%
Mortgage loans held for sale		4,701		32			1.38	%		3,145		7			0.45	%
Investment securities:
Taxable securities		146,530		1,470			2.03	%		85,831		791			1.85	%
Tax-exempt securities		54,018		823			3.08	%		55,941		809			2.91	%
Interest bearing balances in other banks		19,471		111			1.15	%		18,971		97			1.03	%
Federal funds sold		-		-			0.00	%		5,932		14			0.47	%
Total interest earning assets	$	736,191	$	16,223			4.46	%	$	657,704	$	15,022			4.59	%
Interest bearing liabilities
Interest bearing transaction accounts	$	191,568	$	229			0.24	%	$	172,039	$	215			0.25	%
Savings and money market accounts		191,713		342			0.36	%		177,105		326			0.37	%
Time deposits		138,714		495			0.72	%		138,248		474			0.69	%
Short-term debt		14,423		22			0.31	%		10,618		8			0.15	%
Federal Home Loan Bank advances		5,008		25			1.01	%		9,509		31			0.66	%
Note payable		6,291		124			3.99	%		7,363		127			3.47	%
Total interest bearing liabilities	$	547,717	$	1,237			0.46	%	$	514,882	$	1,181			0.46	%
Noninterest-bearing funding of earning assets		188,474		-			0.00	%		142,822		-			0.00	%
Total cost of funding earning assets	$	736,191	$	1,237			0.34	%	$	657,704	$	1,181			0.36	%
Net interest rate spread							4.00	%							4.13	%
Net interest income/margin (taxable equivalent)			$	14,986			4.12	%			$	13,841			4.23	%
Tax equivalent adjustment				(316	)							(311	)
Net interest income/margin			$	14,670			4.03	%			$	13,530			4.14	%

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The following table reflects, for the six months ended June 30, 2017 and 2016, the changes in our net interest income due to variances in the volume of interest earning assets and interest bearing liabilities and variances in the associated rates earned or paid on these assets and liabilities.

	Six Months Ended June 30, 2017 vs.
	Six Months Ended June 30, 2016
				Variance
				due to
	Volume			Yield/Rate			Total
Interest earning assets
Loans	$	593		$	(110	)	$	483
Mortgage loans held for sale		3			22			25
Investment securities:
Taxable securities		549			130			679
Tax-exempt securities		(29	)		43			14
Interest bearing balances in other banks		2			12			14
Federal funds sold		(14	)		-			(14	)
Total interest earning assets	$	1,104		$	97		$	1,201
Interest bearing liabilities
Interest bearing transaction accounts	$	23		$	(9	)	$	14
Savings and money market accounts		24			(8	)		16
Time deposits		-			21			21
Short-term debt		2			12			14
Federal Home Loan Bank advances		(15	)		9			(6	)
Note payable		(18	)		15			(3	)
Total interest bearing liabilities	$	16		$	40		$	56
Net interest income
Net interest income (taxable equivalent)	$	1,088		$	57		$	1,145
Taxable equivalent adjustment		(28	)		23			(5	)
Net interest income	$	1,060		$	80		$	1,140

Total interest income for the six months ended June 30, 2017 was $15,907 and total interest expense was $1,237, resulting in net interest income of $14,670 for the period. For the same period of 2016, total interest income was $14,711 and total interest expense was $1,181, resulting in net interest income of $13,530 for the period. This represents an 8.43% increase in net interest income when comparing the same period from 2017 and 2016. When comparing the variances related to interest income for the six months ended June 30, 2017 and 2016, the increase was primarily attributed to increases in average volumes in loans and taxable securities. When comparing variances related to interest expense for the six months ended June 30, 2017 and 2016, the increase resulted primarily from an increase in the effective rates paid on time deposit accounts.

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Provision for Loan Losses

The provision for loan losses represents a charge to earnings necessary to establish an allowance for loan losses that, in management’s evaluation, is adequate to provide coverage for estimated losses on outstanding loans and to provide for uncertainties in the economy. As a result of evaluating the allowance for loan losses at June 30, 2017, management recorded a provision of $360 in the second quarter of 2017 compared to a provision of $215 in the second quarter of 2016. The increase in the provision was primarily related to the increase in loans, excluding the loans acquired in the Keystone merger, from June 30, 2016 to June 30, 2017.

The allowance for loan losses is increased by a provision for loan losses, which is a charge to earnings, and it is decreased by loan charge-offs and increased by recoveries on loans previously charged off. In determining the adequacy of the allowance for loan losses, we consider our historical loan loss experience, the general economic environment, our overall portfolio composition and other relevant information. As these factors change, the level of loan loss provision changes.  When individual loans are evaluated for impairment and impairment is deemed necessary, a specific allowance is required for the impaired portion of the loan amount. Subsequent changes in the impairment amount will generally cause corresponding changes in the allowance related to the impaired loan and corresponding changes to the loan loss provision. As of June 30, 2017, the recorded allowance related to impaired loans was $1,093. As of June 30, 2016, the recorded allowance related to impaired loans was $1,162.

Noninterest Income

In addition to net interest income, we generate various types of noninterest income from our operations. Our banking operations generate revenue from service charges and fees mainly on deposits accounts. Our mortgage division generates revenue from originating and selling mortgage loans. Our investment brokerage division generates revenue through a revenue-sharing relationship with a registered broker-dealer. We also own life insurance policies on several key employees and record income on the increase in the cash surrender value of these policies.

The following table sets forth the principal components of noninterest income for the periods indicated.

	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
	2017		2016		2017		2016
Service charges and fees	$	714	$	593	$	1,413	$	1,193
Investment brokerage revenue		6		91		31		134
Mortgage operations		485		350		894		545
Bank owned life insurance income		103		108		207		214
Net gain on sale of investment securities		3		14		3		14
Other noninterest income		61		77		131		145
Total noninterest income	$	1,372	$	1,233	$	2,679	$	2,245

Noninterest income for the three months ended June 30, 2017 was $1,372 compared to $1,233 for the same period in 2016. The increase of $121 in service charges and fees was primarily related to an increase in the number of deposit accounts and activity within the deposit accounts. The increase in mortgage operations revenue of $135 resulted from an increase in the volume of mortgage loans originated for sale in the quarter ended June 30, 2017 as compared to the second quarter of 2016. These increases were offset by a $85 decrease in investment brokerage revenue as a result of a decrease in investment brokerage activity.

Noninterest income for the six months ended June 30, 2017 was $2,679 compared to $2,245 for the same period of 2016. The increase of $220 in service charges and fees was primarily related to an increase in the number of deposit accounts and activity within the deposit accounts. The increase in mortgage operations revenue of $349 resulted from an increase in the volume of mortgage loans originated for sale in 2017 as compared to the same period in 2016. These increases were offset by a $103 decrease in investment brokerage revenue as a result of a decrease in investment brokerage activity.

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Noninterest Expense

Noninterest expenses consist primarily of salaries and employee benefits, building occupancy and equipment expenses, advertising and promotion expenses, data processing expenses, legal and professional services expense and miscellaneous other operating expenses.

The following table sets forth the principal components of noninterest expense for the periods indicated.

	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
	2017		2016		2017		2016
Salaries and employee benefits	$	2,951	$	2,651	$	5,668	$	5,199
Occupancy expenses		354		363		684		714
Equipment rentals, depreciation, and maintenance		214		246		397		486
Telephone and communications		84		62		139		124
Advertising and business development		244		92		359		204
Data processing		431		435		873		915
Foreclosed assets, net		33		49		71		99
Federal deposit insurance and other regulatory assessments		83		116		175		222
Legal and other professional services		134		214		260		428
Other operating expense		809		852		1,607		1,617
Total noninterest expense	$	5,337	$	5,080	$	10,233	$	10,008

Noninterest expense for the three months ended June 30, 2017 totaled $5,337 compared with $5,080 for the same period of 2016. The increase was primarily a result of increases in salaries and employee benefits expense and advertising and business development expenses, but these increases were offset by continued expense reductions realized from the Keystone merger as systems and operations were consolidated. Salaries and employee benefits increased $300, or 11.32%, to $2,951 in the second quarter of 2017 from $2,651 in the second quarter of 2016. The number of full-time equivalent employees increased from approximately 122 at June 30, 2016 to approximately 140 at June 30, 2017 for an increase of approximately 14.75%. Equipment rentals, depreciation, and maintenance decreased $32, or approximately 13%, in the second quarter of 2017 as compared to the second quarter of 2016. Advertising and business development expenses increased 165.22% from $92 in the second quarter of 2016 to $244 in the second quarter of 2017.  Foreclosed asset expense decreased $16, or 32.65%, in the second quarter of 2017 compared to the second quarter of 2016 as a result of reduced provision for losses on foreclosed assets. Legal and other professional services expense decreased $80 in the second quarter of 2017 as compared to the second quarter of 2016 as legal fees associated with the Keystone merger recognized in the second quarter of 2016 were not recognized in the second quarter of 2017.

Noninterest expense for the six months ended June 30, 2017 totaled $10,233 compared with $10,008 for the same period of 2016. The increase was primarily a result of increases in salaries and employee benefits expense and advertising and business development expenses, but these increases were offset by continued expense reductions realized from the Keystone merger as systems and operations were consolidated. Salaries and employee benefits increased $469, or 9.02%, to $5,668 in the first half of 2017 from $5,199 in the first half of 2016. Equipment rentals, depreciation, and maintenance decreased $89, or approximately 18.3%, in the first half of 2017 as compared to the first half of 2016. Advertising and business development expenses increased 75.98% from $204 in the first half of 2016 to $359 in the first half of 2017.  Data processing expenses totaled $873 in the first half of 2017 compared to $915 in the first half of 2016 for a decrease of $42, or 4.59%, as a result of savings realized from the conversion to a new core processing system. Foreclosed asset expense decreased $28, or 28.28%, in the first half of 2017 compared to the first half of 2016 as a result of reduced provision for losses on foreclosed assets. Legal and other professional services expense decreased $168 in the first half of 2017 as compared to the first half of 2016 as legal fees associated with the Keystone merger recognized in the first half of 2016 were not recognized in the first half of 2017.

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Provision for Income Taxes

We recognized income tax expense of $986 for the three months ended June 30, 2017, compared to $865 for the three months ended June 30, 2016. The increase of $121 or 14%, resulted from the increase in net income before taxes of $247 in the second quarter of 2017 as compared to the second quarter of 2016. The effective tax rate for the three months ended June 30, 2017 was 31.9% compared to 30.4% for the same period in 2016. The effective tax rate is affected by levels of items of income that are not subject to federal and/or state taxation and by levels of items of expense that are not deductible for federal and/or state income tax purposes.

We recognized income tax expense of $2,059 for the six months ended June 30, 2017, compared to $1,616 for the six months ended June 30, 2016. The increase of $433, or 27.4%, resulted from the increase in net income before taxes of $1,076 in the first six months of 2017 as compared to the first six months of 2016. The effective tax rate for the six months ended June 30, 2017 was 32.2% compared to 30.04% for the same period in 2016. The effective tax rate is affected by levels of items of income that are not subject to federal and/or state taxation and by levels of items of expense that are not deductible for federal and/or state income tax purposes.

Comparison of Financial Condition at June 30, 2017, and December 31, 2016

Overview

Our total assets increased $1,424, or 0.18%, from December 31, 2016 to June 30, 2017. Loans, net of deferred fees and discounts, increased $1,509, or .29%, from December 31, 2016 to June 30, 2017. Securities available-for-sale increased by $23,787, or 12.97%, from December 31, 2016 to June 30, 2017. Cash and cash equivalents decreased $20,355, or 47.9% from December 31, 2016 to June 30, 2017 as funds were used to purchase investment securities. Total deposits decreased $16,647, or 2.36%, from December 31, 2016 to June 30, 2017 mainly because seasonal deposits from December 31, 2016 were withdrawn. Federal Home Loan Bank advances increased from zero at December 31, 2016 to $10,000 at June 30, 2017.  Total stockholders’ equity increased $5,127, or 6.27%.

Investment Securities

We use our securities portfolio primarily to enhance our overall yield on interest-earning assets, as a source of liquidity, as a tool to manage our balance sheet sensitivity and regulatory capital ratios, and as a base from which to pledge assets for public deposits. When our liquidity position exceeds current needs and our expected loan demand, other investments are considered as a secondary earnings alternative. As investments mature or pay down, they are used to meet current cash needs, or they are reinvested to maintain our desired liquidity position. We have historically designated all our securities as available-for-sale to provide flexibility in case an immediate need for liquidity arises, and we believe that the composition of the portfolio offers needed flexibility in managing our liquidity position and interest rate sensitivity without adversely impacting our regulatory capital levels. Securities available-for-sale are reported at fair value, with unrealized gains or losses reported as a separate component of other comprehensive income, net of deferred taxes. Purchase premiums and discounts are recognized in income using the interest method over the terms of the securities.

During the six months ended June 30, 2017, we purchased investment securities totaling $47,743 and sold investment securities with proceeds received of $13,246 including net realized gains of $3.

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The following tables summarize the amortized cost, gross unrealized gains, gross unrealized losses, and fair value of securities available-for-sale at June 30, 2017 and December 31, 2016.

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair  Value
June 30, 2017:
Securities available-for-sale:
Residential mortgage-backed	$	134,241	$	185	$	(1,692	)	$	132,734
U.S. govt. sponsored enterprises		17,126		97		(107	)		17,116
State, county, and municipal		54,817		881		(187	)		55,511
Corporate debt obligations		1,825		9		(47	)		1,787
Totals	$	208,009	$	1,172	$	(2,033	)	$	207,148

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair  Value
December 31, 2016:
Securities available-for-sale:
Residential mortgage-backed	$	111,611	$	63	$	(2,999	)	$	108,675
U.S. govt. sponsored enterprises		15,506		44		(223	)		15,327
State, county, and municipal		57,837		562		(813	)		57,586
Corporate debt obligations		1,819		4		(50	)		1,773
Totals	$	186,773	$	673	$	(4,085	)	$	183,361

Loans

Loans are the largest category of interest earning assets and typically provide higher yields than other types of interest earning assets. Associated with the higher loan yields are the inherent credit and liquidity risks which management attempts to control and counterbalance. Total loans averaged $511,845 during the three months ended June 30, 2017, or 69.4% of average interest earning assets, as compared to $495,466, or 74.3% of average interest earning assets, for the three months ended June 30, 2016. At June 30, 2017, total loans, net of deferred loan fees and discounts, were $517,950, compared to $516,441 at December 31, 2016, an increase of $1,509, or .29%.

The growth in average outstanding loans is primarily attributable to the Bank’s ability to attract new customers from other financial institutions. We have hired experienced bankers in the markets we serve and these employees were successful in transitioning many of their former clients as well as bringing new clients to the Bank. Our bankers are expected to maintain calling efforts to develop relationships with clients and our philosophy is to be responsive to customer needs by providing service and decisions in a timely manner. Additionally, the markets we serve have shown some signs of economic recovery over the last few years which has increased demand for the services we provide.

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The following table provides a summary of the loan portfolio as of June 30, 2017, and December 31, 2016.

	June 30, 2017						December 31, 2016
	Amount			% of Total			Amount			% of Total
Residential real estate:
Closed-end 1-4 family - first lien	$	112,018			21.8	%	$	113,807			22.2	%
Closed-end 1-4 family - junior lien		4,104			0.8	%		4,791			0.9	%
Multi-family		14,907			2.9	%		17,043			3.3	%
Total residential real estate		131,029			25.5	%		135,641			26.4	%
Commercial real estate:
Nonfarm nonresidential		162,387			31.6	%		161,198			31.5	%
Farmland		13,255			2.6	%		13,344			2.6	%
Total commercial real estate		175,642			34.2	%		174,542			34.1	%
Construction and land development:
Residential		22,928			4.5	%		27,228			5.3	%
Other		37,437			7.3	%		37,221			7.3	%
Total construction and land development		60,365			11.8	%		64,449			12.6	%
Home equity lines of credit		34,028			6.6	%		35,761			7.0	%
Commercial loans:
Other commercial loans		90,846			17.7	%		81,198			15.8	%
Agricultural		935			0.2	%		887			0.2	%
State, county, and municipal loans		8,290			1.6	%		8,719			1.7	%
Total commercial loans		100,071			19.5	%		90,804			17.7	%
Consumer loans		21,087			4.1	%		20,858			4.1	%
Total gross loans		522,222			101.7	%		522,055			101.9	%
Allowance for loan losses		(4,401	)		-0.9	%		(4,007	)		-0.8	%
Net deferred loan fees and discounts		(4,272	)		-0.8	%		(5,614	)		-1.1	%
Net loans	$	513,549			100.0	%	$	512,434			100.0	%

In this context, a “real estate loan” is defined as any loan, secured by real estate, regardless of the purpose of the loan. It is common practice for financial institutions in our market areas, and for our Bank, to obtain a security interest or lien in real estate whenever possible, in addition to any other available collateral. This collateral is taken to reinforce the likelihood of the ultimate repayment of the loan and tends to increase the magnitude of the real estate loan portfolio component. In general, we prefer real estate collateral to many other potential collateral sources, such as accounts receivable, inventory and equipment.

Real estate loans are the largest component of our loan portfolio and include residential real estate loans, commercial real estate loans, construction and land development loans, and home equity lines of credit. At June 30, 2017, this category totaled $401,064, or 76.8% of total gross loans, compared to $410,393, or 78.6%, at December 31, 2016. Real estate loans decreased $9,329, or 2.3%, during the period December 31, 2016 to June 30, 2017. Commercial loans increased $9,267, or 10.2% during the same period. Our management team and lending officers have a great deal of experience and expertise in real estate lending and commercial lending.

The Federal regulatory agencies issued two “guidance” documents that have a significant impact on real estate related lending and, thus, on the operations of the Bank. One part of the guidance could require lenders to restrict lending secured primarily by certain categories of commercial real estate to a level of 300% of their capital or raise additional capital. This factor, combined with the current economic environment, could affect the Bank’s lending strategy away from, or to limit its expansion of, commercial real estate lending which has been a material part of River Financial Corporation’s lending strategy. This could also have a negative impact on our lending and profitability. Management actively monitors the composition of the Bank’s loan portfolio, focusing on concentrations of credit, and the results of that monitoring activity are periodically reported to the Board of Directors.

The other guidance relates to the structuring of certain types of mortgages that allows negative amortization of consumer mortgage loans. Although the Bank does not engage at present in lending using these types of instruments, the guidance could have the effect of making the Bank less competitive in consumer mortgage lending if the local market is driving the demand for such an offering.

