Smartfinancial, Inc. · NYSE:SMBK
Smartfinancial — Q4 2017 Earnings Presentation
23 slides from Smartfinancial's earnings presentation, Jan 31, 2018
Slide 1: Fourth Quarter 2017 Earnings Call
Fourth Quarter 2017 Earnings Call February 1, 2018
Slide 2: Important Information: Forward Looking Statements
Important Information Forward Looking Statements This presentation contains forward-looking statements. SmartFinancial cautions you that a number of important factors could cause actual results to differ materially from those currently anticipated in any forward-looking statement. Such factors inclu
Slide 3: Important Information for Investors and Shareholders
Important Information Important Information for Investors and Shareholders In connection with the Tennessee Bancshares merger, SmartFinancial intends to file a registration statement on Form S-4 with the Securities and Exchange Commission (the “SEC”) to register the shares of SmartFinancial common s
Slide 4: SMBK at-a-glance
SMBK at-a-glance • Core franchise in East Tennessee – SmartBank founded in 2007 • Corporate Headquarters – Knoxville, Tennessee • 22 Branch Offices located in Knoxville, Pigeon Forge/Gatlinburg and Chattanooga/Cleveland regions in TN; in Tuscaloosa and southern AL; and in Pensacola, Destin and Panam
Slide 5: Fourth Quarter Highlights
Fourth Quarter 2018 Highlights • Record high total assets of $1.7 billion, net loans of $1.3 billion, and deposits of $1.4 billion. • Net interest margin, taxable equivalent, increased to 4.64 percent in the quarter driven by higher earning asset yields. • Efficiency ratio decreased by over 4 percen
Slide 6: Summary Results
Summary Results 0.00% 0.25% 0.50% 0.75% 1.00% 1.25% ROAA Net Operating ROAA 3.60% 3.70% 3.80% 3.90% 4.00% 4.10% 4.20% Net interest income / average assets 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% Noninterest income / average assets 2.90% 3.00% 3.10% 3.20% 3.30% 3.40% Noninterest expense / average assets
Slide 7: Earnings Profile – Fourth Quarter 2017
Earnings Profile – Fourth Quarter 2017 • Earnings before taxes up over 50% year over year • Net interest income up over 55% year over year primarily due higher average earning asset balances and higher earning asset yields • Increases in noninterest expense primarily driven by salaries from the incr
Slide 8: Net Interest Income
Net Interest Income • Net interest margin, taxable equivalent, increased quarter to quarter due higher average interest-earning assets to average interest- bearing liabilities and increases in the yields of loans and securities. • Compared to a year ago earning asset yields are up 70bps while cost o
Slide 9: Noninterest Income
Noninterest Income • 4Q17 Noninterest income increased $0.4 million quarter to quarter. • Quarterly recurring core noninterest income of service charges, gains on the sale of loans, and other noninterest income has trended higher over the last four quarters from approximately $0.9 million in 4Q16 to
Slide 10: Noninterest Expense
Noninterest Expense • Salary increases are primarily due to the additions of personnel in Alabama from the Capstone acquisition. • Increases in other noninterest expense compared to the prior year primarily due to merger expenses. • Even including merger expense Efficiency ratio dropped over 4%, the
Slide 11: Balance Sheet
Balance Sheet • Assets increased primarily due to the completion of the Capstone acquisition. • Cash & cash equivalents increased primarily due to liquidation and pending re-investment of Capstone securities portfolio. • Capstone acquisition added a little over $450 million in gross loans. • Deposit
Slide 12: Loan Portfolio
Loan Portfolio • Loan balance increase last due to strong organic growth and Capstone acquisition. • Loan composition as a result of the of the acquisition has a higher allocation of C&I $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 4Q16 1Q17 2Q17 3Q17 4Q17 Portfolio Compos
Slide 13: CRE Ratios
CRE Ratios • Declining trend in CRE ratios has been a result of targeted focus by lending teams across Bank’s geography to primarily prospect opportunities within the owner occupied CRE and Commercial and Industrial portfolio segments. • This strategy was implemented to further diversify the bank’s
Slide 14: Asset Quality
Asset Quality • Excellent asset quality with nonperforming assets at just 0.29% of total assets. • Purchase accounting discounts are over 3x current Allowance 0.10% 0.30% 0.50% 0.70% $0 $2,000 $4,000 $6,000 4Q16 1Q17 2Q17 3Q17 4Q17 Nonperforming Assets Foreclosed assets Nonperforming loans Nonperfor
Slide 15: Deposits
Deposits • Well diversified deposit mix with growth of money market, savings, and noninterest demand replacing mostly wholesale time deposits. • Cost of funds up just 11bps while Fed Funds has increased 75bps over the last year. 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 1.60% $- $200,000 $400,000 $600,000
Slide 16: Conclusions
Conclusions • Record high total assets of $1.7 billion, net loans of $1.3 billion and total deposits of$1.4 billion. • Net interest margin, taxable equivalent of 4.64 percent • Efficiency ratio decreased by over 4 percentage points to 74.3 percent and operatingefficiency ratio dropped to 60.7 percen
Slide 17: Non-GAAP Reconciliations
Non-GAAP Reconciliations 4Q17 3Q17 2Q17 1Q17 4Q16 Net interest income -ex purchase acct. adj. Net interest income (GAAP) 15,341$ 10,924$ 10,248$ 9,815$ 9,856$ Taxable equivalent adjustment 16 22 21 21 22 Net interest income TEY (Non-GAAP) 15,357 $10,946 $10,269 9,836 $9,878 Purchase accounting adjus
Slide 18: Non-GAAP Reconciliations
Non-GAAP Reconciliations 4Q17 3Q17 2Q17 1Q17 4Q16 Operating Earnings Net income (loss) (GAAP) 38$ 1,685$ 1,648$ 1,644$ 1,647$ Securities (gains) losses — (144) — — — Foreclosed assets (gains) losses 5 27 — 15 (6) Merger and conversion costs 1,694 303 420 — — Revaluation of deferred tax assets due to
Slide 19: Fourth Quarter 2017 Supplemental Information
Fourth Quarter 2017 19 Supplemental Information
Slide 20: Loan & Deposit Composition
Loan & Deposit Composition 4Q17 C&I 18% C&D 10% CRE, owner occupied 21% CRE, non- owner occupied 28% Consumer RE 22% Other 1% Loans Noninterest demand 15% Interest- bearing demand 16%Money marketand savings 38% Time deposits 31% Deposits 20
Slide 21: Loan Composition History
Loan Composition History 4Q17 3Q17 2Q17 1Q17 4Q16 Gross Loans C&I 238,690$ 119,782$ 105,129$ 90,649$ 85,696$ C&D 135,409 98,212 101,151 115,675 117,748 CRE, owner occupied 281,297 210,489 211,469 197,032 199,645 CRE, non-owner occupied 361,536 237,131 233,707 210,901 215,215 Consumer RE 292,795 199,
Slide 22: Deposit Composition History
Deposit Composition History 4Q17 3Q17 2Q17 1Q17 4Q16 Deposits Noninterest demand 220,520$ 185,386$ 183,324$ 160,673$ 153,483$ Interest-bearing demand 231,643 156,953 156,150 167,433 162,702 Money market and savings 543,645 306,358 324,014 274,994 274,605 Time deposits 442,774 311,490 318,147 286,600
Slide 23: Management Team
Management Team 23 Billy Carroll President & CEO Miller Welborn Chairman of the Board C. Bryan Johnson Chief Financial Officer Rhett Jordan Chief Credit Officer Gary Petty Chief Risk Officer Greg Davis Chief Lending Officer