Smartfinancial, Inc. · NYSE:SMBK
Smartfinancial — Merger or Acquisition (January 2019)
25 slides from Smartfinancial's merger presentation, Jan 16, 2019
Slide 1: Transformative Merger of Equals
Transformative Merger of Equals January 15, 2019
Slide 2: Compliance Disclosures
2 Compliance Disclosures Important Information for Shareholders and Investors This presentation shall not constitute an offer to sell, the solicitation of an offer to sell, or the solicitation of an offer to buy any securities or the solicitation of any vote or approval of the SmartFinancial, Inc. (
Slide 3: Legal Disclaimer: Forward-Looking Statements
3 Legal Disclaimer Forward-Looking Statements Certain of the statements made in this investor presentation may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Slide 4: Creating a Premier Southeastern Partnership
4 To maximize the combined ~$4.0B platform – ▪ Build upon both teams’ integration experience to support the foundation for continued efficient, intelligent growth ▪ Leverage ENFC’s operational expertise/mortgage platform and SMBK’s lending/sales culture and brand across the entire footprint ▪ SmartF
Slide 5: Enhancing Value for Both Shareholder Bases
5 Enhancing Value for Both Shareholder Bases ▪ $2.3 billion asset bank holding company(2) – Headquartered in Knoxville, TN – Founded in 2007 – NASDAQ traded under ticker “SMBK” ▪ Double digit annual organic growth complemented by track record of strategic partnerships – 6 multi-state strategic partn
Slide 6: Transaction Rationale
6 Transaction Rationale Mutually strong regulatory standing with conservative credit cultures Well equipped to execute given both parties’ acquisition expertise (including MOE integration) Leveraging of ENFC’s operational expertise with SMBK’s sales and lending culture Enhanced operating leverage ac
Slide 7: Experienced in Managing MOE Execution Risk
7 Experienced in Managing MOE Execution Risk ▪ SmartFinancial has established itself as a partner of choice in the Southeast, having successfully completed and integrated six previous transactions across three states since 2012 alongside consistent organic growth ▪ A key transaction in SMBK’s histor
Slide 8: Transaction Terms
8 Calculated deal price per share of $22.36 Aggregate transaction value of $158.2 million(2) Transaction Terms SMBK to make $1 million contribution within 3-year period to qualifying charities serving legacy ENFC markets as directed by the Carolina Advisory Board* Consideration 100% Stock; fixed exc
Slide 9: Key Transaction Assumptions
9 Expected Cost Savings Treatment of Options Merger & Integration Costs Revenue Synergies Purchase Accounting & Other Adjustments ▪ $10 million, or 25% of ENFC’s annual Noninterest Expense base ▪ 50% realized in 2019 ▪ 100% realized thereafter ▪ Approximately $15 million in combined pre-tax merger e
Slide 10: Estimated Pro Forma Capital Ratios and Concentrations
10 Loan Concentration Ratios C&D/ Total Capital CRE/ Total Capital Estimated Pro Forma Capital Ratios and Concentrations TCE/ TA Leverage Ratio Common Equity Tier 1 Ratio Tier 1 Ratio Total Risk-Based Ratio Capital Ratios 268% 9.2% 9.3% 10.7% 10.7% 13.3% 78% 8.2% 8.7% 10.7% 11.1% 12.1% 88% 269% ▪ St
Slide 11: Our Combined Leadership Team
11 Our Combined Leadership Team David Bright Chief Financial Officer Billy Carroll, Jr. President & CEO Greg Davis Chief Lending Officer Bill Yoder Chief Banking Officer Ryan Scaggs Chief Operations Officer Gary Petty Chief Risk Officer Rhett Jordan Chief Credit Officer Ron Gorczynski Chief Administ
Slide 12: Due Diligence Highlights
12 Due Diligence Highlights ▪ Significant collaboration between SMBK and ENFC to carefully plan and structure: ▪ Optimal organizational structure ▪ Combined leadership team and Board of Directors ▪ Right-sized Risk Management and Compliance functions ▪ Comprehensive, reciprocal review of cultures, p
Slide 13: Building Significant Scarcity Value
13 Building Significant Scarcity Value ▪ Increases depth of executive leadership team and Board of Directors highly capable of running a pro forma ~$4.0 billion asset, NASDAQ-traded financial institution *Most recent quarter (MRQ) pro forma for acquisitions (whole-bank and branch) and branch divesti
Slide 14: Pro Forma Footprint and Highlights
14 Pro Forma Footprint and Highlights Pro Forma Deposits by State (as of 06/30/18) Pro Forma Highlights (as of 09/30/18) (1) Tangible common equity is a Non-GAAP measure. Refer to appendix for GAAP to Non-GAAP reconciliation. Deposits by state as of 06/30/18 FDIC deposit survey, adjusted for announc
Slide 15: Pro Forma Deposit Market Share
15 Pro Forma Deposit Market Share Pro Forma Counties of Operation Rank Institution Market Share (%) Deposits in Market ($000) Number of Branches 1 Regions Financial Corp. (AL) 10.27 9,206,647 131 2 SunTrust Banks Inc. (GA) 8.44 7,560,434 79 3 Wells Fargo & Co. (CA) 7.55 6,762,338 73 4 First Horizon
Slide 16: Overview of Entegra Financial Corp.