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Allowance for Loan Losses, Provision for Loan Losses and Asset Quality

Allowance for loan losses and provision for loan losses

The allowance for loan losses represents management’s estimate of probable inherent credit losses in the loan portfolio. Management determines the allowance based on an ongoing evaluation of risk as it correlates to potential losses within the portfolio. Increases to the allowance for loan losses are made by charges to the provision for loan losses. Loans deemed to be uncollectible are charged against the allowance. Recoveries of previously charged-off amounts are credited to the allowance for loan losses.

Management utilizes a review process for the loan portfolio to identify loans that are deemed to be impaired. A loan is considered impaired when it is probable that the Bank will be unable to collect the scheduled payments of principal and interest due under the contractual terms of the loan agreement or when the loan is deemed to be a troubled debt restructuring. For loans and loan relationships deemed to be impaired that are $100, or greater, management determines the estimated value of the underlying collateral, less estimated costs to acquire and sell the collateral, or the estimated net present value of the cash flows expected to be received on the loan or loan relationship. These amounts are compared to the current investment in the loan and a specific allowance for the deficiency, if any, is specifically included in the analysis of the allowance for loan losses. For loans and loan relationships less than $100 that are deemed to be impaired, management applies a general loss factor of 15% and includes that amount in the analysis of the allowance for loan losses rather than specifically measuring the impairment for each loan.

All other loans are deemed to be unimpaired and are grouped into various homogeneous risk pools primarily utilizing regulatory reporting classification codes. The Bank’s historical loss factors are calculated for each of the risk pools based on the percentage of net losses experienced as a percentage of the average loans outstanding. The time periods utilized in these historical loss factor calculations are subjective and vary according to management’s estimate of the impact of current economic cycles. As every loan has a risk of loss, minimum loss factors are estimated based on long term trends for the Bank, the banking industry, and the economy. The greater of the calculated historical loss factors or the minimum loss factors are applied to the unimpaired loan amounts currently outstanding for the risk pool and included in the analysis of the allowance for loan losses. In addition, certain qualitative adjustments may be included by management as additional loss factors. These adjustments may include, among other things, changes in loan policy, loan administration, loan concentrations, and loan growth. The loss allocations for specifically impaired loans, smaller impaired loans not specifically measured for impairment, and unimpaired loans are totaled to yield the allowance for loan losses.

Management believes the data it uses in determining the allowance for loan losses is sufficient to estimate potential losses in the loan portfolio; however, actual results could differ from management’s estimate.

37

The following table presents a summary of changes in the allowance for loan losses for the periods indicated.

	As of and for the						As of and for the
	Three Months Ended:						Six  Months Ended:
	June 30,			June 30,			June 30,			June 30,
	2017				2016		2017				2016
Allowance for loan losses at beginning of period	$	4,026		$	4,071		$	4,007		$	3,827
Charge-offs:
Mortgage loans on real estate:
Residential		-			-			-			-
Commercial real estate		-			-			115			-
Construction and land development		-			-			-			-
Total mortgage loans on real estate		-			-			115			-
Home equity lines of credit		-			10			100			10
Commercial		10			181			114			206
Consumer		24			9			85			9
Total		34			200			414			225
Recoveries:
Mortgage loans on real estate:
Residential		5			-			6			-
Commercial real estate		9			-			9			-
Construction and land development		4			3			6			7
Total mortgage loans on real estate		18			3			21			7
Home equity lines of credit		1			13			2			20
Commercial		18			15			52			38
Consumer		12			4			13			7
Total		49			35			88			72
Net Charge-offs (Recoveries)		(15	)		165			326			153
Provision for loan losses		360			215			720			447
Allowance for loan losses at end of period	$	4,401		$	4,121		$	4,401		$	4,121
Total loans outstanding, net of deferred loan fees		517,950			499,396			517,950			499,396
Average loans outstanding, net of deferred loan fees		511,845			495,466			511,471			487,884
Allowance for loan losses to period end loans		0.85	%		0.83	%		0.85	%		0.83	%
Net charge-offs (recoveries) to average loans (annualized)		-0.01	%		0.13	%		0.06	%		0.06	%

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Allocation of the Allowance for Loan Losses

While no portion of the allowance for loans losses is in any way restricted to any individual loan or group of loans and the entire allowance is available to absorb losses from any and all loans, the following table represents management’s allocation of the allowance for loan losses to specific loan categories as of the dates indicated.

	June 30, 2017					December 31, 2016
			Percent of					Percent of
	Amount		Total			Amount		Total
Mortgage loans on real estate:
Residential	$	821		18.7	%	$	563		14.1	%
Commercial real estate		1,476		33.5	%		1,506		37.6	%
Construction and land development		687		15.6	%		723		18.0	%
Total mortgage loans on real estate		2,984		67.8	%		2,792		69.7	%
Home equity lines of credit		295		6.7	%		187		4.7	%
Commercial		918		20.9	%		829		20.6	%
Consumer		204		4.6	%		199		5.0	%
Total	$	4,401		100.0	%	$	4,007		100.0	%

Nonperforming Assets

The following table presents our nonperforming assets as of the dates indicated:

	June 30,						December 31,
	2017			2016			2016
Nonaccrual loans	$	2,787		$	2,875		$	4,386
Accruing loans past due 90 days or more		163			136			39
Total nonperforming loans		2,950			3,011			4,425
Foreclosed assets		1,557			1,546			1,151
Total nonperforming assets	$	4,507		$	4,557		$	5,576
Allowance for loan losses to period end loans		0.85	%		0.83	%		0.78	%
Allowance for loan losses to period end nonperforming loans		149.19	%		136.86	%		90.55	%
Net charge-offs (recoveries) to average loans (annualized)		0.13	%		0.06	%		0.14	%
Nonperforming assets to period end loans and foreclosed property		0.87	%		0.91	%		1.08	%
Nonperforming loans to period end loans		0.57	%		0.60	%		0.86	%
Nonperforming assets to total assets		0.56	%		0.61	%		0.69	%
Period end loans		517,950			499,396			516,441
Period end total assets		811,841			742,248			810,417
Allowance for loan losses		4,401			4,121			4,007
Average loans for the period		511,845			495,466			495,687
Net charge-offs for the period		326			153			698
Period end loans plus foreclosed property		519,507			500,942			517,592

Accrual of interest is discontinued on a loan when management believes, after considering economic and business conditions and collection efforts that the borrower’s financial condition is such that the collection of interest is doubtful. When a loan is placed on nonaccrual status, all accrued interest on the loan is reversed and deducted from earnings as a reduction of reported interest income. No additional interest is accrued on the loan balance until collection of both principal and interest becomes reasonably certain.  Payments received while the loan is on nonaccrual status are applied to the loan’s outstanding principal balance. When a problem loan is fully resolved, there may ultimately be an actual write-down or charge-off of the principal balance of the loan which would necessitate additional charges to the allowance for loan losses.

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Deposits

Deposits, which include noninterest bearing demand deposits, interest bearing demand deposits, money market accounts, savings accounts, and time deposits, are the principal source of funds for the Bank. We offer a variety of products designed to attract and retain customers, with primary focus on building and expanding client relationships. Management continues to focus on establishing a comprehensive relationship with consumer and business borrowers, seeking deposits as well as lending relationships.

The following table details the composition of our deposit portfolio as of June 30, 2017, and December 31, 2016.

	June 30, 2017					December 31, 2016
			Percent of					Percent of
	Amount		Total			Amount		Total
Demand deposits, non-interest bearing	$	167,533		24.3	%	$	185,270		26.3	%
Demand deposits, interest bearing		194,116		28.2	%		197,509		28.0	%
Money market accounts		159,951		23.2	%		160,677		22.8	%
Savings deposits		27,240		4.0	%		24,022		3.4	%
Time certificates of $250 or more		37,175		5.4	%		32,991		4.7	%
Other time certificates		102,251		14.9	%		104,444		14.8	%
Totals	$	688,266		100.0	%	$	704,913		100.0	%

Total deposits were $688,266 at June 30, 2017, a decrease of $16,647 from December 31, 2106 with the decrease resulting mainly in the balances of demand deposits. Some of our demand deposit accounts are seasonal and typically have larger balances at year-end than at the end of other calendar quarters. The seasonality of these demand deposits is related to property tax collections and to agricultural production.

The following table presents the Bank’s time certificates of deposits by various maturities as of June 30, 2017.

	All Time Deposits		Time Deposits $100 or more		Time Deposits less than $100
Three months or less	$	27,405	$	17,953	$	9,452
Greater than three months through six months		18,843		10,851		7,992
Greater than six months through one year		42,588		27,484		15,104
Greater than one year through three years		33,143		21,210		11,933
Greater than three years		17,447		13,141		4,306
Total	$	139,426	$	90,639	$	48,787

Other Funding Sources

We supplement our deposit funding with wholesale funding when needed for balance sheet planning and management or when the terms are attractive and will not disrupt our offering rates in our markets. A source we have used for wholesale funding is the Federal Home Loan Bank of Atlanta (FHLB). The line of credit with the FHLB is secured by pledges of various loans in our loan portfolio. At June 30, 2017, the FHLB line of credit available was $76,997 and at December 31, 2016 it was $88,071. As of June 30, 2017 we have $10,000 of Federal Home Loan Bank Advances outstanding.  We also have lines of credit for federal funds borrowings with other banks that totaled $28,500 at June 30, 2017 and December 31, 2016. Furthermore, we have pledged certain loans to the Federal Reserve Bank (FRB) to secure a line of credit. At June 30, 2017, the FRB line of credit available was $66,066 and at December 31, 2016, the FRB line of credit available was $51,236. We have never drawn on the FRB line of credit and consider it a contingency line of credit to be used only for emergency liquidity management.

River borrowed $7,500 on January 4, 2016 and used the proceeds to fund the cash payments made to Keystone shareholders according to the merger agreement. The loan matures on December 31, 2022. The interest rate is floating and is equal to the Wall Street Journal Prime Rate. Quarterly principal payments of $268 plus accrued interest are due on March 31, June 30, September 30, and December 31 of each year.

40

Liquidity

Market and public confidence in our financial strength and financial institutions in general will largely determine our access to appropriate levels of liquidity. This confidence is significantly dependent on our ability to maintain sound asset quality and appropriate levels of capital reserves.

Liquidity is defined as the ability to meet anticipated customer demands for funds under credit commitments and deposit withdrawals at a reasonable cost and on a timely basis. We measure our liquidity position by giving consideration to both on- and off-balance sheet sources of and demands for funds on a daily, weekly and monthly basis.

Liquidity risk involves the risk of being unable to fund assets with the appropriate duration and rate-based liabilities, as well as the risk of not being able to meet unexpected cash needs. Liquidity planning and management are necessary to ensure the ability to fund operations cost-effectively and to meet current and future potential obligations such as loan commitments and unexpected deposit outflows. In this process, we focus on assets and liabilities and on the manner in which they combine to provide adequate liquidity to meet our needs.

Funds are available from a number of basic banking activity sources, including the core deposit base, the repayment and maturity of loans, and investment cash flows. Other funding sources include federal funds borrowings, brokered certificates of deposit and borrowings from the FHLB and FRB.

Cash and cash equivalents at June 30, 2017 and December 31, 2016, were $22,144 and $42,499, respectively. Based on recorded cash and cash equivalents, management believes River Financial Corporation’s liquidity resources were sufficient at June 30, 2017 to fund loans and meet other cash needs as necessary.

Commitments

The Company is party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financial needs of its customers.  These financial instruments include commitments to extend credit and standby letters of credit.  Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized by the balance sheet.  The contract amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

The exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments.  The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.  In most cases, the Company requires collateral or other security to support financial instruments with credit risk.  

Financial instruments whose contract amount represents credit risk at June 30, 2017 and December 31, 2016 were as follows in (thousands):

	June 30, 2017		December 31, 2016
Commitments to extend credit	$	126,799	$	108,564
Stand-by and performance letters of credit		2,380		2,219
Total	$	129,179	$	110,783

41

Contractual Obligations

While our liquidity monitoring and management considers both present and future demands for and sources of liquidity, the following table of contractual commitments focuses only on future obligations as of June 30, 2017.

			Due after 1		Due after 3
	Due in 1		through		through		Due after
	year or less		3 years		5 years		5 years		Total
Federal Home Loan Bank advances	$	10,000	$	-	$	-	$	-	$	10,000
Certificates of deposit of less than $100		32,548		11,933		4,306		-		48,787
Certificates of deposit of $100 or more		56,288		21,210		13,141		-		90,639
Securities sold under agreements to repurchase		17,085		-		-		-		17,085
Note payable		1,071		2,143		2,143		536		5,893
Operating leases		507		990		959		788		3,244
Total contractual obligations	$	117,499	$	36,276	$	20,549	$	1,324	$	175,648

Capital Position and Dividends

At June 30, 2017 and December 31, 2016, total stockholders’ equity was $86,843 and $81,827, respectively. The increase of $5,016 resulted mainly from retained earnings and other comprehensive income for the six months ended June 30, 2017. Retained earnings for the first six months of 2017 increased $3,065 and other comprehensive income increased $1,610. The ratio of stockholders’ equity to total assets was 10.71% and 10.1% at June 30, 2017 and December 31, 2016, respectively.

River Bank & Trust is subject to various regulatory capital requirements administered by the federal banking agencies. Certain items such as goodwill and other intangible assets are deducted from total capital in arriving at the various regulatory capital measures such as Common Equity Tier 1capital, Tier 1 capital, and total risk based capital. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on River Financial Corporation’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the River Bank & Trust must meet specific capital guidelines that involve quantitative measures of the bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory regulations and guidelines. River Bank & Trust’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures, established by regulation to ensure capital adequacy effective January 1, 2015, require River Bank & Trust to maintain minimum amounts and ratios (set forth in the table below) of total risk based capital, Common Equity Tier 1 capital, and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined).

Management believes, as of June 30, 2017, that the Bank meets all capital adequacy requirements to which it is subject. The following table presents the Bank’s capital amounts and ratios as of June 30, 2017 with the required minimum levels for capital adequacy purposes including the phase in of the capital conservation buffer under Basel III and minimum levels to be well capitalized (as defined) under the regulatory prompt corrective action regulations.

As of June 30, 2017:
									To Be Well Capitalized
						Required For Capital			Under Prompt Corrective
	Actual					Adequacy Purposes			Action Regulations
	Amount		Ratio			Amount		Ratio	Amount		Ratio
Total Capital (To Risk-Weighted Assets)	$	84,916		14.01	%	$	56,065	>= 9.250%	$	60,611	>= 10.00%
Common Equity Tier 1 Capital (To Risk-weighted Assets)		80,516		13.28	%		34,862	>= 5.750%		39,409	>= 6.50%
Tier 1 Capital (To Risk-Weighted Assets)		80,516		13.28	%		43,956	>= 7.250%		48,504	>= 8.00%
Tier 1 Capital (To Average Assets)		80,516		10.14	%		31,762	>= 4.000%		39,702	>= 5.00%

42

Management believes, as of December 31, 2016, that the Bank met all capital adequacy requirements to which it was subject at the time. The following table presents the Bank’s capital amounts and ratios as of December 31, 2016 with the required minimum levels for capital adequacy purposes and minimum levels to be well capitalized (as defined) under the prompt corrective action regulations.

As of December 31, 2016:
									To Be Well Capitalized
						Required For Capital			Under Prompt Corrective
	Actual					Adequacy Purposes			Action Regulations
	Amount		Ratio			Amount		Ratio	Amount		Ratio
Total Capital (To Risk-Weighted Assets)	$	81,719		13.68	%	$	51,522	>= 8.625%	$	59,736	>= 10.00%
Common Equity Tier 1 Capital (To Risk-weighted Assets)		77,712		13.01	%		30,613	>= 5.125%		38,826	>= 6.50%
Tier 1 Capital (To Risk-Weighted Assets)		77,712		13.01	%		39,573	>= 6.625%		47,786	>= 8.00%
Tier 1 Capital (To Average Assets)		77,712		9.96	%		31,210	>= 4.000%		39,012	>= 5.00%

River Financial Corporation’s principal source of funds for dividend payments and debt service is dividends received from River Bank & Trust. There are statutory limitations on the payment of dividends by River Bank & Trust to River Financial Corporation. As of June 30, 2017, the maximum amount the Bank could dividend to River Financial Corporation without prior regulatory authority approval was approximately $11,243. In addition to dividend restrictions, federal statutes prohibit unsecured loans from banks to bank holding companies.

During the six months ending June 30, 2017 there were 19,000 incentive stock options issued with a weighted average exercise price of $20.25 per share. During the same period, there were 18,550 incentive stock options exercised at a weighted average exercise price of $11.49 per share. A total of 267,875 incentive stock options were outstanding as of June 30, 2017 with a weighted average exercise price of $14.73 per share and a weighted average remaining life of 6.36 years. 

Interest Sensitivity and Market Risk

Management monitors and manages the pricing and maturity of our assets and liabilities in order to diminish the potential adverse impact that changes in interest rates could have on net interest income. The principal monitoring technique employed by the Bank is simulation analysis.

In simulation analysis, we review each asset and liability category and its projected behavior in various different interest rate environments. These projected behaviors are based on management’s past experience and on current competitive environments, including the various environments in the different markets in which we compete. Using projected behavior and differing rate scenarios as inputs, the simulation analysis generates projections of net interest income. We also periodically verify the validity of this approach by comparing actual results with those that were projected in previous models.

Another technique used in interest rate management, but to a lesser degree than simulation analysis, is the measurement of the interest sensitivity “gap”, which is the positive or negative dollar difference between assets and liabilities that are subject to interest rate repricing within a given period of time. Interest rate sensitivity can be managed by repricing assets and liabilities, selling securities available for sale, replacing an asset or liability at maturity or by adjusting the interest rate during the life of an asset or liability.

We evaluate interest rate sensitivity risk and then formulate guidelines regarding asset generation and repricing, and sources and prices of off-balance sheet commitments in order to maintain interest sensitivity risk at levels deemed prudent by management. We use computer simulations to measure the net income effect of various rate scenarios. The modeling reflects interest rate changes and the related impact on net income over specified periods of time.

43

The following table illustrates our interest rate sensitivity at June 30, 2017, assuming the relevant assets and liabilities are collected and paid, respectively, based upon historical experience rather than their stated maturities.

