Smartfinancial, Inc. · NYSE:SMBK
Smartfinancial — Q1 2018 Earnings Presentation
22 slides from Smartfinancial's earnings presentation, Apr 24, 2018
Slide 1: First Quarter 2018 Earnings Call
First Quarter 2018 Earnings Call April 25, 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: 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 4: First Quarter 2018 Highlights
First Quarter 2018 Highlights • Record high net income of $3.4 million for the quarter, up 108 percentfrom a year ago. • ROAA of 0.80 percent, a new record, for the quarter and net operatingROAA of 0.91 percent • Organic loan growth of $51 million, over 15 percent annualized duringthe quarter. • Tra
Slide 5: 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 3.00% 3.10% 3.20% 3.30% 3.40% Noninterest expense / average assets 5
Slide 6: Earnings Profile – First Quarter 2018
Earnings Profile – First Quarter 2018 • EPS up over 55% year over year. • Earnings before taxes up over 65% year over year. • Net interest income up over 70% year over year primarily due higher average earning asset balances and higher earning asset yields. • Increases in noninterest expense primari
Slide 7: Net Interest Income
Net Interest Income • Net interest margin, taxable equivalent, decreased quarter to quarter primarily due to lower purchase accounting adjustments on acquired loans. • Compared to a year ago earning asset yields are up 51bps while cost of interest bearing liabilities are up 22bps. • Excluding the ef
Slide 8: Noninterest Income
Noninterest Income • 1Q18 Noninterest income increased primarily due to higher service charges on deposit accounts. • Quarterly recurring noninterest income has trended higher over the last four quarters from approximately $0.95 million in 1Q17 to $1.64 million in 1Q18. $0 $500,000 $1,000,000 $1,500
Slide 9: Noninterest Expense
Noninterest Expense • Efficiency ratio dropped to 72.66%, the lowest of any quarter since the Cornerstone merger in 2015. • Salary increases are primarily due three months of Alabama associates vs. two in the prior quarter. • Data processing slightly elevated due to operating two core systems for ha
Slide 10: Balance Sheet
Balance Sheet • Assets increased primarily due to organic loan growth. • Cash & cash equivalents drawn down to fund loans. • Securities held fairly flat to allocate funds to loans. • Deposit composition shifted to DDAs as a result of conversion related reclassifications and organic growth. • FHLB &
Slide 11: Loan Portfolio
Loan Portfolio • Loan balance increases due to strong organic growth, over 15% annualized. • Loan composition shifted slightly with of C&I increasing 1%, with an equivalent decrease in non- owner occupied CRE. $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 1Q17 2Q
Slide 12: CRE Ratios
CRE Ratios • C&D levels still well below regulatory guidance levels. • 300 ratio up slightly as a result of taking advantage of attractive growth opportunities. 50.00% 75.00% 100.00% 125.00% 150.00% Q4 20 14 Q1 20 15 Q2 20 15 Q3 20 15 Q4 20 15 Q1 20 16 Q2 20 16 Q3 20 16 Q4 20 16 Q1 20 17 Q2 20 17 Q3
Slide 13: Asset Quality
Asset Quality • Excellent asset quality with nonperforming assets at just 0.26% of total assets. • Purchase accounting discounts on acquired loans are over 2.5x current Allowance. 0.10% 0.30% 0.50% 0.70% $0 $1,000 $2,000 $3,000 $4,000 $5,000 1Q17 2Q17 3Q17 4Q17 1Q18 Nonperforming Assets Foreclosed a
Slide 14: Deposits
Deposits • Well diversified deposit mix with growth of money market, savings, and noninterest demand replacing mostly wholesale time deposits. • About 30% of the growth in DDAs was organic, 70% being conversion related reclassifcations • Cost of funds up just 18bps while Fed Funds has increased 75bp
Slide 15: Conclusions
Conclusions • Record high net income of $3.4 million for the quarter, up 108 percent from a year ago. • ROAA of 0.80 percent, a new record, for the quarter and net operating ROAA of 0.91 percent • Organic loan growth of $51 million, over 15 percent annualized during the quarter. • Transaction accoun
Slide 16: Non-GAAP Reconciliations
Non-GAAP Reconciliations 1Q18 4Q17 3Q17 2Q17 1Q17 Net interest income -ex purchase acct. adj. Net interest income (GAAP) 16,811$ 15,341$ 10,924$ 10,249$ 9,815$ Taxable equivalent adjustment 32 16 22 21 21 Net interest income TEY (Non-GAAP) 16,823 $15,357 $10,946 10,270 $9,836 Purchase accounting adj
Slide 17: Non-GAAP Reconciliations
Non-GAAP Reconciliations 1Q18 4Q17 3Q17 2Q17 1Q17 Operating Earnings Net income (loss) (GAAP) $3,415 $38 $1,685 $1,648 $1,644 Securities (gains) losses — — (144) — — Foreclosed assets (gains) losses 146 5 27 — 15 Merger and conversion costs 498 1,694 303 420 — Revaluation of deferred tax assets due
Slide 18: First Quarter 2018 Supplemental Information
First Quarter 2018 18 Supplemental Information
Slide 19: Loan & Deposit Composition
Loan & Deposit Composition 1Q18 C&I 19% C&D 10% CRE, owner occupied 21% CRE, non- owner occupied 27% Consumer RE 22% Other 1% Loans Noninterest demand 15% Interest- bearing demand 19% Money market and savings 33% Time deposits 30% Deposits 19
Slide 20: Loan Composition History
Loan Composition History C&I 256,333$ 238,690$ 119,782$ 105,129$ 90,649$ C&D 142,702 135,409 98,212 101,151 115,675 CRE, owner occupied 288,666 281,297 210,489 211,469 197,032 CRE, non-owner occupied 375,028 361,536 237,131 233,707 210,901 Consumer RE 299,148 292,795 199,704 206,667 186,344 Other 12
Slide 21: Deposit Composition History
Deposit Composition History 1Q18 4Q17 3Q17 2Q17 1Q17 Deposits Noninterest demand 276,249$ 220,520$ 185,386$ 183,324$ 160,673$ Interest-bearing demand 278,965 231,643 156,953 156,150 167,433 Money market and savings 491,243 543,645 306,358 324,014 274,994 Time deposits 453,276 442,774 311,490 318,147
Slide 22: Management Team
Management Team 22 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