16 Overview of Entegra Financial Corp. Entegra Company Highlights * Nonperforming assets excluding restructured loans (nonaccrual loans, real estate owned and repossessed assets) as a percent of total assets Note: Deposits for market share analysis are as of 06/30/18 FDIC deposit survey, adjusted fo
Slide 17: Balance Sheet Trends
17 907 1,439 1,500 1,717 1,897 830 1,162 1,206 1,221 1,256 0 400 800 1,200 1,600 2,000 YE 2016 YE 2017 Q1'18 Q2'18 Q3'18* 1,062 1,721 1,760 2,062 2,270 1,293 1,581 1,625 1,628 1,670 0 500 1,000 1,500 2,000 2,500 YE 2016 YE 2017 Q1'18 Q2'18 Q3'18* Balance Sheet Trends *Includes pro forma impact of SM
Slide 18: Performance Trends
18 Performance Trends (1) Excludes non-recurring and merger-related items (2) SMBK figures presented reflect Core Net Interest Margin, which excludes purchase accounting adjustments. Refer to appendix for GAAP to Non-GAAP reconciliation Sources: S&P Global Market Intelligence, SMBK and ENFC SEC fili
Slide 19: Combined Presence in Several Key Markets
19 Combined Presence in Several Key Markets ▪ Creates a combined presence in five of the top 25 largest MSAs in a region covering Alabama, Florida, Georgia, North Carolina, South Carolina and Tennessee ▪ Outside of top 25 MSAs, the combined company enhances total deposit market share from existing l
Slide 20: Pro Forma Loan and Deposit Composition
20 Demand 16% Transaction 17% MMDA & Savings 34% Retail CD 25% Jumbo CD Demand 8% 17% Transaction 17% MMDA & Savings 34% Retail CD 25% Jumbo CD 7% Demand 16% Transaction 17% MMDA & Savings 34% Retail CD 24% Jumbo CD 9% ADC 11% 1-4 23% Owner CRE 21% Other CRE 22% C&I 16% Other 7% ADC 14% 1-4 35% Owne
Slide 21: Appendix
RIN SmartFinancial, Inc. Entegra Appendix
Slide 22: Non-GAAP Reconciliations - SMBK
22 Non-GAAP Reconciliations - SMBK 3Q18 2Q18 1Q18 2017 2016 Net income (GAAP) $ 4,324 $ 3,931 $ 3,415 $ 5,015 $ 5,798 Securities (gains) losses and other - 1 - (94) (127) Merger-related expenses 642 912 395 1,999 - Revaluation of deferred tax asset due to tax rate change - - - 2,440 - Net operating
Slide 23: Non-GAAP Reconciliations - ENFC
23 Non-GAAP Reconciliations - ENFC 3Q18 2Q18 1Q18 2017 2016 Net income (GAAP) $ 3,523 $ 3,087 $ 3,582 $ 2,579 $ 6,376 Securities (gains) losses and other - 402 9 1,208 (713) Merger-related expenses 76 215 - 2,006 1,428 Revaluation of deferred tax asset due to tax rate change - - 155 4,854 - Net oper
Slide 24: Investor Contacts
24 Investor Contacts Miller Welborn Chairman Miller.Welborn@SmartBank.com Billy Carroll President and CEO Billy.Carroll@SmartBank.com Phone: (865) 437-5700 Roger Plemens President and CEO RPlemens@EntegraBank.com David Bright Chief Financial Officer and Treasurer DBright@EntegraBank.com Phone: (828)
Slide 25: RIN
RIN SmartFinancial, Inc. Entegra
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