	0-1 Mos			1-3 Mos			3-12 Mos			1-2 Yrs			2-3 Yrs			>3 Yrs			Total
Interest earning assets
Loans	$	126,513		$	27,890		$	108,923		$	89,309		$	62,799		$	102,516		$	517,950
Securities		2,828			7,912			26,951			33,122			25,591			110,744			207,148
Certificates of  deposit in banks		248			-			1,247			249			1,184			2,535			5,463
Cash balances in banks		5,812			-			-			-			-			-			5,812
Total interest earning assets	$	135,401		$	35,802		$	137,121		$	122,680		$	89,574		$	215,795		$	736,373
Interest bearing liabilities
Interest bearing transaction accounts	$	79,790		$	3,884		$	17,242		$	23,300		$	23,300		$	46,600		$	194,116
Savings and money market accounts		105,570			3,342			15,314			20,055			20,055			22,855			187,191
Time deposits		11,167			17,220			60,450			23,955			9,187			17,447			139,426
Securities sold under agreements to repurchase		17,085			-			-			-			-			-			17,085
Note payable		-			268			804			1,072			1,072			2,677			5,893
Total interest bearing liabilities	$	218,612		$	29,714		$	93,810		$	68,382		$	53,614		$	89,579		$	553,711
Interest sensitive gap
Period gap	$	(83,211	)	$	6,088		$	43,311		$	54,298		$	35,960		$	126,216		$	182,662
Cumulative gap	$	(83,211	)	$	(77,123	)	$	(33,812	)	$	20,486		$	56,446		$	182,662
Cumulative gap - Rate Sensitive Assets/ Rate    Sensitive Liabilities		-11.3	%		-10.5	%		-4.6	%		2.8	%		7.7	%		24.8	%

The Bank generally benefits from increasing market interest rates when it has an asset-sensitive gap (a positive number) and generally benefits from decreasing market interest rates when it is liability sensitive (a negative number). As shown in the table above, the Bank is liability sensitive on a cumulative basis throughout the one year time frame. The interest sensitivity analysis presents only a static view of the timing and repricing opportunities, without taking into consideration that changes in interest rates do not affect all assets and liabilities equally. For example, rates paid on a substantial portion of core deposits may change contractually within a relatively short time frame, but those are viewed by management as significantly less interest sensitive than market-based rates such as those paid on non-core deposits. For this and other reasons, management relies more upon the simulations analysis (as noted above) in managing interest rate risk. Net interest income may be impacted by other significant factors in a given interest rate environment, including changes in volume and mix of interest earning assets and interest bearing liabilities.

The Bank’s earnings are dependent, to a large degree, on its net interest income, which is the difference between interest income earned on all interest earning assets, primarily loans and securities, and interest paid on all interest bearing liabilities, primarily deposits. Market risk is the risk of loss from adverse changes in market prices and interest rates. Our market risk arises primarily from inherent interest rate risk in our lending, investing and deposit gathering activities. We seek to reduce our exposure to market risk through actively monitoring and managing interest rate risk. Management relies on simulations analysis to evaluate the impact of varying levels of prevailing interest rates and the sensitivity of specific earning assets and interest bearing liabilities to changes in those prevailing rates. Simulation analysis consists of evaluating the impact on net interest income given changes from 400 basis points below the current prevailing rates to 400 basis points above current prevailing interest rates. Management makes certain assumptions as to the effect varying levels of interest rates have on certain interest earning assets and interest bearing liabilities, which assumptions consider both historical experience and consensus estimates of outside sources.

44

The following table illustrates the results of our simulation analysis to determine the extent to which market risk would affect net interest income for the next twelve months if prevailing interest rates increased or decreased by the specified amounts from current rates. As noted above, this model uses estimates and assumptions in asset and liability account rate reactions to changes in prevailing interest rates. However, to isolate the market risk inherent in the balance sheet, the model assumes that no growth in the balance sheet occurs during the projection period. This model also assumes an immediate and parallel shift in interest rates, which would result in no change in the shape or slope of the interest rate yield curve. Because of the inherent use of the estimates and assumptions in the simulation model to derive this market risk information, the actual results of the future impact of market risk on our net interest income may differ from that found in the table. Given the current level of prevailing interest rates, management believes prevailing market rates falling 300 basis points and 400 basis points are not reasonable assumptions. All other simulated prevailing interest rates changes modeled indicate a level of sensitivity of the Bank’s net interest income to those changes that is acceptable to management and within established Bank policy limits as of both dates shown.

	Impact on net interest income
	As of			As of
	June 30, 2017			December 31, 2016
Change in prevailing rates:
+ 400 basis points		(2.61	)%		(0.40	)%
+ 300 basis points		(1.36	)%		0.20	%
+ 200 basis points		(0.62	)%		0.48	%
+ 100 basis points		(0.04	)%		0.38	%
+ 0 basis points		—			—
- 100 basis points		(4.07	)%		(3.10	)%
- 200 basis points		(9.72	)%		(8.68	)%
- 300 basis points		(11.94	)%		(10.50	)%
- 400 basis points		(13.36	)%		(11.52	)%

45

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

This item is not applicable to smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Management, including our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports we file and submit under the Exchange Act is (i) recorded, processed, summarized and reported as and when required and (ii) accumulated and communicated to our management, including our Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There has been no change in the Company’s internal control over financial reporting during the six months ended June 30, 2017 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

46

PART II. OTHER INFORMATION

ITEM1.LEGALPROCEEDINGS

Various legal proceedings to which River Financial Corporation (the “Company”) or a subsidiary of the Company is a party arise from time to time in the normal course of business. There are no material pending legal proceedings to which the Company or a subsidiary is a party or of which any of their property is the subject.

ITEM1A.RISKFACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors,” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 that could materially affect the Company’s business, financial condition or future results. The risks described in the Company’s Annual Report on Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company’s business, financial condition and/or operating results.

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

On June 30, 2017, the Company sold 9,755 shares to its employee stock ownership plan for cash.  The Company relied upon the exemption from registration under SEC Rule 147.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Notapplicable.

ITEM 4. MINE SAFETY DISCLOSURES

Notapplicable.

ITEM 5. OTHER INFORMATION

None.

47

Item 6. Exhibits.

Exhibit Number	Description
31.1*	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32 *	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

48

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.

	RIVER FTNANCIAL CORPORATION
Date: August 9, 2017	By:	/s/ James M. Stubbs
		James M. Stubbs
		Chief Executive Officer (principal executive officer)
Date: August 9, 2017	By:	/s/ Kenneth H. Givens
		Kenneth H. Givens
		Chief Financial Officer

49

EX-31.1

Exhibit 31.1

CERTIFICATION

I, James M. Stubbs, certify that:

1. I have reviewed this report on Form 10-Q of River Financial Corporation;

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

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

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) 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 history, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) 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

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s first fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

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 registrant’s board of directors:

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

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

	RIVER FINANCIAL CORPORATION
August 9, 2017	/s/James M. Stubbs
	James M. Stubbs
	Chief Executive Officer
	(principal executive officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Kenneth H. Givens, certify that:

1. I have reviewed this report on Form 10-Q of River Financial Corporation;

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

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

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) 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 history, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) 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

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s first fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

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 registrant’s board of directors:

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

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

	RIVER FINANCIAL CORPORATION
August 9, 2017	/s/Kenneth H. Givens
	Kenneth H. Givens
	Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATIONS OF CEO AND CFO PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT

CERTIFICATES PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with the Quarterly Report of River Financial Corporation, an Alabama corporation (the “Company”), on Form 10-Q for the period ending June 30, 2017 as filed with the Securities and Exchange Commission (the “Report”), each of James M. Stubbs, Chief Executive Officer of the Company and Kenneth H. Givens, Chief Financial Officer of the Company, do hereby certify, pursuant to §906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350), that to his 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 result of operations of the Company.

RIVER FINANCIAL CORPORATION

/s/James M. Stubbs

James M. Stubbs

Chief Executive Officer

(principal executive officer)

Date: August 9, 2017

RIVER FINANCIAL CORPORATION

/s/Kenneth H. Givens

Kenneth H. Givens

Chief Financial Officer

(principal financial officer and accounting officer)

Date: August 9, 2017

{BH276398.1}A signed original of this written statement required by Section  906 has been provided to River Financial Corporation  and will be retained by River Financial Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Aug. 03, 2017
Document And Entity Information [Abstract]
Entity Registrant Name	RIVER FINANCIAL CORPORATION
Entity Central Index Key	0001641601
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		5,113,405
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2017

XML

Consolidated Statements of Financial Condition - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Assets
Cash and due from banks	$ 16,332	$ 17,329
Interest-bearing deposits in banks	5,812	25,170
Cash and cash equivalents	22,144	42,499
Certificates of deposit in banks	5,463	5,463
Securities available-for-sale	207,148	183,361
Loans held for sale	3,800	7,734
Loans, net of deferred fees and discounts	517,950	516,441
Less allowance for loan losses	(4,401)	(4,007)
Net loans	513,549	512,434
Premises and equipment, net	22,138	21,472
Accrued interest receivable	2,324	2,376
Bank owned life insurance	15,370	15,161
Foreclosed assets	1,557	1,151
Deferred income taxes	2,255	3,352
Core deposit intangible	1,828	2,119
Goodwill	10,050	10,050
Other assets	4,215	3,245
Total assets	811,841	810,417
Liabilities and Shareholders' Equity
Noninterest-bearing deposits	167,533	185,270
Interest-bearing deposits	520,733	519,643
Total deposits	688,266	704,913
Securities sold under agreements to repurchase	17,085	13,034
Federal Home Loan Bank advances	10,000
Note payable	5,893	6,428
Accrued interest payable and other liabilities	3,020	3,592
Total liabilities	724,264	727,967
Common stock related to 401(k) Employee Stock Ownership Plan	734	623
Stockholders' Equity:
Common stock ($1 par value; 10,000,000 shares authorized; 5,113,655 and 5,090,901 shares issued; 5,113,655 and 5,080,857 shares outstanding, respectively)	5,114	5,091
Additional paid in capital	64,909	64,656
Retained earnings	18,097	15,032
Accumulated other comprehensive loss	(543)	(2,153)
Treasury stock at cost (10,044 shares at December 31, 2016)		(176)
Common stock related to 401(k) Employee Stock Ownership Plan	(734)	(623)
Total stockholders' equity	86,843	81,827
Total equity	87,577	82,450
Total liabilities and stockholders' equity	$ 811,841	$ 810,417

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Consolidated Statements of Financial Condition (Parenthetical) - $ / shares	Jun. 30, 2017	Dec. 31, 2016
Statement Of Financial Position [Abstract]
Common stock, par value	$ 1	$ 1
Common stock, shares authorized	10,000,000	10,000,000
Common stock, shares issued	5,113,655	5,090,901
Common stock, shares outstanding	5,113,655	5,080,857
Treasury stock, shares		10,044

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Unaudited Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Interest income:
Loans, including fees	$ 6,976	$ 6,788	$ 13,761	$ 13,267
Taxable securities	768	374	1,470	787
Nontaxable securities	279	272	565	543
Federal funds sold		8		14
Other interest income	48	53	111	100
Total interest income	8,071	7,495	15,907	14,711
Interest expense:
Deposits	547	506	1,066	1,015
Short-term borrowings	17	4	22	8
Federal Home Loan Bank advances	25	12	25	31
Note payable	63	64	124	127
Total interest expense	652	586	1,237	1,181
Net interest income	7,419	6,909	14,670	13,530
Provision for loan losses	360	215	720	447
Net interest income after provision for loan losses	7,059	6,694	13,950	13,083
Noninterest income:
Service charges and fees	714	593	1,413	1,193
Investment brokerage revenue	6	91	31	134
Mortgage operations	485	350	894	545
Bank owned life insurance income	103	108	209	214
Net gain on sale of investment securities	3	14	3	14
Other noninterest income	61	77	129	145
Total noninterest income	1,372	1,233	2,679	2,245
Noninterest expense:
Salaries and employee benefits	2,951	2,651	5,668	5,199
Occupancy expenses	354	363	684	714
Equipment rentals, depreciation, and maintenance	214	246	397	486
Telephone and communications	84	62	139	124
Advertising and business development	244	92	359	204
Data processing	431	435	873	915
Foreclosed assets, net	33	49	71	99
Federal deposit insurance and other regulatory assessments	83	116	175	222
Legal and other professional services	134	214	260	428
Other operating expense	809	852	1,607	1,617
Total noninterest expense	5,337	5,080	10,233	10,008
Income before income taxes	3,094	2,847	6,396	5,320
Provision for income taxes	986	865	2,059	1,616
Net income	$ 2,108	$ 1,982	$ 4,337	$ 3,704
Basic net earnings per common share	$ 0.41	$ 0.39	$ 0.85	$ 0.75
Diluted net earnings per common share	$ 0.41	$ 0.39	0.84	0.73
Dividends per common share			$ 0.25	$ 0.16

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Unaudited Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 2,108	$ 1,982	$ 4,337	$ 3,704
Investment securities available-for-sale:
Net unrealized gains	1,646	509	2,554	1,045
Reclassification adjustments for net gains realized in net income	(3)	(14)	(3)	(14)
Income tax effect	(606)	(182)	(941)	(380)
Other comprehensive income	1,037	313	1,610	651
Comprehensive income	$ 3,145	$ 2,295	$ 5,947	$ 4,355

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Unaudited Consolidated Statements of Changes in Shareholders' Equity - 6 months ended Jun. 30, 2017 - USD ($) $ in Thousands	Total	Common Stock	Additional Paid In Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Treasury Stock	Common Stock Related to KSOP
Balance at Dec. 31, 2016	$ 81,827	$ 5,091	$ 64,656	$ 15,032	$ (2,153)	$ (176)	$ (623)
Net income	4,337			4,337
Other comprehensive income	1,610				1,610
Exercise of stock options and warrants	264	19	137			108
Purchase of treasury stock	(36)					(36)
Sale of treasury shares	112		8			$ 104
Issuance of common stock	85	4	81
Dividends declared	(1,272)			(1,272)
Stock compensation expense	27		27
Change for KSOP related shares	(111)						(111)
Balance at Jun. 30, 2017	$ 86,843	$ 5,114	$ 64,909	$ 18,097	$ (543)		$ (734)

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Unaudited Consolidated Statements of Changes in Shareholders' Equity (Parenthetical)	6 Months Ended
	Jun. 30, 2017 $ / shares shares
Statement Of Stockholders Equity [Abstract]
Exercise of stock options and warrants, shares	24,800
Purchase of treasury stock	1,757
Sale of treasury shares	5,551
Issuance of common stock, Shares	4,204
Dividends declared, per share | $ / shares	$ 0.25

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Unaudited Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cash Flows From (Used For) Operating Activities:
Net income	$ 4,337	$ 3,704
Adjustments to reconcile net income to net cash from operating activities:
Provision for loan losses	720	447
Provision for losses on foreclosed assets	60	90
Amortization of securities available-for-sale	1,136	804
Accretion of securities available-for-sale	(16)	(16)
Realized net gain on securities available-for-sale	(3)	(14)
Accretion of discount on acquired loans	(1,262)	(1,040)
Amortization of deferred loan fees	(525)	(221)
Amortization of core deposit intangible asset	291	333
Stock compensation expense	27	29
Bank owned life insurance income	(209)	(214)
Depreciation and amortization of premises and equipment	453	416
Loss (gain) on sale of foreclosed assets	(55)	9
Deferred income tax (benefit)	157	478
(Increase) decrease in operating assets and (decrease) increase in operating liabilities:
Loans held-for-sale	3,934	(593)
Accrued interest receivable	52	99
Other assets	(461)	746
Accrued interest payable and other liabilities	(649)	(1,533)
Net cash from operating activities	7,987	3,524
Cash Flows From (Used For) Investing Activities:
Maturity of certificate of deposit	249
Purchase of certificate of deposit	(249)
Sales	13,246	13,306
Maturities, payments, calls	12,143	7,564
Purchases	(47,743)	(12,173)
Loan principal originations, net	(2,476)	(19,015)
Proceeds from sale of foreclosed assets	2,017	304
Payment to Keystone shareholders		(7,274)
Purchases of premises and equipment	(1,042)	(868)
(Purchase) sale of restricted equity securities, net	(509)	62
Net cash used for investing activities	(24,364)	(18,094)
Cash Flows From (Used For) Financing Activities:
Net (decrease) increase in deposits	(16,647)	30,103
Net decrease in securities sold under agreements to repurchase	4,051	(2,186)
Proceeds from Federal Home Loan Bank advances	20,000	6,750
Repayment of Federal Home Loan Bank advances	(10,000)	(15,250)
Proceeds from issuance of note payable		7,500
Repayment of note payable	(535)	(536)
Proceeds from issuance of common stock	85
Proceeds from exercise of common stock options and warrants	264	2,457
Purchase of treasury stock	(36)	(28)
Sale of treasury stock	112
Cash dividends	(1,272)	(812)
Net cash from (used for) financing activities	(3,978)	27,998
Net Change In Cash And Cash Equivalents	(20,355)	13,428
Cash and Cash Equivalents At Beginning Of Period	42,499	31,002
Cash and Cash Equivalents At End Of Period	22,144
Cash Payments For:
Interest paid to depositors	1,186	1,141
Interest paid on borrowings	167	169
Income taxes	2,029	$ 1,200
Non-cash investing and financing activities:
Transfer of loans to foreclosed assets	$ 2,428

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Basis of Presentation

6 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Basis of Presentation

Note 1 – Basis of Presentation

General

The unaudited consolidated financial statements include the accounts of River Financial Corporation (“River” or the “Company”) and its wholly owned subsidiary, River Bank & Trust (“Bank”). The Bank provides a full range of commercial and consumer banking services primarily in the Montgomery, Alabama metropolitan area, Lee and Etowah counties and surrounding counties in Alabama. The Bank is primarily regulated by the Federal Deposit Insurance Corporation (“FDIC”) and undergoes periodic examinations by this regulatory agency and the Alabama Banking Department.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly River Financial Corporation’s consolidated statements of financial condition, statements of income, statements of comprehensive income, statements of changes in stockholders’ equity and statements of cash flows for the periods presented, and all such adjustments are of a normal recurring nature. All material intercompany transactions are eliminated. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the entire year.

