Smartfinancial, Inc. · NYSE:SMBK
Smartfinancial — Q4 2020 Earnings Presentation
28 slides from Smartfinancial's earnings presentation, Jan 20, 2021
Slide 1: Investor Call 4Q 2020
INVESTOR CALL 4Q 2020 January 20, 2021, 10:00am Webcast: www.smartbank.com (Investor Relations) Audio Only: 888-317-6003 Confirmation #: 0205038 Miller Welborn Chairman of the Board Billy Carroll President & CEO
Slide 2: Legal Disclaimer
Legal Disclaimer 2 Forward-Looking Statements Non-GAAP Financial Measures This presentation may contain statements that are based on management’s current Statements included in this presentation include Non-GAAP financial measures and should be read along estimates or expectations of future events o
Slide 3: Overview of SmartFinancial
Overview of SmartFinancial 3 ▪ SmartFinancial, Inc. (Nasdaq: SMBK) is a $3.3 billion asset bank holding company headquartered in Knoxville, Tennessee ▪ Operates one subsidiary bank, SmartBank, which was founded in January 2007 ▪ Located primarily in attractive, high-growth markets throughout East/Mi
Slide 4: Culture
Culture 4 We are building a culture where Associates thrive and are empowered to be leaders. The core values that we have established as a company help us operate in unison and have become a critical part of our culture. Our Associates are key to SmartBank’s success. POSITIONING STATEMENT At SmartBa
Slide 5: COVID-19 Update
COVID-19 Update 5 COVID-19 Actions • Pandemic Response Team meets regularly to share latest COVID updates or impacts that we are seeing in all regions across our footprint. • Continue to evaluate markets on a case by case basis as to bank operations or any changes that need to be made to protect ass
Slide 6: Fourth Quarter Financial Highlights
Fourth Quarter Financial Highlights
Slide 7: Quarterly Highlights
Quarterly Highlights 7 ($ i n thous a nds , except per s ha re da ta) 4Q20 3Q20 Change Net interest income $ 26,506 $ 26,043 $ 463 Provision for loan losses - 2,634 (2,634) Noninterest income 4,976 4,121 855 Noninterest expense 19,953 19,167 786 Income tax expense 2,499 1,968 531 Net income 9,030 6,
Slide 8: Investing in Technology
Investing in Technology 8 Technology Initiatives Launched: ▪ Launched Zelle payment app – Q2 2020 ▪ Hired EVP | Chief Information Officer – Q2 2020 ▪ Upgrades to BillPay – Q2 2020 ▪ Modernized cloud security, device security, and authentication capabilities – Q3 2020 ▪ New advanced threat protection
Slide 9: Operating PTPP Earnings (Non-GAAP)
Operating PTPP Earnings 9 Operating PTPP Earnings (Non-GAAP) ($ in thousands) $14,000 $11,912 $11,766 $12,000 $11,296 $10,000 $8,786 $8,700 $8,692 $8,039 $7,772 $7,890 $8,000 $6,000 $4,000 $2,000 $0 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 Operating PTPP Earnings, Less Accretion & PPP Fees Accre
Slide 10: Total Assets, Loans, and Deposits
Performance Trends 10 Total Assets, Loans, and Deposits ($ in millions) $4,000 $3,500 $3,388 $3,305 $3,266 $3,000 $2,874 $2,391 $2,390 $2,449 $2,500 $2,274 $2,354 $2,000 $1,500 $1,000 $500 $0 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 Assets Loans Deposits
Slide 11: Performance Trends
Performance Trends 11 ROAA (%): Reported, Operating, Operating PTPP ROAA 1.80 % 1.53 % 1.60 % 1.45 % 1.31 % 1.37 % 1.35 % 1.40 % 1.14 % 1.20 % 1.08 % 0.93 % 1.00 % 0.79 % 0.80 % 0.67 % 0.60 % 0.40 % 0.20 % —% 4Q19 1Q20 2Q20 3Q20 4Q20 ROAA Operating ROAA ⁽¹⁾ Operating PTPP ROAA ⁽¹⁾ ROATCE (%) 16.0 %
Slide 12: Performance Trends
Performance Trends 12 Book Value per Share $25.00 $23.64 $22.96 $23.00 $22.33 $22.57 $22.09 $21.00 $19.00 $17.92 $16.90 $17.27 $16.82 $17.00 $16.40 $15.00 4Q19 1Q20 2Q20 3Q20 4Q20 Book Value Tangible Book Value ⁽¹⁾ Efficiency Ratio (%) 80.0 % 74.0 % 75.0 % 70.0 % 67.0 % 64.3 % 63.5 % 63.4 % 65.0 % 6
Slide 13: Net Interest Income
Net Interest Income 13 Net Interest Margin 6.00% 5.36% 5.35% Average Yields and Rates 4.87% 4.71% 4.72% 5.00% 4Q20 3Q20 Change 3.84% 3.90% 4.00% 3.63% 3.39% 3.57% Loans, less accretion & PPP fees 4.23% 4.25% (0.02%) 3.00% Accretion 0.13% 0.16% (0.03%) PPP Fees 0.36% 0.30% 0.06% 2.00% Loans including
Slide 14: Operating Noninterest Income (Non-GAAP)