These interim consolidated financial statements have been prepared according to the rules and regulations of the Securities and Exchange Commission and, therefore, certain information and note disclosures normally presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted or abbreviated. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes as of December 31, 2016, which are contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events and actions River may undertake in the future. Estimates are used in accounting for, among other items, the allowance for loan losses, foreclosed asset valuations, useful lives for depreciation and amortization, fair value of financial instruments, deferred taxes, and contingencies. Estimates that are particularly susceptible to significant change for River include the determination of the allowance for loan losses, investment securities impairment, assessment of deferred tax assets and liabilities, and business combination related fair value estimates, and therefore are critical accounting policies. Management does not anticipate any material changes to estimates in the near term. Factors that may cause sensitivity to the aforementioned estimates include but are not limited to: external market factors such as market interest rates and employment rates, changes to operating policies and procedures, economic conditions in our markets, and changes in applicable banking regulations. Actual results may ultimately differ from estimates, although management does not generally believe such differences would materially affect the consolidated financial statements in any individual reporting period presented.

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Reclassifications

6 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Reclassifications

Note 2 – Reclassifications

Certain prior period amounts have been reclassified to conform to the presentation used in 2017. These reclassifications had no material effect on the operations, financial condition or cash flows of the Company.

The Company’s 401(k) employee stock ownership plan (KSOP) includes a "put option" for shares of the Company’s common stock distributed from the KSOP. Shares are distributed from the KSOP primarily to separate vested participants and certain eligible participants who elect to diversify their account balances. Since the Company’s common stock is not currently traded on an established securities market, if the owners of distributed shares desire to sell their shares, the Company is required to purchase the shares at fair value during two put option periods following the distribution of the shares from the KSOP. The first put option period is within sixty days following the distribution of the shares from the KSOP.  The second put option period begins on the first day of the fifth month of the plan year for a sixty day period.  The distributed shares subject to the put option and the shares held by the KSOP (KSOP shares) were previously recorded in permanent equity. Due to the Company’s obligation under the put option, the distributed shares and KSOP shares should be classified as temporary equity in the mezzanine section of the consolidated statements of financial condition. This change in classification resulted in the December 31, 2016 permanent equity decreasing $623 thousand and temporary equity increasing by $623 thousand from amounts previously reported. Based on an analysis of quantitative and qualitative factors, this change in classification was deemed immaterial for all periods previously reported. See Note 9.

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Earnings Per Share

6 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

Earnings Per Share

Note 3 – Earnings Per Share

Basic earnings per common share are computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per common share are computed by dividing net income by the effect of the issuance of potential common shares that are dilutive and by the sum of the weighted-average number of shares of common stock outstanding. All shares owned by the Company’s 401(k) Employee Stock Ownership Plan (KSOP) are included in the earnings per share calculations.

The reconciliation of the components of the basic and diluted earnings per share is as follows:

	For the Three Months				For the Six  Months
	Ended June 30,				Ended June 30,
	2017			2016	2017			2016
Net earnings available to common shareholders	$	2,108	$	1,982	$	4,337	$	3,704
Weighted average common shares outstanding		5,093,273		5,077,167		5,088,971		4,971,608
Dilutive effect of stock options		69,766		60,884		73,223		69,625
Dilutive effect of stock warrants		2,202		3,183		2,987		27,985
Diluted common shares		5,165,241		5,141,234		5,165,181		5,069,218
Basic earnings per common share	$	0.41	$	0.39	$	0.85	$	0.75
Diluted earnings per common share	$	0.41	$	0.39	$	0.84	$	0.73

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Investment Securities

6 Months Ended

Jun. 30, 2017

Investments Debt And Equity Securities [Abstract]

Investment Securities

Note 4 – Investment Securities

Securities available-for-sale at June 30, 2017 and December 31, 2016 are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair  Value
June 30, 2017:
Securities available-for-sale:
Residential mortgage-backed	$	134,241	$	185	$	(1,692	)	$	132,734
U.S. govt. sponsored enterprises		17,126		97		(107	)		17,116
State, county, and municipal		54,817		881		(187	)		55,511
Corporate debt obligations		1,825		9		(47	)		1,787
Totals	$	208,009	$	1,172	$	(2,033	)	$	207,148

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair  Value
December 31, 2016:
Securities available-for-sale:
Residential mortgage-backed	$	111,611	$	63	$	(2,999	)	$	108,675
U.S. govt. sponsored enterprises		15,506		44		(223	)		15,327
State, county, and municipal		57,837		562		(813	)		57,586
Corporate debt obligations		1,819		4		(50	)		1,773
Totals	$	186,773	$	673	$	(4,085	)	$	183,361

Management evaluates securities for other-than-temporary impairment on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

Details concerning investment securities with unrealized losses as of June 30, 2017 and December 31, 2016 are as follows:

	Less Than 12 Months				More Than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
June 30, 2017:
Securities available-for-sale:
Residential mortgage-backed	$	90,885	$	1,590	$	5,128	$	102	$	96,013	$	1,692
U.S. govt. sponsored enterprises		4,022		69		1,306		38		5,328		107
State, county & municipal		14,896		154		6,458		33		21,354		187
Corporate debt obligations		345		29		983		18		1,328		47
Totals	$	110,148	$	1,842	$	13,875	$	191	$	124,023	$	2,033
December 31, 2016:
Securities available-for-sale:
Residential mortgage-backed	$	98,033	$	2,999	$	-	$	-	$	98,033	$	2,999
U.S. govt. sponsored enterprises		10,733		149		1,376		74		12,109		223
State, county & municipal		35,062		813		-		-		35,062		813
Corporate debt obligations		1,319		50		-		-		1,319		50
Totals	$	145,147	$	4,011	$	1,376	$	74	$	146,523	$	4,085

As of June 30, 2017, management does not consider securities with unrealized losses to be other-than-temporarily impaired. The unrealized losses in each category have occurred as a result of changes in interest rates, market spreads and market conditions subsequent to purchase. River has the ability and intent to hold its securities for a period of time sufficient to allow for a recovery in fair value. There were no other-than-temporary impairments charged to earnings during the six months ended June 30, 2017 or 2016.  The Company owned a total of 114 securities with unrealized losses of $2,033 at June 30, 2017. As of June 30, 2017 and December 31, 2016, securities with a carrying value of approximately $24,357 and $29,873, respectively, were pledged to secure public deposits as required by law. At June 30, 2017 and December 31, 2016, the carrying value of securities pledged to secure repurchase agreements was approximately $22,055 and $18,392, respectively.    

During the six months ended June 30, 2017, River sold investment securities for proceeds of $13,246 and realized gains of $3.  During the six months ended June 30, 2016, River sold investment securities for proceeds of $13,306 and realized gains of $14.  

The amortized cost and estimated fair value of securities available-for-sale at June 30, 2017, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities for residential mortgage backed securities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties.  These securities are therefore not presented by maturity classification.  

	Amortized Cost		Fair Value
	(In Thousands)
Securities available-for-sale
Less than 1 year	$	6,165	$	6,161
1 to 5 years		19,828		19,874
5 to 10 years		14,069		14,128
After 10 years		33,706		34,251
		73,768		74,414
Residential mortgage-backed securities		134,241		132,734
Totals	$	208,009	$	207,148

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Loans, Allowance for Loan Losses and Credit Quality

6 Months Ended

Jun. 30, 2017

Accounts Notes Loans And Financing Receivable Gross Allowance And Net [Abstract]

Loans, Allowance for Loan Losses and Credit Quality

Note 5 – Loans, Allowance for Loan Losses and Credit Quality

Major classifications of loans at June 30, 2017 and December 31, 2016 are summarized as follows:

	June 30, 2017						December 31, 2016
	Amount			% of Total			Amount			% of Total
Residential real estate:
Closed-end 1-4 family - first lien	$	112,018			21.8	%	$	113,807			22.2	%
Closed-end 1-4 family - junior lien		4,104			0.8	%		4,791			0.9	%
Multi-family		14,907			2.9	%		17,043			3.3	%
Total residential real estate		131,029			25.5	%		135,641			26.4	%
Commercial real estate:
Nonfarm nonresidential		162,387			31.6	%		161,198			31.5	%
Farmland		13,255			2.6	%		13,344			2.6	%
Total commercial real estate		175,642			34.2	%		174,542			34.1	%
Construction and land development:
Residential		22,928			4.5	%		27,228			5.3	%
Other		37,437			7.3	%		37,221			7.3	%
Total construction and land development		60,365			11.8	%		64,449			12.6	%
Home equity lines of credit		34,028			6.6	%		35,761			7.0	%
Commercial loans:
Other commercial loans		90,846			17.7	%		81,198			15.8	%
Agricultural		935			0.2	%		887			0.2	%
State, county, and municipal loans		8,290			1.6	%		8,719			1.7	%
Total commercial loans		100,071			19.5	%		90,804			17.7	%
Consumer loans		21,087			4.1	%		20,858			4.1	%
Total gross loans		522,222			101.7	%		522,055			101.9	%
Allowance for loan losses		(4,401	)		-0.9	%		(4,007	)		-0.8	%
Net deferred loan fees and discounts		(4,272	)		-0.8	%		(5,614	)		-1.1	%
Net loans	$	513,549			100.0	%	$	512,434			100.0	%

The Bank grants loans and extensions of credit to individuals and a variety of businesses and corporations located in its general trade area. Although the Bank has a diversified loan portfolio, a substantial portion of the loan portfolio is collateralized by improved and unimproved real estate and is dependent upon the real estate market. Relevant risk characteristics for these portfolio segments generally include debt service coverage, loan-to-value ratios and financial performance on non-consumer loans and credit scores, debt-to-income, collateral type and loan-to-value ratios for consumer loans.

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method for the periods indicated:

	Real Estate Mortgage Loans
						Construction			Home Equity
						and Land			Lines
Allowance for Loan Losses	Residential		Commercial			Development			Of Credit			Commercial			Consumer			Total
Balance - December 31, 2016	$	563	$	1,506		$	723		$	187		$	829		$	199		$	4,007
Provision for loan losses		252		76			(42	)		206			151			77			720
Loan charge-offs		-		(115	)		-			(100	)		(114	)		(85	)		(414	)
Loan recoveries		6		9			6			2			52			13			88
Balance - June 30, 2017	$	821	$	1,476		$	687		$	295		$	918		$	204		$	4,401
Ending balance:
Individually evaluated for impairment	$	279	$	380		$	-		$	-		$	408		$	26		$	1,093
Collectively evaluated for impairment		542		1,096			687			295			510			178			3,308
Total	$	821	$	1,476		$	687		$	295		$	918		$	204		$	4,401
Loans:
Individually evaluated for impairment	$	2,459	$	2,701		$	-		$	100		$	592		$	48		$	5,900
Collectively evaluated for impairment		128,570		172,941			60,365			33,928			99,479			21,039			516,322
Total	$	131,029	$	175,642		$	60,365		$	34,028		$	100,071		$	21,087		$	522,222

	Real Estate Mortgage Loans
						Construction		Home Equity
						and Land		Lines
Allowance for Loan Losses	Residential		Commercial			Development		Of Credit			Commercial			Consumer			Total
Balance - December 31, 2015	$	368	$	1,302		$	569	$	150		$	1,250		$	188		$	3,827
Provision for loan losses		106		(282	)		576		(23	)		22			48			447
Loan charge-offs		-		-			-		(10	)		(206	)		(9	)		(225	)
Loan recoveries		-		-			7		20			38			7			72
Balance - June 30, 2016	$	474	$	1,020		$	1,152	$	137		$	1,104		$	234		$	4,121
Ending balance:
Individually evaluated for  impairment	$	73	$	333		$	5	$	-		$	751		$	-		$	1,162
Collectively evaluated for impairment		401		687			1,147		137			353			234			2,959
Total	$	474	$	1,020		$	1,152	$	137		$	1,104		$	234		$	4,121
Loans:
Individually evaluated for impairment	$	1,215	$	4,937		$	78	$	100		$	838		$	-		$	7,168
Collectively evaluated for impairment		131,372		165,957			65,774		33,189			82,701			20,168			499,161
Total	$	132,587	$	170,894		$	65,852	$	33,289		$	83,539		$	20,168		$	506,329

Among other loans, the Bank individually evaluates for impairment all nonaccrual loans and troubled debt restructured loans.  A loan is considered impaired when, based on current events and circumstances it is probable that all amounts due according to the contractual terms of the loan will not be collected. Impaired loans are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate, at the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent. Management may also elect to apply an additional collective reserve to groups of impaired loans based on current economic or market factors. Interest payments received on impaired loans are generally applied as a reduction of the outstanding principal balance.

The following table presents impaired loans by class of loans as of June 30, 2017.

Nonaccruing Impaired Loans	Total Impaired Loans		Impaired Loans With No Allowance		Impaired Loans With Allowance		Allowance for Loan Losses
Mortgage loans on real estate:
Residential	$	1,509	$	90	$	1,419	$	279
Commercial real estate		848		255		593		87
Construction and land development		-		-		-		-
Total mortgage loans on real estate		2,357		345		2,012		366
Home equity lines of credit		-		-		-		-
Commercial loans		54		54		-		-
Consumer loans		-		-		-		-
Total Loans	$	2,411	$	399	$	2,012	$	366

Accruing Impaired Loans	Total Impaired Loans		Impaired Loans With No Allowance		Impaired Loans With Allowance		Allowance for Loan Losses
Mortgage loans on real estate:
Residential	$	950	$	950	$	-	$	-
Commercial real estate		1,853		563		1,290		293
Construction and land development		-		-		-		-
Total mortgage loans on real estate		2,803		1,513		1,290		293
Home equity lines of credit		100		100		-		-
Commercial loans		538		132		406		408
Consumer loans		48		-		48		26
Total Loans	$	3,489	$	1,745	$	1,744	$	727

Total Impaired Loans	Total Impaired Loans		Impaired Loans With No Allowance		Impaired Loans With Allowance		Allowance for Loan Losses
Mortgage loans on real estate:
Residential	$	2,459	$	1,040	$	1,419	$	279
Commercial real estate		2,701		818		1,883		380
Construction and land development		-		-		-		-
Total mortgage loans on real estate		5,160		1,858		3,302		659
Home equity lines of credit		100		100		-		-
Commercial loans		592		186		406		408
Consumer loans		48		-		48		26
Total Loans	$	5,900	$	2,144	$	3,756	$	1,093

The following table presents impaired loans by class of loans as of December 31, 2016.

Nonaccruing Impaired Loans	Total Impaired Loans		Impaired Loans With No Allowance		Impaired Loans With Allowance		Allowance for Loan Losses
Mortgage loans on real estate:
Residential	$	223	$	96	$	127	$	53
Commercial real estate		3,470		1,010		2,460		430
Construction and land development		-		-		-		-
Total mortgage loans on real estate		3,693		1,106		2,587		483
Home equity lines of credit		100		100		-		-
Commercial loans		93		93		-		-
Consumer loans		-		-		-		-
Total Loans	$	3,886	$	1,299	$	2,587	$	483

Accruing Impaired Loans	Total Impaired Loans		Impaired Loans With No Allowance		Impaired Loans With Allowance		Allowance for Loan Losses
Mortgage loans on real estate:
Residential	$	978	$	978	$	-	$	-
Commercial real estate		1,905		589		1,316		317
Construction and land development		31		31		-		-
Total mortgage loans on real estate		2,914		1,598		1,316		317
Home equity lines of credit		100		100		-		-
Commercial loans		592		136		456		456
Consumer loans		39		-		39		19
Total Loans	$	3,645	$	1,834	$	1,811	$	792

Total Impaired Loans	Total Impaired Loans		Impaired Loans With No Allowance		Impaired Loans With Allowance		Allowance for Loan Losses
Mortgage loans on real estate:
Residential	$	1,201	$	1,074	$	127	$	53
Commercial real estate		5,375		1,599		3,776		747
Construction and land development		31		31		-		-
Total mortgage loans on real estate		6,607		2,704		3,903		800
Home equity lines of credit		200		200		-		-
Commercial loans		685		229		456		456
Consumer loans		39		-		39		19
Total Loans	$	7,531	$	3,133	$	4,398	$	1,275

The following table presents the average recorded investment in impaired loans and the interest income recognized on impaired loans in the six months ended June 30, 2017 and 2016 by loan category.

	Six  Months Ended						Six  Months Ended
	June 30, 2017						June 30, 2016
	Average		Ending				Average		Ending
	Recorded		Recorded		Interest		Recorded		Recorded		Interest
	Investment		Investment		Income		Investment		Investment		Income
Mortgage loans on real estate:
Residential real estate	$	1,966	$	2,459	$	35	$	1,221	$	1,215	$	37
Commercial real estate		3,275		2,701		49		4,035		4,937		71
Construction and land development		10		-		-		83		78		3
Total mortgage loans on real estate		5,251		5,160		84		5,339		6,230		111
Home equity lines of credit		67		100		3		100		100		2
Commercial loans		586		592		13		1,137		838		13
Consumer loans		24		48		1		-		-		-
Total Loans	$	5,928	$	5,900	$	101	$	6,576	$	7,168	$	126

The following tables present the aging of loans and non-accrual loan balances as of June 30, 2017 and December 31, 2016, by class of loans.

	Accruing Loans
As of June 30, 2017	Current		30-89 Days Past Due		90+ Days Past Due		Nonaccrual Loans		Total Loans
Mortgage loans on real estate:
Residential	$	128,043	$	1,273	$	71	$	1,642	$	131,029
Commercial real estate		174,005		715		1		921		175,642
Construction and land development		60,235		71		-		59		60,365
Total mortgage loans on real estate		362,283		2,059		72		2,622		367,036
Home equity lines of credit		33,911		55		-		62		34,028
Commercial loans		99,007		1,010		-		54		100,071
Consumer loans		20,808		139		91		49		21,087
Total Loans	$	516,009	$	3,263	$	163	$	2,787	$	522,222

	Accruing Loans
As of December 31, 2016	Current		30-89 Days Past Due		90+ Days Past Due		Nonaccrual Loans		Total Loans
Mortgage loans on real estate:
Residential	$	132,603	$	2,585	$	-	$	453	$	135,641
Commercial real estate		170,363		708		-		3,471		174,542
Construction and land development		64,111		312		-		26		64,449
Total mortgage loans on real estate		367,077		3,605		-		3,950		374,632
Home equity lines of credit		35,257		320		-		184		35,761
Commercial loans		90,579		76		19		130		90,804
Consumer loans		20,431		285		20		122		20,858
Total Loans	$	513,344	$	4,286	$	39	$	4,386	$	522,055

The Bank categorizes loans in risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Bank analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a continuous basis. The Bank uses the following definitions for its risk ratings:

Special Mention - Weakness exists that could cause future impairment, including the deterioration of financial ratios, past due status and questionable management capabilities. Collateral values generally afford adequate coverage but may not be immediately marketable.

Substandard - Specific and well-defined weaknesses exist that may include poor liquidity and deterioration of financial ratios. The loan may be past due and related deposit accounts experiencing overdrafts. Immediate corrective action is necessary.

Doubtful - Specific weaknesses characterized as Substandard that are severe enough to make collection in full unlikely. There is no reliable secondary source of full repayment. Loans classified as doubtful will be placed on non-accrual, analyzed and fully or partially charged-off based on review of collateral and other relevant factors.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be Pass rated loans. As of June 30, 2017 and December 31, 2016, and based on the most recent analysis performed as of those dates, the risk category of loans by class of loans is as follows:

As of June 30, 2017	Pass		Special Mention		Substandard		Doubtful		Total
Mortgage loans on real estate:
Residential	$	125,150	$	2,794	$	3,085	$	-	$	131,029
Commercial real estate		166,493		6,555		2,594		-		175,642
Construction and land development		59,446		771		148		-		60,365
Total mortgage loans on real estate		351,089		10,120		5,827		-		367,036
Home equity lines of credit		33,734		108		186		-		34,028
Commercial loans		97,257		2,189		625		-		100,071
Consumer loans		20,697		187		203		-		21,087
Total Loans	$	502,777	$	12,604	$	6,841	$	-	$	522,222

As of December 31, 2016	Pass		Special Mention		Substandard		Doubtful		Total
Mortgage loans on real estate:
Residential	$	125,983	$	6,272	$	3,386	$	-	$	135,641
Commercial real estate		165,381		3,837		5,324		-		174,542
Construction and land development		63,151		605		451		242		64,449
Total mortgage loans on real estate		354,515		10,714		9,161		242		374,632
Home equity lines of credit		35,344		109		308		-		35,761
Commercial loans		87,684		2,357		649		114		90,804
Consumer loans		20,433		211		214		-		20,858
Total Loans	$	497,976	$	13,391	$	10,332	$	356	$	522,055

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Fair Value Measurements and Disclosures

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

Fair Value Measurements and Disclosures

Note 6 – Fair Value Measurements and Disclosures

River utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Securities available-for-sale are recorded at fair value on a recurring basis. Additionally, from time to time, River may be required to record at fair value other assets on a nonrecurring basis, such as impaired loans and foreclosed assets. These nonrecurring fair value adjustments typically involve application of the lower of cost or market accounting or write-downs of individual assets.

Fair Value Hierarchy

River groups assets and liabilities 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. These levels are:

Level 1 – Valuation is based upon quoted prices for identical instruments traded in active markets.

Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

Following is a description of valuation methodologies used for assets and liabilities recorded or disclosed at fair value.

Cash and cash equivalents – For disclosure purposes, for cash, due from banks, interest-bearing deposits and federal funds sold, the carrying amount is a reasonable estimate of fair value.

Certificates of deposit – For disclosure purposes, the carrying amount of certificates of deposit is a reasonable estimate of fair value.

Securities available-for-sale – Securities available-for-sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, repayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange and U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter market funds. Level 2 securities included mortgage-backed securities issued by government sponsored enterprises and municipal bonds. Securities classified as Level 3 include asset-backed securities in less liquid markets.

Restricted equity securities - It is not practical to determine the fair value of restricted equity securities due to restrictions placed on transferability.

Loans – River Financial Corporation does not record loans at fair value on a recurring basis. However, from time to time, a loan is considered impaired and an allowance for loan losses is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. When a loan is identified as individually impaired, management measures impairment using one of three methods, including collateral value, market value of similar debt, and discounted cash flows. Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. As of June 30, 2017 and December 31, 2016, impaired loans were evaluated based on the fair value of the collateral. Impaired loans for which an allowance is established based on the fair value of collateral, or loans that were charged down according to the fair value of collateral, require classification in the fair value hierarchy. When the fair value of the collateral is based on an observable market price, River Financial Corporation records the impaired loan as nonrecurring Level 2. When the fair value is based on an appraised value, River Financial Corporation records the impaired loan as nonrecurring Level 3.

For disclosure purposes, the fair value of fixed rate loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings. For variable rate loans, the carrying amount is a reasonable estimate of fair value.

Cash value of bank owned life insurance – For disclosure purposes, the fair value of the cash surrender value of bank owned life insurance policies is equivalent to the carrying value.

Deposit liabilities – For disclosure purposes, the fair value for demand deposits, savings accounts, and certain money market deposits is the amount payable on demand at the reporting date. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered for deposits of similar remaining maturities.

Securities sold under agreements to repurchase – For disclosure purposes, the carrying amounts of securities sold under agreements to repurchase approximate their fair values.

Federal Home Loan Bank advances – For disclosure purposes the fair value of Federal Home Loan Bank advances is estimated using discounted cash flow analyses using interest rates offered for borrowings with similar maturities.

Note Payable – For disclosure purposes the carrying amount of the floating rate note payable approximates fair value.

Assets and liabilities measured at fair value on a recurring basis - The only assets and liabilities measured at fair value on a recurring basis are our securities available-for-sale.  Information related to River’s assets and liabilities measured at fair value on a recurring basis at June 30, 2017 and December 31, 2016 is as follows:

	Fair Value Measurements At Reporting Date Using:
June 30, 2017	Fair Value		Quoted Prices In Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Securities available-for-sale:
Residential mortgage -backed	$	132,734	$	-	$	132,734	$	-
U.S. government sponsored enterprises		17,116		-		17,116		-
State, county, and municipal		55,511		-		55,511		-
Corporate debt obligations		1,787		-		1,787		-
Totals	$	207,148	$	-	$	207,148	$	-

	Fair Value Measurements At Reporting Date Using:
December 31, 2016	Fair Value		Quoted Prices In Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Securities available-for-sale:
Residential mortgage -backed	$	108,675	$	-	$	108,675	$	-
U.S. government sponsored enterprises		15,327		-		15,327		-
State, county, and municipal		57,586		-		57,586		-
Corporate debt obligations		1,773		-		1,773		-
Totals	$	183,361	$	-	$	183,361	$	-

Assets measured at fair value on a nonrecurring basis - River has assets that, under certain conditions, are subject to measurement at fair value on a non-recurring basis.  The following table presents the financial instruments carried on the statement of financial position by caption and by level in the fair value hierarchy, for which a non-recurring change in fair value has been recorded as of June 30, 2017 and December 31, 2016:

	Fair Value Measurements At Reporting Date Using:
June 30, 2017	Fair Value		Quoted Prices In Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans	$	4,807	$	-	$	-	$	4,807
Foreclosed assets		1,557		-		-		1,557
Totals	$	6,364	$	-	$	-	$	6,364

December 31, 2016	Fair Value		Quoted Prices In Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans	$	6,256	$	-	$	-	$	6,256
Foreclosed assets		1,151		-		-		1,151
Totals	$	7,407	$	-	$	-	$	7,407

River has estimated the fair values of these assets using Level 3 inputs, specifically the appraised value of the collateral. Impaired loan balances represent those collateral dependent impaired loans where management has estimated the credit loss by comparing the loan’s carrying value against the expected realizable fair value of the impaired loan for the amount of the credit loss.

The estimated fair values, and related carrying or notional amounts, of River’s financial instruments as of June 30, 2017 and December 31, 2016 are as follows:

			Estimated Fair Value
June 30, 2017	Carrying Amount		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	22,144	$	22,144	$	-	$	-
Certificates of deposit in banks		5,463		-		5,463		-
Securities available-for-sale		207,148		-		207,148		-
Loans held-for-sale		3,800		-		3,800		-
Restricted equity securities		1,259		-		-		1,259
Loans receivable		513,549		-		511,250		4,807
Bank owned life insurance		15,370		-		15,370		-
Accrued interest receivable		2,324		-		2,324		-
Financial liabilities:
Deposits		688,266		-		687,453		-
Accrued interest payable		113		-		113		-
Securities sold under agreements to repurchase		17,085		-		17,085		-
Federal Home Loan Bank advances		10,000		-		9,998		-
Note payable		5,893		-		5,893		-

			Estimated Fair Value
December 31, 2016	Carrying Amount		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	42,499	$	42,499	$	-	$	-
Certificates of deposit in banks		5,463		-		5,463		-
Securities available-for-sale		183,361		-		183,361		-
Loans held-for-sale		7,734		-		7,734		-
Restricted equity securities		751		-		-		751
Loans receivable		512,434		-		506,178		6,256
Bank owned life insurance		15,161		-		15,161		-
Accrued interest receivable		2,376		-		2,376		-
Financial liabilities:
Deposits		704,913		-		688,591		-
Accrued interest payable		130		-		130		-
Securities sold under agreements to repurchase		13,034		-		13,034		-
Note payable		6,428		-		6,428		-

The estimated fair values of the standby letters of credit and loan commitments on which the committed interest rate is less than the current market rate are insignificant at June 30, 2017 and December 31, 2016.

River assumes interest rate risk (the risk that general interest rate levels will change) as a result of its normal operations.  As a result, the fair values of River’s financial instruments will change when interest rate levels change and that change may be either favorable or unfavorable to River. Management attempts to match maturities of assets and liabilities to the extent believed necessary to minimize interest rate risk.  However, borrowers with fixed-rate obligations are less likely to prepay in a rising rate environment and more likely to prepay in a falling rate environment. Conversely, depositors who are receiving fixed-rates are more likely to withdraw funds before maturity in a rising rate environment and less likely to do so in a falling-rate environment.  Management monitors rates and maturities of assets and liabilities, and attempts to minimize interest rate risk by adjusting terms of new loans and deposits and by investing in securities with terms that mitigate the Company’s overall interest rate risk.

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Acquisition

6 Months Ended

Jun. 30, 2017

Business Combinations [Abstract]

Acquisition

Note 7 – Acquisition

On December 31, 2015, Keystone Bancshares, Inc. (“Keystone”) was merged with and into River. Concurrent with the merger of River and Keystone, Keystone Bank was merged with and into River Bank & Trust. Under the terms of the merger agreement, shareholders of Keystone immediately prior to the effective time of the merger received one share of River common stock in exchange for each outstanding share of Keystone common stock held and $4.00 in cash. In addition, persons holding options or warrants to acquire Keystone common stock received options or warrants to acquire 1.25 shares of River common stock for each option or warrant at a purchase price equal to the original exercise price divided by 1.25. River issued 1,818,492 shares of River common stock to Keystone shareholders and made cash payments to Keystone shareholders of approximately $7,274.    

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Recently Issued Accounting Pronouncements

6 Months Ended

Jun. 30, 2017

Accounting Changes And Error Corrections [Abstract]

Recently Issued Accounting Pronouncements

Note 8 – Recently Issued Accounting Pronouncements

In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718).  ASU 2016-09 amended existing guidance to simplify the accounting for share-based payment award transactions, including:  a) income tax consequences; b) classification of awards as either equity or liabilities; c) classification on the statement of cash flows; and d) policy election to estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur.  For public business entities, the amendments of this ASU are effective fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The adoption of this standard did not have a material effect on the Company’s operating results or financial condition.

In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606)—Deferral of the Effective Date. ASU 2015-14 defers the effective date of ASU 2014-09, Revenue from Contracts with Customers, which supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, by one year. ASU 2014-09 is based on the principle that revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. Under ASU 2015-14, ASU 2014-09 is now effective for annual periods beginning after December 15, 2017 and interim periods within those years. The Company is currently evaluating the effects of ASU 2014-09 on its financial statements and disclosures, if any. 

In January 2016, the FASB issued ASU 2016-01 Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This will enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The ASU addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Some of the amendments include the following: 1) Require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; 2)Simplify the impairment assessment of equity investment’s without readily determinable fair values by requiring a qualitative assessment to identify impairment; 3) Require public business entities to use exit price notion when measuring fair value of financial instruments for disclosure purposes; 4)Require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting in a change in the fair value of a liability resulting in a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value; among others. For public business entities, the amendments of this ASU are effective fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements. 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This will require lessees to recognize assets and liabilities that arise from leases on the balance sheet. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right of use asset representing its right to use the underlying asset for lease term. The new guidance is effective for annual and interim reporting periods beginning after December 15, 2018. The amendment should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements. 

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The new guidance will apply to most financial assets measured at amortized cost and certain other instruments including loans, debt securities held to maturity, net investments in leases and off-balance-sheet credit exposures. The guidance will replace the current incurred loss accounting model that delays recognition of a loss until it is probable a loss has been incurred with an expected loss model that reflects expected credit losses based upon a broader range of estimates including consideration of past events, current conditions and supportable forecasts. The guidance also eliminates the current accounting model for purchased credit impaired loans and debt securities. For securities available for sale, credit losses are to be recognized as allowances rather than reductions in the amortized cost of the securities, which will require re-measurement of the related allowance at each reporting period. The guidance includes enhanced disclosure requirements intended to help financial statement users better understand estimates and judgments used in estimating credit losses. The guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. However, entities can apply these amendments as early as fiscal years beginning after December 15, 2018. The Company is evaluating the impact to its consolidated financial statements upon adoption. 

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350):  Simplifying the Test for Goodwill Impairment. ASU 2017-04 was issued to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under the amendments in this Update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The amendments in this Update modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. An entity no longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. Because these amendments eliminate Step 2 from the goodwill impairment test, they should reduce the cost and complexity of evaluating goodwill for impairment. An entity should apply the amendments in this Update on a prospective basis. An entity is required to disclose the nature of and reason for the change in accounting principle upon transition. That disclosure should be provided in the first annual period and in the interim period within the first annual period when the entity initially adopts the amendments in this Update. A public business entity that is a U.S. Securities and Exchange Commission (SEC) filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019.  Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the effects of this update on its financial statements and disclosures, if any. 

In March 2017, the FASB issued ASU 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20):  Premium Amortization on Purchased Callable Debt Securities.   ASU 2017-08 will shorten the amortization period for certain callable debt securities held at a premium.  Specifically, the amendments require the premium to be amortized to the earliest call date whereas under current GAAP, the amortization is to the maturity. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The amendments in this Update more closely align the amortization period of premiums and discounts to expectations incorporated in market pricing on the underlying securities. Market participants generally price securities to the call date that produces the worst yield when the coupon is above current market rates (that is, the security is trading at a premium) and price securities to maturity when the coupon is below market rates (that is, the security is trading at a discount) in anticipation that the borrower will act in its economic best interest. As a result, the amendments more closely align interest income recorded on bonds held at a premium or a discount with the economics of the underlying instrument. An entity should apply the amendments in this Update on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Additionally, in the period of adoption, an entity should provide disclosures about a change in accounting principle. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.  Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The Company is currently evaluating the effects of this update on its financial statements and disclosures, if any.

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Defined Contribution Plan

6 Months Ended

Jun. 30, 2017

Compensation And Retirement Disclosure [Abstract]

Defined Contribution Plan

Note 9 – Defined Contribution Plan

The Company provides a 401(k) employee stock ownership plan (KSOP), which covers substantially all of the Company’s employees who are eligible, as to age and length of service. A participant may elect to make contributions up to $18,000 of the participant’s annual compensation in 2017 and 2016. The Company makes contributions up to 3% of each participant’s annual compensation and the Company matches 50% of the next 2% contributed by the employee. Contributions to the plan by Company were approximately $162 thousand and $137 thousand for the six months ended June 30, 2017 and 2016, respectively.  Outstanding shares of the Company’s common stock allocated to participants at June 30, 2017 and December 31, 2016 totaled 43,477 and 38,933, respectively, and there were no unallocated shares. These shares are treated as outstanding for purposes of calculating earnings per share and dividends on these shares are included in the Consolidated Statements of Stockholders’ Equity.

The Company’s KSOP includes a put option for shares of the Company’s common stock distributed from the KSOP. Shares are distributed from the KSOP primarily to separated vested participants and certain eligible participants who elect to diversify their account balances. Since the Company’s common stock is not currently traded on an established securities market, if the owners of distributed shares desire to sell their shares, the Company is required to purchase the shares at fair value during two put option periods following the distribution of the shares from the KSOP. The first put option period is within sixty days following the distribution of the shares from the KSOP.  The second put option period begins on the first day of the fifth month of the plan year for a sixty day period. The fair value of distributed shares subject to the put option totaled $0 and $0 as of June 30, 2017 and December 31, 2016, respectively. The cost of the KSOP shares totaled $734 thousand and $623 thousand as of June 30, 2017 and December 31, 2016, respectively. Due to the Company’s obligation under the put option, the distributed shares and KSOP shares are classified as temporary equity in the mezzanine section of the consolidated statements of financial condition and totaled $734 thousand and $623 thousand as of June 30, 2017 and December 31, 2016, respectively. The fair value of the KSOP shares totaled $989 thousand and $672 thousand as of June 30, 2017 and December 31, 2016, respectively.