Operating Noninterest Income (Non-GAAP) 14 Operating Noninterest Income (Non-GAAP) ($ in millions) $5,500 $4,511 $5,000 $4,500 $4,130 $4,000 $3,495 $3,500 Other noninterest income Interchange fees $3,000 $2,818 Investment services income $2,500 Insurance commissions $2,120 $2,000 Mortgage banking in
Slide 15: 2021 Noninterest Income Strategic Goals
2021 Noninterest Income Strategic Goals 15 2021 Strategic Goals: • Enhanced CRM and synergy initiatives for increased revenues • Increased efficiency across all units • Digital innovation to enhance customer experience
Slide 16: Operating Noninterest Expense (Non-GAAP)
Operating Noninterest Expense (Non-GAAP) 16 Operating Noninterest Expense (Non-GAAP) ($ in thousands) $20,000 $18,877 $19,251 $18,000 $16,697 $17,329 $16,000 $15,334 $14,000 Other $12,000 Professional services $10,000 Amortization of intangibles Data processing $8,000 Occupancy and equipment $6,000
Slide 17: Attractive Deposit Mix
Attractive Deposit Mix 17 Deposit Composition (12/31/20) Time deposits Noninterest demand 20% 24% Historical Deposit Composition ($ in millions) $3,000 Money market and Interest-bearing demand $2,805 savings 33% 23% $2,652 $2,540 $2,500 $2,342 $2,047 $2,000 $1,500 $1,000 Historical Cost of Deposits
Slide 18: Overview of Loan Portfolio
Overview of Loan Portfolio 18 Loan Composition (12/31/20) Consumer RE CRE, Non 19% Owner Occupied Historical Loan Composition 23% ($ in millions) C&I 27% $3,000 CRE, Owner Occupied C&D 19% 12% $2,500 $2,408 $2,404 $2,382 $2,139 $2,000 $1,897 $1,500 CRE Ratios $1,000 400% 300% 265.3% 200% $500 88.6%
Slide 19: Asset Quality
Asset Quality 19 Nonperforming Assets Delinquent and Nonaccruals / Total Loans ($ in thousands) ($ in thousands) $20,000 1.50% $20,000 1.80% $15,821 1.60% $15,000 $15,000 1.40% 1.00% $9,300 $10,401 $9,606 1.20% $10,000 $8,963 $9,005 $10,000 $7,156 0.74% 1.00% $5,107 $6,180 $6,089 0.80% 0.50% $5,000
Slide 20: COVID-19 Modified Loans
COVID-19 Modified Loans 20 ($ i n thous a nds ) % of Total % of Total Industries with Modifications O/S Balance Loan Portfolio Modified Loans Hospitality $ 10,469 0.4% 60.9% Restaurants 2,983 0.1% 17.3% Overnight Rentals 1,484 0.1% 8.7% Transportation 618 0.0% 3.7% CRE Retail 192 0.0% 1.1% Fitness/R
Slide 21: Paycheck Protection Program
Paycheck Protection Program 21 PPP forgiveness underway; SmartBank SBA team primed for second round funding ▪ Streamlined digital platform for application submission ▪ Second round application window open ▪ Enhanced internal procedures for faster execution ▪ Implemented forgiveness tool to ensure cl
Slide 22: Reserve Reconciliation
Reserve Reconciliation 22 ($ in thousands) 4Q19 1Q20 2Q20 3Q20 4Q20 Allowance for Loan Losses - Originated $ 9,969 $ 12,412 $ 14,590 $ 16,704 $ 16,464 Allowance for Loan Losses - Acquired 274 1,019 1,664 2,113 1,882 Acquired Loan Fair Value Discounts 15,348 17,237 16,187 15,141 14,467 Total Reserves
Slide 23: Current Capital Position
Current Capital Position 23 TCE / TA (%) Leverage Ratio (%) 16.0% 16.0% 12.0% 9.93% 12.0% 10.34% 10.28% 8.96% 8.41% 8.83% 8.78% 8.69% 8.09% 7.97% 8.0% 8.0% Well Cap. 5% 4.0% 4.0% 0.0% 0.0% 4Q19 1Q20 2Q20 3Q20 4Q20 4Q19 1Q20 2Q20 3Q20 4Q20 CET1 Ratio (%) Total Risk-Based Capital Ratio (%) 16.0% 16.0%
Slide 24: Appendix
My SmartFinancial Appendix
Slide 25: Non-GAAP Reconciliations
Non-GAAP Reconciliations 25 ($ in thousands, except per share data) 4Q20 3Q20 2Q20 1Q20 4Q19 Operating Earnings Net income (GAAP) $ 9,030 $ 6,395 $ 6,174 $ 2,732 $ 6,733 Noninterest income: Securities (gains) losses - 9 (16) - - ADECA termination proceeds (465) - - - (720) Merger termination fee - -
Slide 26: Non-GAAP Reconciliations
Non-GAAP Reconciliations 26 ($ in thousands) 4Q20 3Q20 2Q20 1Q20 4Q19 Tangible Common Equity: Shareholders' equity (GAAP) $ 357,168 $ 349,789 $ 343,488 $ 336,200 $ 312,747 Less goodwill and other intangible assets 86,471 86,710 86,327 86,503 77,193 Tangible Common Equity (Non-GAAP) $ 270,697 $ 263,0
Slide 27: Investor Contact
Investor Contact 27 Billy Carroll Miller Welborn President & CEO Chairman 865.868.0613 423.385.3067 billy.carroll@smartbank.com miller.welborn@smartbank.com 5401 Kingston Pike, Suite 600 Knoxville, TN 37919
Slide 28: SmartFinancial
SmartFinancial