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

Components of the Basic and Diluted Earnings Per Share

The reconciliation of the components of the basic and diluted earnings per share is as follows:

	For the Three Months				For the Six  Months
	Ended June 30,				Ended June 30,
	2017			2016	2017			2016
Net earnings available to common shareholders	$	2,108	$	1,982	$	4,337	$	3,704
Weighted average common shares outstanding		5,093,273		5,077,167		5,088,971		4,971,608
Dilutive effect of stock options		69,766		60,884		73,223		69,625
Dilutive effect of stock warrants		2,202		3,183		2,987		27,985
Diluted common shares		5,165,241		5,141,234		5,165,181		5,069,218
Basic earnings per common share	$	0.41	$	0.39	$	0.85	$	0.75
Diluted earnings per common share	$	0.41	$	0.39	$	0.84	$	0.73

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Investment Securities (Tables)

6 Months Ended

Jun. 30, 2017

Investments Debt And Equity Securities [Abstract]

Schedule of Securities Available for Sale

Securities available-for-sale at June 30, 2017 and December 31, 2016 are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair  Value
June 30, 2017:
Securities available-for-sale:
Residential mortgage-backed	$	134,241	$	185	$	(1,692	)	$	132,734
U.S. govt. sponsored enterprises		17,126		97		(107	)		17,116
State, county, and municipal		54,817		881		(187	)		55,511
Corporate debt obligations		1,825		9		(47	)		1,787
Totals	$	208,009	$	1,172	$	(2,033	)	$	207,148

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair  Value
December 31, 2016:
Securities available-for-sale:
Residential mortgage-backed	$	111,611	$	63	$	(2,999	)	$	108,675
U.S. govt. sponsored enterprises		15,506		44		(223	)		15,327
State, county, and municipal		57,837		562		(813	)		57,586
Corporate debt obligations		1,819		4		(50	)		1,773
Totals	$	186,773	$	673	$	(4,085	)	$	183,361

Schedule of Details Concerning Investment Securities with Unrealized Losses

Details concerning investment securities with unrealized losses as of June 30, 2017 and December 31, 2016 are as follows:

	Less Than 12 Months				More Than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
June 30, 2017:
Securities available-for-sale:
Residential mortgage-backed	$	90,885	$	1,590	$	5,128	$	102	$	96,013	$	1,692
U.S. govt. sponsored enterprises		4,022		69		1,306		38		5,328		107
State, county & municipal		14,896		154		6,458		33		21,354		187
Corporate debt obligations		345		29		983		18		1,328		47
Totals	$	110,148	$	1,842	$	13,875	$	191	$	124,023	$	2,033
December 31, 2016:
Securities available-for-sale:
Residential mortgage-backed	$	98,033	$	2,999	$	-	$	-	$	98,033	$	2,999
U.S. govt. sponsored enterprises		10,733		149		1,376		74		12,109		223
State, county & municipal		35,062		813		-		-		35,062		813
Corporate debt obligations		1,319		50		-		-		1,319		50
Totals	$	145,147	$	4,011	$	1,376	$	74	$	146,523	$	4,085

Schedule of Amortized Cost and Estimated Fair value of Securities Available-for-Sale

The amortized cost and estimated fair value of securities available-for-sale at June 30, 2017, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities for residential mortgage backed securities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties.  These securities are therefore not presented by maturity classification.  

	Amortized Cost		Fair Value
	(In Thousands)
Securities available-for-sale
Less than 1 year	$	6,165	$	6,161
1 to 5 years		19,828		19,874
5 to 10 years		14,069		14,128
After 10 years		33,706		34,251
		73,768		74,414
Residential mortgage-backed securities		134,241		132,734
Totals	$	208,009	$	207,148

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Loans, Allowance for Loan Losses and Credit Quality (Tables)

6 Months Ended

Jun. 30, 2017

Accounts Notes Loans And Financing Receivable Gross Allowance And Net [Abstract]

Schedule of Major Classifications of Loans

Major classifications of loans at June 30, 2017 and December 31, 2016 are summarized as follows:

	June 30, 2017						December 31, 2016
	Amount			% of Total			Amount			% of Total
Residential real estate:
Closed-end 1-4 family - first lien	$	112,018			21.8	%	$	113,807			22.2	%
Closed-end 1-4 family - junior lien		4,104			0.8	%		4,791			0.9	%
Multi-family		14,907			2.9	%		17,043			3.3	%
Total residential real estate		131,029			25.5	%		135,641			26.4	%
Commercial real estate:
Nonfarm nonresidential		162,387			31.6	%		161,198			31.5	%
Farmland		13,255			2.6	%		13,344			2.6	%
Total commercial real estate		175,642			34.2	%		174,542			34.1	%
Construction and land development:
Residential		22,928			4.5	%		27,228			5.3	%
Other		37,437			7.3	%		37,221			7.3	%
Total construction and land development		60,365			11.8	%		64,449			12.6	%
Home equity lines of credit		34,028			6.6	%		35,761			7.0	%
Commercial loans:
Other commercial loans		90,846			17.7	%		81,198			15.8	%
Agricultural		935			0.2	%		887			0.2	%
State, county, and municipal loans		8,290			1.6	%		8,719			1.7	%
Total commercial loans		100,071			19.5	%		90,804			17.7	%
Consumer loans		21,087			4.1	%		20,858			4.1	%
Total gross loans		522,222			101.7	%		522,055			101.9	%
Allowance for loan losses		(4,401	)		-0.9	%		(4,007	)		-0.8	%
Net deferred loan fees and discounts		(4,272	)		-0.8	%		(5,614	)		-1.1	%
Net loans	$	513,549			100.0	%	$	512,434			100.0	%

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

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method for the periods indicated:

	Real Estate Mortgage Loans
						Construction			Home Equity
						and Land			Lines
Allowance for Loan Losses	Residential		Commercial			Development			Of Credit			Commercial			Consumer			Total
Balance - December 31, 2016	$	563	$	1,506		$	723		$	187		$	829		$	199		$	4,007
Provision for loan losses		252		76			(42	)		206			151			77			720
Loan charge-offs		-		(115	)		-			(100	)		(114	)		(85	)		(414	)
Loan recoveries		6		9			6			2			52			13			88
Balance - June 30, 2017	$	821	$	1,476		$	687		$	295		$	918		$	204		$	4,401
Ending balance:
Individually evaluated for impairment	$	279	$	380		$	-		$	-		$	408		$	26		$	1,093
Collectively evaluated for impairment		542		1,096			687			295			510			178			3,308
Total	$	821	$	1,476		$	687		$	295		$	918		$	204		$	4,401
Loans:
Individually evaluated for impairment	$	2,459	$	2,701		$	-		$	100		$	592		$	48		$	5,900
Collectively evaluated for impairment		128,570		172,941			60,365			33,928			99,479			21,039			516,322
Total	$	131,029	$	175,642		$	60,365		$	34,028		$	100,071		$	21,087		$	522,222

	Real Estate Mortgage Loans
						Construction		Home Equity
						and Land		Lines
Allowance for Loan Losses	Residential		Commercial			Development		Of Credit			Commercial			Consumer			Total
Balance - December 31, 2015	$	368	$	1,302		$	569	$	150		$	1,250		$	188		$	3,827
Provision for loan losses		106		(282	)		576		(23	)		22			48			447
Loan charge-offs		-		-			-		(10	)		(206	)		(9	)		(225	)
Loan recoveries		-		-			7		20			38			7			72
Balance - June 30, 2016	$	474	$	1,020		$	1,152	$	137		$	1,104		$	234		$	4,121
Ending balance:
Individually evaluated for  impairment	$	73	$	333		$	5	$	-		$	751		$	-		$	1,162
Collectively evaluated for impairment		401		687			1,147		137			353			234			2,959
Total	$	474	$	1,020		$	1,152	$	137		$	1,104		$	234		$	4,121
Loans:
Individually evaluated for impairment	$	1,215	$	4,937		$	78	$	100		$	838		$	-		$	7,168
Collectively evaluated for impairment		131,372		165,957			65,774		33,189			82,701			20,168			499,161
Total	$	132,587	$	170,894		$	65,852	$	33,289		$	83,539		$	20,168		$	506,329

Summary of Impaired Loans by Class of Loans

The following table presents impaired loans by class of loans as of June 30, 2017.

Nonaccruing Impaired Loans	Total Impaired Loans		Impaired Loans With No Allowance		Impaired Loans With Allowance		Allowance for Loan Losses
Mortgage loans on real estate:
Residential	$	1,509	$	90	$	1,419	$	279
Commercial real estate		848		255		593		87
Construction and land development		-		-		-		-
Total mortgage loans on real estate		2,357		345		2,012		366
Home equity lines of credit		-		-		-		-
Commercial loans		54		54		-		-
Consumer loans		-		-		-		-
Total Loans	$	2,411	$	399	$	2,012	$	366

Accruing Impaired Loans	Total Impaired Loans		Impaired Loans With No Allowance		Impaired Loans With Allowance		Allowance for Loan Losses
Mortgage loans on real estate:
Residential	$	950	$	950	$	-	$	-
Commercial real estate		1,853		563		1,290		293
Construction and land development		-		-		-		-
Total mortgage loans on real estate		2,803		1,513		1,290		293
Home equity lines of credit		100		100		-		-
Commercial loans		538		132		406		408
Consumer loans		48		-		48		26
Total Loans	$	3,489	$	1,745	$	1,744	$	727

Total Impaired Loans	Total Impaired Loans		Impaired Loans With No Allowance		Impaired Loans With Allowance		Allowance for Loan Losses
Mortgage loans on real estate:
Residential	$	2,459	$	1,040	$	1,419	$	279
Commercial real estate		2,701		818		1,883		380
Construction and land development		-		-		-		-
Total mortgage loans on real estate		5,160		1,858		3,302		659
Home equity lines of credit		100		100		-		-
Commercial loans		592		186		406		408
Consumer loans		48		-		48		26
Total Loans	$	5,900	$	2,144	$	3,756	$	1,093

The following table presents impaired loans by class of loans as of December 31, 2016.

Nonaccruing Impaired Loans	Total Impaired Loans		Impaired Loans With No Allowance		Impaired Loans With Allowance		Allowance for Loan Losses
Mortgage loans on real estate:
Residential	$	223	$	96	$	127	$	53
Commercial real estate		3,470		1,010		2,460		430
Construction and land development		-		-		-		-
Total mortgage loans on real estate		3,693		1,106		2,587		483
Home equity lines of credit		100		100		-		-
Commercial loans		93		93		-		-
Consumer loans		-		-		-		-
Total Loans	$	3,886	$	1,299	$	2,587	$	483

Accruing Impaired Loans	Total Impaired Loans		Impaired Loans With No Allowance		Impaired Loans With Allowance		Allowance for Loan Losses
Mortgage loans on real estate:
Residential	$	978	$	978	$	-	$	-
Commercial real estate		1,905		589		1,316		317
Construction and land development		31		31		-		-
Total mortgage loans on real estate		2,914		1,598		1,316		317
Home equity lines of credit		100		100		-		-
Commercial loans		592		136		456		456
Consumer loans		39		-		39		19
Total Loans	$	3,645	$	1,834	$	1,811	$	792

Total Impaired Loans	Total Impaired Loans		Impaired Loans With No Allowance		Impaired Loans With Allowance		Allowance for Loan Losses
Mortgage loans on real estate:
Residential	$	1,201	$	1,074	$	127	$	53
Commercial real estate		5,375		1,599		3,776		747
Construction and land development		31		31		-		-
Total mortgage loans on real estate		6,607		2,704		3,903		800
Home equity lines of credit		200		200		-		-
Commercial loans		685		229		456		456
Consumer loans		39		-		39		19
Total Loans	$	7,531	$	3,133	$	4,398	$	1,275

Summary of Average Recorded Investment and Interest Income Recognized on Impaired Loans

The following table presents the average recorded investment in impaired loans and the interest income recognized on impaired loans in the six months ended June 30, 2017 and 2016 by loan category.

	Six  Months Ended						Six  Months Ended
	June 30, 2017						June 30, 2016
	Average		Ending				Average		Ending
	Recorded		Recorded		Interest		Recorded		Recorded		Interest
	Investment		Investment		Income		Investment		Investment		Income
Mortgage loans on real estate:
Residential real estate	$	1,966	$	2,459	$	35	$	1,221	$	1,215	$	37
Commercial real estate		3,275		2,701		49		4,035		4,937		71
Construction and land development		10		-		-		83		78		3
Total mortgage loans on real estate		5,251		5,160		84		5,339		6,230		111
Home equity lines of credit		67		100		3		100		100		2
Commercial loans		586		592		13		1,137		838		13
Consumer loans		24		48		1		-		-		-
Total Loans	$	5,928	$	5,900	$	101	$	6,576	$	7,168	$	126

Schedule of Aging of Loans and Non-Accrual Loan

The following tables present the aging of loans and non-accrual loan balances as of June 30, 2017 and December 31, 2016, by class of loans.

	Accruing Loans
As of June 30, 2017	Current		30-89 Days Past Due		90+ Days Past Due		Nonaccrual Loans		Total Loans
Mortgage loans on real estate:
Residential	$	128,043	$	1,273	$	71	$	1,642	$	131,029
Commercial real estate		174,005		715		1		921		175,642
Construction and land development		60,235		71		-		59		60,365
Total mortgage loans on real estate		362,283		2,059		72		2,622		367,036
Home equity lines of credit		33,911		55		-		62		34,028
Commercial loans		99,007		1,010		-		54		100,071
Consumer loans		20,808		139		91		49		21,087
Total Loans	$	516,009	$	3,263	$	163	$	2,787	$	522,222

	Accruing Loans
As of December 31, 2016	Current		30-89 Days Past Due		90+ Days Past Due		Nonaccrual Loans		Total Loans
Mortgage loans on real estate:
Residential	$	132,603	$	2,585	$	-	$	453	$	135,641
Commercial real estate		170,363		708		-		3,471		174,542
Construction and land development		64,111		312		-		26		64,449
Total mortgage loans on real estate		367,077		3,605		-		3,950		374,632
Home equity lines of credit		35,257		320		-		184		35,761
Commercial loans		90,579		76		19		130		90,804
Consumer loans		20,431		285		20		122		20,858
Total Loans	$	513,344	$	4,286	$	39	$	4,386	$	522,055

Schedule of Risk Category of Loans by Class of Loans

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be Pass rated loans. As of June 30, 2017 and December 31, 2016, and based on the most recent analysis performed as of those dates, the risk category of loans by class of loans is as follows:

As of June 30, 2017	Pass		Special Mention		Substandard		Doubtful		Total
Mortgage loans on real estate:
Residential	$	125,150	$	2,794	$	3,085	$	-	$	131,029
Commercial real estate		166,493		6,555		2,594		-		175,642
Construction and land development		59,446		771		148		-		60,365
Total mortgage loans on real estate		351,089		10,120		5,827		-		367,036
Home equity lines of credit		33,734		108		186		-		34,028
Commercial loans		97,257		2,189		625		-		100,071
Consumer loans		20,697		187		203		-		21,087
Total Loans	$	502,777	$	12,604	$	6,841	$	-	$	522,222

As of December 31, 2016	Pass		Special Mention		Substandard		Doubtful		Total
Mortgage loans on real estate:
Residential	$	125,983	$	6,272	$	3,386	$	-	$	135,641
Commercial real estate		165,381		3,837		5,324		-		174,542
Construction and land development		63,151		605		451		242		64,449
Total mortgage loans on real estate		354,515		10,714		9,161		242		374,632
Home equity lines of credit		35,344		109		308		-		35,761
Commercial loans		87,684		2,357		649		114		90,804
Consumer loans		20,433		211		214		-		20,858
Total Loans	$	497,976	$	13,391	$	10,332	$	356	$	522,055

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Fair Value Measurements and Disclosures (Tables)

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

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

The only assets and liabilities measured at fair value on a recurring basis are our securities available-for-sale.  Information related to River’s assets and liabilities measured at fair value on a recurring basis at June 30, 2017 and December 31, 2016 is as follows:

	Fair Value Measurements At Reporting Date Using:
June 30, 2017	Fair Value		Quoted Prices In Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Securities available-for-sale:
Residential mortgage -backed	$	132,734	$	-	$	132,734	$	-
U.S. government sponsored enterprises		17,116		-		17,116		-
State, county, and municipal		55,511		-		55,511		-
Corporate debt obligations		1,787		-		1,787		-
Totals	$	207,148	$	-	$	207,148	$	-

	Fair Value Measurements At Reporting Date Using:
December 31, 2016	Fair Value		Quoted Prices In Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Securities available-for-sale:
Residential mortgage -backed	$	108,675	$	-	$	108,675	$	-
U.S. government sponsored enterprises		15,327		-		15,327		-
State, county, and municipal		57,586		-		57,586		-
Corporate debt obligations		1,773		-		1,773		-
Totals	$	183,361	$	-	$	183,361	$	-

Schedule of Fair Value, Assets Measured on Non-Recurring Basis

The following table presents the financial instruments carried on the statement of financial position by caption and by level in the fair value hierarchy, for which a non-recurring change in fair value has been recorded as of June 30, 2017 and December 31, 2016:

	Fair Value Measurements At Reporting Date Using:
June 30, 2017	Fair Value		Quoted Prices In Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans	$	4,807	$	-	$	-	$	4,807
Foreclosed assets		1,557		-		-		1,557
Totals	$	6,364	$	-	$	-	$	6,364

December 31, 2016	Fair Value		Quoted Prices In Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans	$	6,256	$	-	$	-	$	6,256
Foreclosed assets		1,151		-		-		1,151
Totals	$	7,407	$	-	$	-	$	7,407

Summary of Estimated Fair values Related to Carrying, Notional Amounts of River's Financial Instruments

The estimated fair values, and related carrying or notional amounts, of River’s financial instruments as of June 30, 2017 and December 31, 2016 are as follows:

			Estimated Fair Value
June 30, 2017	Carrying Amount		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	22,144	$	22,144	$	-	$	-
Certificates of deposit in banks		5,463		-		5,463		-
Securities available-for-sale		207,148		-		207,148		-
Loans held-for-sale		3,800		-		3,800		-
Restricted equity securities		1,259		-		-		1,259
Loans receivable		513,549		-		511,250		4,807
Bank owned life insurance		15,370		-		15,370		-
Accrued interest receivable		2,324		-		2,324		-
Financial liabilities:
Deposits		688,266		-		687,453		-
Accrued interest payable		113		-		113		-
Securities sold under agreements to repurchase		17,085		-		17,085		-
Federal Home Loan Bank advances		10,000		-		9,998		-
Note payable		5,893		-		5,893		-

			Estimated Fair Value
December 31, 2016	Carrying Amount		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	42,499	$	42,499	$	-	$	-
Certificates of deposit in banks		5,463		-		5,463		-
Securities available-for-sale		183,361		-		183,361		-
Loans held-for-sale		7,734		-		7,734		-
Restricted equity securities		751		-		-		751
Loans receivable		512,434		-		506,178		6,256
Bank owned life insurance		15,161		-		15,161		-
Accrued interest receivable		2,376		-		2,376		-
Financial liabilities:
Deposits		704,913		-		688,591		-
Accrued interest payable		130		-		130		-
Securities sold under agreements to repurchase		13,034		-		13,034		-
Note payable		6,428		-		6,428		-

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Reclassifications - Additional Information (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2017 USD ($)	Dec. 31, 2016 USD ($)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Decrease in common stock related to 401(k) Employee Stock Ownership Plan	$ 734	$ 623
Employee Stock Ownership Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Decrease in common stock related to 401(k) Employee Stock Ownership Plan		623
Increase in common stock related to 401(k) Employee Stock Ownership Plan		$ 623
Employee Stock Ownership Plan | Defined Benefit Plans Adjustment
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of periods available to purchase shares following distribution	2
First put option effective period	within sixty days following the distribution of the shares from the KSOP
Second put option effective period	begins on the first day of the fifth month of the plan year for a sixty day period

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Earnings Per Share - Components of the Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Earnings Per Share [Abstract]
Net earnings available to common shareholders	$ 2,108	$ 1,982	$ 4,337	$ 3,704
Weighted average common shares outstanding	5,093,273	5,077,167	5,088,971	4,971,608
Dilutive effect of stock options	69,766	60,884	73,223	69,625
Dilutive effect of stock warrants	2,202	3,183	2,987	27,985
Diluted common shares	5,165,241	5,141,234	5,165,181	5,069,218
Basic earnings per common share	$ 0.41	$ 0.39	$ 0.85	$ 0.75
Diluted earnings per common share	$ 0.41	$ 0.39	$ 0.84	$ 0.73

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Investment Securities - Schedule of Securities Available for Sale (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Schedule of Available for Sale Securities [Line Items]
Securities available-for-sale, Amortized Cost	$ 208,009	$ 186,773
Securities available-for-sale, Gross Unrealized Gains	1,172	673
Securities available-for-sale, Gross Unrealized Losses	(2,033)	(4,085)
Securities available-for-sale, Fair Value	207,148	183,361
Residential Mortgage - Backed
Schedule of Available for Sale Securities [Line Items]
Securities available-for-sale, Amortized Cost	134,241	111,611
Securities available-for-sale, Gross Unrealized Gains	185	63
Securities available-for-sale, Gross Unrealized Losses	(1,692)	(2,999)
Securities available-for-sale, Fair Value	132,734	108,675
U.S. Govt. Sponsored Enterprises
Schedule of Available for Sale Securities [Line Items]
Securities available-for-sale, Amortized Cost	17,126	15,506
Securities available-for-sale, Gross Unrealized Gains	97	44
Securities available-for-sale, Gross Unrealized Losses	(107)	(223)
Securities available-for-sale, Fair Value	17,116	15,327
State, Country and Municipal
Schedule of Available for Sale Securities [Line Items]
Securities available-for-sale, Amortized Cost	54,817	57,837
Securities available-for-sale, Gross Unrealized Gains	881	562
Securities available-for-sale, Gross Unrealized Losses	(187)	(813)
Securities available-for-sale, Fair Value	55,511	57,586
Corporate Debt Obligations
Schedule of Available for Sale Securities [Line Items]
Securities available-for-sale, Amortized Cost	1,825	1,819
Securities available-for-sale, Gross Unrealized Gains	9	4
Securities available-for-sale, Gross Unrealized Losses	(47)	(50)
Securities available-for-sale, Fair Value	$ 1,787	$ 1,773

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Investment Securities - Schedule of Details Concerning Investment Securities with Unrealized Losses (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Schedule of Available for Sale Securities [Line Items]
Less than 12 Months, Fair Value	$ 110,148	$ 145,147
Less than 12 Months, Unrealized Losses	1,842	4,011
More Than 12 Months, Fair Value	13,875	1,376
More Than 12 Months, Unrealized Losses	191	74
Total, Fair Value	124,023	146,523
Total, Unrealized Losses	2,033	4,085
Residential Mortgage - Backed
Schedule of Available for Sale Securities [Line Items]
Less than 12 Months, Fair Value	90,885	98,033
Less than 12 Months, Unrealized Losses	1,590	2,999
More Than 12 Months, Fair Value	5,128
More Than 12 Months, Unrealized Losses	102
Total, Fair Value	96,013	98,033
Total, Unrealized Losses	1,692	2,999
U.S. Govt. Sponsored Enterprises
Schedule of Available for Sale Securities [Line Items]
Less than 12 Months, Fair Value	4,022	10,733
Less than 12 Months, Unrealized Losses	69	149
More Than 12 Months, Fair Value	1,306	1,376
More Than 12 Months, Unrealized Losses	38	74
Total, Fair Value	5,328	12,109
Total, Unrealized Losses	107	223
State, Country and Municipal
Schedule of Available for Sale Securities [Line Items]
Less than 12 Months, Fair Value	14,896	35,062
Less than 12 Months, Unrealized Losses	154	813
More Than 12 Months, Fair Value	6,458
More Than 12 Months, Unrealized Losses	33
Total, Fair Value	21,354	35,062
Total, Unrealized Losses	187	813
Corporate Debt Obligations
Schedule of Available for Sale Securities [Line Items]
Less than 12 Months, Fair Value	345	1,319
Less than 12 Months, Unrealized Losses	29	50
More Than 12 Months, Fair Value	983
More Than 12 Months, Unrealized Losses	18
Total, Fair Value	1,328	1,319
Total, Unrealized Losses	$ 47	$ 50

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Investment Securities - Additional Information (Details)	6 Months Ended
	Jun. 30, 2017 USD ($) Security	Jun. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)
Investments Debt And Equity Securities [Abstract]
Other-than-temporary impairments charged to earnings	$ 0	$ 0
Number of securities owned | Security	114
Unrealized losses	$ 2,033,000		$ 4,085,000
Securities pledged to secure public deposits	24,357,000		29,873,000
Securities pledged to secure repurchase agreements	22,055,000		$ 18,392,000
Proceeds from sale of available-for-sale securities	13,246,000	13,306,000
Realized investment gains	$ 3,000	$ 14,000

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Investment Securities - Schedule of Amortized Cost and Estimated Fair value of Securities Available-for-Sale (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Securities available-for-sale
Securities available-for-sale, Less than 1 year, Amortized Cost	$ 6,165
Securities available-for-sale, 1 to 5 years, Amortized Cost	19,828
Securities available-for-sale, 5 to 10 years, Amortized Cost	14,069
Securities available-for-sale, After 10 years, Amortized Cost	33,706
Securities available-for-sale, before Residential mortgage-backed securities	73,768
Securities available-for-sale, Residential mortgage-backed securities	208,009	$ 186,773
Securities available-for-sale
Securities available-for-sale, Less than 1 year, Fair Value	6,161
Securities available-for-sale, 1 to 5 years, Fair Value	19,874
Securities available-for-sale, 5 to 10 years, Fair Value	14,128
Securities available-for-sale, After 10 years, Fair Value	34,251
Securities available-for-sale, before Residential mortgage-backed securities Fair Value	74,414
Securities available-for-sale, Fair Value	207,148	183,361
Residential Mortgage-Backed Securities
Securities available-for-sale
Securities available-for-sale, Residential mortgage-backed securities	134,241	111,611
Securities available-for-sale
Securities available-for-sale, Fair Value	$ 132,734	$ 108,675

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Loans, Allowance for Loan Losses and Credit Quality - Major Classifications of Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016	Dec. 31, 2015
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	$ 522,222	$ 522,055	$ 506,329
Allowance for loan losses	(4,401)	(4,007)	(4,121)	$ (3,827)
Net deferred loan fees and discounts	(4,272)	(5,614)
Net loans	$ 513,549	$ 512,434
Total gross loans percentage	101.70%	101.90%
Allowance for loan losses percentage	(0.90%)	(0.80%)
Net deferred loan fees and discounts percentage	(0.80%)	(1.10%)
Net loans percentage	100.00%	100.00%
Home Equity Lines of Credit
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	$ 34,028	$ 35,761
Total gross loans percentage	6.60%	7.00%
Residential Real Estate
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	$ 131,029	$ 135,641
Total gross loans percentage	25.50%	26.40%
Residential Real Estate | Closed-end 1-4 family - first lien
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	$ 112,018	$ 113,807
Total gross loans percentage	21.80%	22.20%
Residential Real Estate | Closed-end 1-4 family - junior lien
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	$ 4,104	$ 4,791
Total gross loans percentage	0.80%	0.90%
Residential Real Estate | Multi-family
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	$ 14,907	$ 17,043
Total gross loans percentage	2.90%	3.30%
Commercial Real Estate
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	$ 175,642	$ 174,542
Total gross loans percentage	34.20%	34.10%
Commercial Real Estate | Nonfarm nonresidential
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	$ 162,387	$ 161,198
Total gross loans percentage	31.60%	31.50%
Commercial Real Estate | Farmland
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	$ 13,255	$ 13,344
Total gross loans percentage	2.60%	2.60%
Construction and Land Development
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	$ 60,365	$ 64,449
Total gross loans percentage	11.80%	12.60%
Construction and Land Development | Residential
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	$ 22,928	$ 27,228
Total gross loans percentage	4.50%	5.30%
Construction and Land Development | Other
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	$ 37,437	$ 37,221
Total gross loans percentage	7.30%	7.30%
Commercial Loans
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	$ 100,071	$ 90,804	83,539
Allowance for loan losses	$ (918)	$ (829)	(1,104)	(1,250)
Total gross loans percentage	19.50%	17.70%
Commercial Loans | Other commercial loans
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	$ 90,846	$ 81,198
Total gross loans percentage	17.70%	15.80%
Commercial Loans | Agricultural
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	$ 935	$ 887
Total gross loans percentage	0.20%	0.20%
Commercial Loans | State, county, and municipal loans
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	$ 8,290	$ 8,719
Total gross loans percentage	1.60%	1.70%
Consumer Loans
Accounts Notes And Loans Receivable [Line Items]
Total gross loans	$ 21,087	$ 20,858	20,168
Allowance for loan losses	$ (204)	$ (199)	$ (234)	$ (188)
Total gross loans percentage	4.10%	4.10%

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Loans, Allowance for Loan Losses and Credit Quality - Summary of Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment and Based on Impairment Method (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016
Allowance for Loan Losses
Beginning Balance			$ 4,007	$ 3,827
Provision for loan losses	$ 360	$ 215	720	447
Loan charge-offs			(414)	(225)
Loan recoveries			88	72
Ending Balance	4,401	4,121	4,401	4,121
Ending Balance, Individually evaluated for impairment					$ 1,093		$ 1,162
Ending Balance, Collectively evaluated for impairment					3,308		2,959
Total	4,401	4,121	4,401	3,827	4,401	$ 4,007	4,121
Loans, Individually evaluated for impairment					5,900		7,168
Loans, Collectively evaluated for impairment					516,322		499,161
Total Loans					522,222	522,055	506,329
Home Equity Lines of Credit
Allowance for Loan Losses
Total Loans					34,028	35,761
Residential
Allowance for Loan Losses
Total Loans					131,029	135,641
Commercial
Allowance for Loan Losses
Total Loans					175,642	174,542
Construction and Land Development
Allowance for Loan Losses
Total Loans					60,365	64,449
Commercial Loans
Allowance for Loan Losses
Beginning Balance			829	1,250
Provision for loan losses			151	22
Loan charge-offs			(114)	(206)
Loan recoveries			52	38
Ending Balance	918	1,104	918	1,104
Ending Balance, Individually evaluated for impairment					408		751
Ending Balance, Collectively evaluated for impairment					510		353
Total	918	1,104	829	1,250	918	829	1,104
Loans, Individually evaluated for impairment					592		838
Loans, Collectively evaluated for impairment					99,479		82,701
Total Loans					100,071	90,804	83,539
Consumer Loans
Allowance for Loan Losses
Beginning Balance			199	188
Provision for loan losses			77	48
Loan charge-offs			(85)	(9)
Loan recoveries			13	7
Ending Balance	204	234	204	234
Ending Balance, Individually evaluated for impairment					26
Ending Balance, Collectively evaluated for impairment					178		234
Total	204	234	199	188	204	199	234
Loans, Individually evaluated for impairment					48
Loans, Collectively evaluated for impairment					21,039		20,168
Total Loans					21,087	20,858	20,168
Real Estate Mortgage Loans
Allowance for Loan Losses
Total Loans					367,036	374,632
Real Estate Mortgage Loans | Home Equity Lines of Credit
Allowance for Loan Losses
Beginning Balance			187	150
Provision for loan losses			206	(23)
Loan charge-offs			(100)	(10)
Loan recoveries			2	20
Ending Balance	295	137	295	137
Ending Balance, Collectively evaluated for impairment					295		137
Total	295	137	187	150	295	187	137
Loans, Individually evaluated for impairment					100		100
Loans, Collectively evaluated for impairment					33,928		33,189
Total Loans					34,028		33,289
Real Estate Mortgage Loans | Residential
Allowance for Loan Losses
Beginning Balance			563	368
Provision for loan losses			252	106
Loan recoveries			6
Ending Balance	821	474	821	474
Ending Balance, Individually evaluated for impairment					279		73
Ending Balance, Collectively evaluated for impairment					542		401
Total	821	474	563	368	821	563	474
Loans, Individually evaluated for impairment					2,459		1,215
Loans, Collectively evaluated for impairment					128,570		131,372
Total Loans					131,029	135,641	132,587
Real Estate Mortgage Loans | Commercial
Allowance for Loan Losses
Beginning Balance			1,506	1,302
Provision for loan losses			76	(282)
Loan charge-offs			(115)
Loan recoveries			9
Ending Balance	1,476	1,020	1,476	1,020
Ending Balance, Individually evaluated for impairment					380		333
Ending Balance, Collectively evaluated for impairment					1,096		687
Total	1,476	1,020	1,506	1,302	1,476	1,506	1,020
Loans, Individually evaluated for impairment					2,701		4,937
Loans, Collectively evaluated for impairment					172,941		165,957
Total Loans					175,642	174,542	170,894
Real Estate Mortgage Loans | Construction and Land Development
Allowance for Loan Losses
Beginning Balance			723	569
Provision for loan losses			(42)	576
Loan recoveries			6	7
Ending Balance	687	1,152	687	1,152
Ending Balance, Individually evaluated for impairment							5
Ending Balance, Collectively evaluated for impairment					687		1,147
Total	$ 687	$ 1,152	$ 723	$ 569	687	723	1,152
Loans, Individually evaluated for impairment							78
Loans, Collectively evaluated for impairment					60,365		65,774
Total Loans					$ 60,365	$ 64,449	$ 65,852

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Loans, Allowance for Loan Losses and Credit Quality - Summary of Impaired Loans by Class of Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016
Accounts Notes And Loans Receivable [Line Items]
Total Impaired Loans	$ 5,900	$ 7,531	$ 7,168
Impaired Loans With No Allowance	2,144	3,133
Impaired Loans With Allowance	3,756	4,398
Allowance for Loan Losses	1,093	1,275
Home Equity Lines of Credit
Accounts Notes And Loans Receivable [Line Items]
Total Impaired Loans	100	200	100
Impaired Loans With No Allowance	100	200
Commercial Loans
Accounts Notes And Loans Receivable [Line Items]
Total Impaired Loans	592	685	838
Impaired Loans With No Allowance	186	229
Impaired Loans With Allowance	406	456
Allowance for Loan Losses	408	456
Consumer Loans
Accounts Notes And Loans Receivable [Line Items]
Total Impaired Loans	48	39
Impaired Loans With Allowance	48	39
Allowance for Loan Losses	26	19
Mortgage Loans on Real Estate
Accounts Notes And Loans Receivable [Line Items]
Total Impaired Loans	5,160	6,607	6,230
Impaired Loans With No Allowance	1,858	2,704
Impaired Loans With Allowance	3,302	3,903
Allowance for Loan Losses	659	800
Mortgage Loans on Real Estate | Residential
Accounts Notes And Loans Receivable [Line Items]
Total Impaired Loans	2,459	1,201	1,215
Impaired Loans With No Allowance	1,040	1,074
Impaired Loans With Allowance	1,419	127
Allowance for Loan Losses	279	53
Mortgage Loans on Real Estate | Commercial Real Estate
Accounts Notes And Loans Receivable [Line Items]
Total Impaired Loans	2,701	5,375	4,937
Impaired Loans With No Allowance	818	1,599
Impaired Loans With Allowance	1,883	3,776
Allowance for Loan Losses	380	747
Mortgage Loans on Real Estate | Construction and Land Development
Accounts Notes And Loans Receivable [Line Items]
Total Impaired Loans		31	$ 78
Impaired Loans With No Allowance		31
Nonaccruing Impaired Loans
Accounts Notes And Loans Receivable [Line Items]
Total Impaired Loans	2,411	3,886
Impaired Loans With No Allowance	399	1,299
Impaired Loans With Allowance	2,012	2,587
Allowance for Loan Losses	366	483
Nonaccruing Impaired Loans | Home Equity Lines of Credit
Accounts Notes And Loans Receivable [Line Items]
Total Impaired Loans		100
Impaired Loans With No Allowance		100
Nonaccruing Impaired Loans | Commercial Loans
Accounts Notes And Loans Receivable [Line Items]
Total Impaired Loans	54	93
Impaired Loans With No Allowance	54	93
Nonaccruing Impaired Loans | Mortgage Loans on Real Estate
Accounts Notes And Loans Receivable [Line Items]
Total Impaired Loans	2,357	3,693
Impaired Loans With No Allowance	345	1,106
Impaired Loans With Allowance	2,012	2,587
Allowance for Loan Losses	366	483
Nonaccruing Impaired Loans | Mortgage Loans on Real Estate | Residential
Accounts Notes And Loans Receivable [Line Items]
Total Impaired Loans	1,509	223
Impaired Loans With No Allowance	90	96
Impaired Loans With Allowance	1,419	127
Allowance for Loan Losses	279	53
Nonaccruing Impaired Loans | Mortgage Loans on Real Estate | Commercial Real Estate
Accounts Notes And Loans Receivable [Line Items]
Total Impaired Loans	848	3,470
Impaired Loans With No Allowance	255	1,010
Impaired Loans With Allowance	593	2,460
Allowance for Loan Losses	87	430
Accruing Impaired Loans
Accounts Notes And Loans Receivable [Line Items]
Total Impaired Loans	3,489	3,645
Impaired Loans With No Allowance	1,745	1,834
Impaired Loans With Allowance	1,744	1,811
Allowance for Loan Losses	727	792
Accruing Impaired Loans | Home Equity Lines of Credit
Accounts Notes And Loans Receivable [Line Items]
Total Impaired Loans	100	100
Impaired Loans With No Allowance	100	100
Accruing Impaired Loans | Commercial Loans
Accounts Notes And Loans Receivable [Line Items]
Total Impaired Loans	538	592
Impaired Loans With No Allowance	132	136
Impaired Loans With Allowance	406	456
Allowance for Loan Losses	408	456
Accruing Impaired Loans | Consumer Loans
Accounts Notes And Loans Receivable [Line Items]
Total Impaired Loans	48	39
Impaired Loans With Allowance	48	39
Allowance for Loan Losses	26	19
Accruing Impaired Loans | Mortgage Loans on Real Estate
Accounts Notes And Loans Receivable [Line Items]
Total Impaired Loans	2,803	2,914
Impaired Loans With No Allowance	1,513	1,598
Impaired Loans With Allowance	1,290	1,316
Allowance for Loan Losses	293	317
Accruing Impaired Loans | Mortgage Loans on Real Estate | Residential
Accounts Notes And Loans Receivable [Line Items]
Total Impaired Loans	950	978
Impaired Loans With No Allowance	950	978
Accruing Impaired Loans | Mortgage Loans on Real Estate | Commercial Real Estate
Accounts Notes And Loans Receivable [Line Items]
Total Impaired Loans	1,853	1,905
Impaired Loans With No Allowance	563	589
Impaired Loans With Allowance	1,290	1,316
Allowance for Loan Losses	$ 293	317
Accruing Impaired Loans | Mortgage Loans on Real Estate | Construction and Land Development
Accounts Notes And Loans Receivable [Line Items]
Total Impaired Loans		31
Impaired Loans With No Allowance		$ 31

XML

Loans, Allowance for Loan Losses and Credit Quality - Summary of Average Recorded Investment and Interest Income recognized on Impaired Loans (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Financing Receivable Impaired [Line Items]
Impaired loans, Average Recorded Investment	$ 5,928	$ 6,576
Impaired loans, Ending Recorded Investment	5,900	7,168	$ 7,531
Impaired loans, Interest Income	101	126
Home Equity Lines of Credit
Financing Receivable Impaired [Line Items]
Impaired loans, Average Recorded Investment	67	100
Impaired loans, Ending Recorded Investment	100	100	200
Impaired loans, Interest Income	3	2
Commercial Loans
Financing Receivable Impaired [Line Items]
Impaired loans, Average Recorded Investment	586	1,137
Impaired loans, Ending Recorded Investment	592	838	685
Impaired loans, Interest Income	13	13
Consumer Loans
Financing Receivable Impaired [Line Items]
Impaired loans, Average Recorded Investment	24
Impaired loans, Ending Recorded Investment	48		39
Impaired loans, Interest Income	1
Mortgage Loans on Real Estate
Financing Receivable Impaired [Line Items]
Impaired loans, Average Recorded Investment	5,251	5,339
Impaired loans, Ending Recorded Investment	5,160	6,230	6,607
Impaired loans, Interest Income	84	111
Mortgage Loans on Real Estate | Residential Real Estate
Financing Receivable Impaired [Line Items]
Impaired loans, Average Recorded Investment	1,966	1,221
Impaired loans, Ending Recorded Investment	2,459	1,215	1,201
Impaired loans, Interest Income	35	37
Mortgage Loans on Real Estate | Commercial Real Estate
Financing Receivable Impaired [Line Items]
Impaired loans, Average Recorded Investment	3,275	4,035
Impaired loans, Ending Recorded Investment	2,701	4,937	5,375
Impaired loans, Interest Income	49	71
Mortgage Loans on Real Estate | Construction and Land Development
Financing Receivable Impaired [Line Items]
Impaired loans, Average Recorded Investment	$ 10	83
Impaired loans, Ending Recorded Investment		78	$ 31
Impaired loans, Interest Income		$ 3

XML

Loans, Allowance for Loan Losses and Credit Quality - Summary of Aging of Loans and Non-accrual Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016
Financing Receivable Recorded Investment Past Due [Line Items]
Accruing Loans, Current	$ 516,009	$ 513,344
Nonaccrual Loans	2,787	4,386
Total Loans	522,222	522,055	$ 506,329
Home Equity Lines of Credit
Financing Receivable Recorded Investment Past Due [Line Items]
Accruing Loans, Current	33,911	35,257
Nonaccrual Loans	62	184
Total Loans	34,028	35,761
Past Due 30-89 Days
Financing Receivable Recorded Investment Past Due [Line Items]
Accruing Loans, Past Due	3,263	4,286
Past Due 30-89 Days | Home Equity Lines of Credit
Financing Receivable Recorded Investment Past Due [Line Items]
Accruing Loans, Past Due	55	320
Past Due 90 Days or More
Financing Receivable Recorded Investment Past Due [Line Items]
Accruing Loans, Past Due	163	39
Residential
Financing Receivable Recorded Investment Past Due [Line Items]
Total Loans	131,029	135,641
Commercial Real Estate
Financing Receivable Recorded Investment Past Due [Line Items]
Total Loans	175,642	174,542
Construction and Land Development
Financing Receivable Recorded Investment Past Due [Line Items]
Total Loans	60,365	64,449
Commercial Loans
Financing Receivable Recorded Investment Past Due [Line Items]
Accruing Loans, Current	99,007	90,579
Nonaccrual Loans	54	130
Total Loans	100,071	90,804	83,539
Commercial Loans | Past Due 30-89 Days
Financing Receivable Recorded Investment Past Due [Line Items]
Accruing Loans, Past Due	1,010	76
Commercial Loans | Past Due 90 Days or More
Financing Receivable Recorded Investment Past Due [Line Items]
Accruing Loans, Past Due		19
Consumer Loans
Financing Receivable Recorded Investment Past Due [Line Items]
Accruing Loans, Current	20,808	20,431
Nonaccrual Loans	49	122
Total Loans	21,087	20,858	20,168
Consumer Loans | Past Due 30-89 Days
Financing Receivable Recorded Investment Past Due [Line Items]
Accruing Loans, Past Due	139	285
Consumer Loans | Past Due 90 Days or More
Financing Receivable Recorded Investment Past Due [Line Items]
Accruing Loans, Past Due	91	20
Mortgage Loans on Real Estate
Financing Receivable Recorded Investment Past Due [Line Items]
Accruing Loans, Current	362,283	367,077
Nonaccrual Loans	2,622	3,950
Total Loans	367,036	374,632
Mortgage Loans on Real Estate | Home Equity Lines of Credit
Financing Receivable Recorded Investment Past Due [Line Items]
Total Loans	34,028		33,289
Mortgage Loans on Real Estate | Past Due 30-89 Days
Financing Receivable Recorded Investment Past Due [Line Items]
Accruing Loans, Past Due	2,059	3,605
Mortgage Loans on Real Estate | Past Due 90 Days or More
Financing Receivable Recorded Investment Past Due [Line Items]
Accruing Loans, Past Due	72
Mortgage Loans on Real Estate | Residential
Financing Receivable Recorded Investment Past Due [Line Items]
Accruing Loans, Current	128,043	132,603
Nonaccrual Loans	1,642	453
Total Loans	131,029	135,641	132,587
Mortgage Loans on Real Estate | Residential | Past Due 30-89 Days
Financing Receivable Recorded Investment Past Due [Line Items]
Accruing Loans, Past Due	1,273	2,585
Mortgage Loans on Real Estate | Residential | Past Due 90 Days or More
Financing Receivable Recorded Investment Past Due [Line Items]
Accruing Loans, Past Due	71
Mortgage Loans on Real Estate | Commercial Real Estate
Financing Receivable Recorded Investment Past Due [Line Items]
Accruing Loans, Current	174,005	170,363
Nonaccrual Loans	921	3,471
Total Loans	175,642	174,542	170,894
Mortgage Loans on Real Estate | Commercial Real Estate | Past Due 30-89 Days
Financing Receivable Recorded Investment Past Due [Line Items]
Accruing Loans, Past Due	715	708
Mortgage Loans on Real Estate | Commercial Real Estate | Past Due 90 Days or More
Financing Receivable Recorded Investment Past Due [Line Items]
Accruing Loans, Past Due	1
Mortgage Loans on Real Estate | Construction and Land Development
Financing Receivable Recorded Investment Past Due [Line Items]
Accruing Loans, Current	60,235	64,111
Nonaccrual Loans	59	26
Total Loans	60,365	64,449	$ 65,852
Mortgage Loans on Real Estate | Construction and Land Development | Past Due 30-89 Days
Financing Receivable Recorded Investment Past Due [Line Items]
Accruing Loans, Past Due	$ 71	$ 312

XML

Loans, Allowance for Loan Losses and Credit Quality - Summary of Risk Category of Loans by Class of Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016
Financing Receivable Recorded Investment [Line Items]
Total loans	$ 522,222	$ 522,055	$ 506,329
Pass
Financing Receivable Recorded Investment [Line Items]
Total loans	502,777	497,976
Special Mention
Financing Receivable Recorded Investment [Line Items]
Total loans	12,604	13,391
Substandard
Financing Receivable Recorded Investment [Line Items]
Total loans	6,841	10,332
Doubtful
Financing Receivable Recorded Investment [Line Items]
Total loans		356
Home Equity Lines of Credit
Financing Receivable Recorded Investment [Line Items]
Total loans	34,028	35,761
Home Equity Lines of Credit | Pass
Financing Receivable Recorded Investment [Line Items]
Total loans	33,734	35,344
Home Equity Lines of Credit | Special Mention
Financing Receivable Recorded Investment [Line Items]
Total loans	108	109
Home Equity Lines of Credit | Substandard
Financing Receivable Recorded Investment [Line Items]
Total loans	186	308
Residential
Financing Receivable Recorded Investment [Line Items]
Total loans	131,029	135,641
Commercial Real Estate
Financing Receivable Recorded Investment [Line Items]
Total loans	175,642	174,542
Construction and Land Development
Financing Receivable Recorded Investment [Line Items]
Total loans	60,365	64,449
Commercial Loans
Financing Receivable Recorded Investment [Line Items]
Total loans	100,071	90,804	83,539
Commercial Loans | Pass
Financing Receivable Recorded Investment [Line Items]
Total loans	97,257	87,684
Commercial Loans | Special Mention
Financing Receivable Recorded Investment [Line Items]
Total loans	2,189	2,357
Commercial Loans | Substandard
Financing Receivable Recorded Investment [Line Items]
Total loans	625	649
Commercial Loans | Doubtful
Financing Receivable Recorded Investment [Line Items]
Total loans		114
Consumer Loans
Financing Receivable Recorded Investment [Line Items]
Total loans	21,087	20,858	20,168
Consumer Loans | Pass
Financing Receivable Recorded Investment [Line Items]
Total loans	20,697	20,433
Consumer Loans | Special Mention
Financing Receivable Recorded Investment [Line Items]
Total loans	187	211
Consumer Loans | Substandard
Financing Receivable Recorded Investment [Line Items]
Total loans	203	214
Mortgage Loans on Real Estate
Financing Receivable Recorded Investment [Line Items]
Total loans	367,036	374,632
Mortgage Loans on Real Estate | Pass
Financing Receivable Recorded Investment [Line Items]
Total loans	351,089	354,515
Mortgage Loans on Real Estate | Special Mention
Financing Receivable Recorded Investment [Line Items]
Total loans	10,120	10,714
Mortgage Loans on Real Estate | Substandard
Financing Receivable Recorded Investment [Line Items]
Total loans	5,827	9,161
Mortgage Loans on Real Estate | Doubtful
Financing Receivable Recorded Investment [Line Items]
Total loans		242
Mortgage Loans on Real Estate | Home Equity Lines of Credit
Financing Receivable Recorded Investment [Line Items]
Total loans	34,028		33,289
Mortgage Loans on Real Estate | Residential
Financing Receivable Recorded Investment [Line Items]
Total loans	131,029	135,641	132,587
Mortgage Loans on Real Estate | Residential | Pass
Financing Receivable Recorded Investment [Line Items]
Total loans	125,150	125,983
Mortgage Loans on Real Estate | Residential | Special Mention
Financing Receivable Recorded Investment [Line Items]
Total loans	2,794	6,272
Mortgage Loans on Real Estate | Residential | Substandard
Financing Receivable Recorded Investment [Line Items]
Total loans	3,085	3,386
Mortgage Loans on Real Estate | Commercial Real Estate
Financing Receivable Recorded Investment [Line Items]
Total loans	175,642	174,542	170,894
Mortgage Loans on Real Estate | Commercial Real Estate | Pass
Financing Receivable Recorded Investment [Line Items]
Total loans	166,493	165,381
Mortgage Loans on Real Estate | Commercial Real Estate | Special Mention
Financing Receivable Recorded Investment [Line Items]
Total loans	6,555	3,837
Mortgage Loans on Real Estate | Commercial Real Estate | Substandard
Financing Receivable Recorded Investment [Line Items]
Total loans	2,594	5,324
Mortgage Loans on Real Estate | Construction and Land Development
Financing Receivable Recorded Investment [Line Items]
Total loans	60,365	64,449	$ 65,852
Mortgage Loans on Real Estate | Construction and Land Development | Pass
Financing Receivable Recorded Investment [Line Items]
Total loans	59,446	63,151
Mortgage Loans on Real Estate | Construction and Land Development | Special Mention
Financing Receivable Recorded Investment [Line Items]
Total loans	771	605
Mortgage Loans on Real Estate | Construction and Land Development | Substandard
Financing Receivable Recorded Investment [Line Items]
Total loans	$ 148	451
Mortgage Loans on Real Estate | Construction and Land Development | Doubtful
Financing Receivable Recorded Investment [Line Items]
Total loans		$ 242

XML

Fair Value Measurement and Disclosures - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	$ 207,148	$ 183,361
U.S. Government Sponsored Enterprises
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	17,116	15,327
State, Country and Municipal
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	55,511	57,586
Corporate Debt Obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	1,787	1,773
Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	207,148	183,361
Recurring Basis | Residential Mortgage -Backed
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	132,734	108,675
Recurring Basis | U.S. Government Sponsored Enterprises
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	17,116	15,327
Recurring Basis | State, Country and Municipal
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	55,511	57,586
Recurring Basis | Corporate Debt Obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	1,787	1,773
Recurring Basis | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	207,148	183,361
Recurring Basis | Significant Other Observable Inputs (Level 2) | Residential Mortgage -Backed
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	132,734	108,675
Recurring Basis | Significant Other Observable Inputs (Level 2) | U.S. Government Sponsored Enterprises
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	17,116	15,327
Recurring Basis | Significant Other Observable Inputs (Level 2) | State, Country and Municipal
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	55,511	57,586
Recurring Basis | Significant Other Observable Inputs (Level 2) | Corporate Debt Obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	$ 1,787	$ 1,773

XML

Fair Value Measurement and Disclosures - Schedule of Fair Value, Assets Measured on Non-Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	$ 6,364	$ 7,407
Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	6,364	7,407
Impaired Loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	4,807	6,256
Impaired Loans | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	4,807	6,256
Foreclosed Assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	1,557	1,151
Foreclosed Assets | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	$ 1,557	$ 1,151

XML

Fair Value Measurement and Disclosures - Summary of Estimated Fair Values Related to Carrying, Notional Amounts of River's Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Financial assets:
Securities available-for-sale	$ 207,148	$ 183,361
Bank owned life insurance	15,370	15,161
Accrued interest receivable	2,324	2,376
Financial liabilities:
Securities sold under agreements to repurchase	17,085	13,034
Carrying Amount
Financial assets:
Cash and cash equivalents	22,144	42,499
Certificates of deposit in banks	5,463	5,463
Securities available-for-sale	207,148	183,361
Loans held-for-sale	3,800	7,734
Restricted equity securities	1,259	751
Loans receivable	513,549	512,434
Bank owned life insurance	15,370	15,161
Accrued interest receivable	2,324	2,376
Financial liabilities:
Deposits	688,266	704,913
Accrued interest payable	113	130
Securities sold under agreements to repurchase	17,085	13,034
Federal Home Loan Bank advances	10,000
Note payable	5,893	6,428
Estimate Fair Value | Quoted Prices In Active Markets For Identical Assets (Level 1)
Financial assets:
Cash and cash equivalents	22,144	42,499
Estimate Fair Value | Significant Other Observable Inputs (Level 2)
Financial assets:
Certificates of deposit in banks	5,463	5,463
Securities available-for-sale	207,148	183,361
Loans held-for-sale	3,800	7,734
Loans receivable	511,250	506,178
Bank owned life insurance	15,370	15,161
Accrued interest receivable	2,324	2,376
Financial liabilities:
Deposits	687,453	688,591
Accrued interest payable	113	130
Securities sold under agreements to repurchase	17,085	13,034
Federal Home Loan Bank advances	9,998
Note payable	5,893	6,428
Estimate Fair Value | Significant Unobservable Inputs (Level 3)
Financial assets:
Restricted equity securities	1,259	751
Loans receivable	$ 4,807	$ 6,256

XML

Acquisition - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands		6 Months Ended
	Dec. 31, 2015	Jun. 30, 2016
Business Acquisition [Line Items]
Cash payments to keystone shareholders		$ 7,274
Keystone Bancshares, Inc.
Business Acquisition [Line Items]
Shares of river common stock issued for each outstanding share of keystone common stock upon merger	1
Cash paid for each outstanding share of keystone common stock upon merger	$ 4.00
Option to acquire shares of river common stock	1.25
Shares to be issued upon closing of merger	1,818,492
Cash payments to keystone shareholders	$ 7,274

XML

Defined Contribution Plan - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2017 USD ($) shares	Jun. 30, 2016 USD ($)	Dec. 31, 2016 USD ($) shares
Defined Contribution Plan Disclosure [Line Items]
Common stock, shares outstanding | shares	5,113,655		5,080,857
Employee Stock Ownership Plan
Defined Contribution Plan Disclosure [Line Items]
Defined contribution plan, description	The Company makes contributions up to 3% of each participant’s annual compensation and the Company matches 50% of the next 2% contributed by the employee.
Maximum annual contributions amount per employee in 2017 and 2016	$ 18,000
Maximum annual contributions percentage per employee	3.00%
Employer matching percentage of compensation contributed	50.00%
Employer matching percentage of employees compensation contributed	2.00%
Contributions by company	$ 162,000	$ 137,000
Defined contribution plan, number of common stock outstanding, shares unallocated | shares	0		0
Common stock related to 401(k) Employee Stock Ownership Plan	$ 734,000		$ 623,000
Fair Value of Common stock related to 401(k) Employee Stock Ownership Plan	$ 989,000		$ 672,000
Employee Stock Ownership Plan | Defined Benefit Plans Adjustment
Defined Contribution Plan Disclosure [Line Items]
Number of periods available to purchase shares following distribution	2
First put option effective period	within sixty days following the distribution of the shares from the KSOP
Second put option effective period	begins on the first day of the fifth month of the plan year for a sixty day period
Stock Compensation Plan | Employee Stock Ownership Plan
Defined Contribution Plan Disclosure [Line Items]
Common stock, shares outstanding | shares	43,477		38,933