Smartfinancial, Inc. · NYSE:SMBK
Smartfinancial — Q3 2020 Earnings Presentation
28 slides from Smartfinancial's earnings presentation, Oct 20, 2020
Slide 1: Investor Call 3Q 2020
INVESTOR CALL 3Q 2020 October 21, 2020, 10:00 am Webcast: www.smartbank.com (Investor Relations) Audio Only: 888-317-6003 Confirmation #: 9589795 Miller Welborn Chairman of the Board Billy Carroll President & CEO
Slide 2: Legal Disclaimer
Legal Disclaimer 2 Forward-Looking Statements This presentation may contain statements that are based on management’s current estimates or expectations of future events or future results, and that may be deemed to constitute forward-looking statements as defined under the Private Securities Litigati
Slide 3: Overview of SmartFinancial
Overview of SmartFinancial 3 ▪ SmartFinancial, Inc. (Nasdaq: SMBK) is a $3.4 billion asset bank holding company headquartered in Knoxville, Tennessee ▪ Operates one subsidiary bank, SmartBank, which was founded in January 2007 ▪ Located primarily in attractive, high-growth markets throughout East/Mi
Slide 4: Culture
Culture 4 We are building a culture where Associates thrive and are empowered to be leaders. The core values that we have established as a company help us operate in unison and have become a critical part of our culture. Our Associates are key to SmartBank’s success. POSITIONING STATEMENT At SmartBa
Slide 5: COVID-19 Update
COVID-19 Update 5 COVID-19 Actions • Pandemic Response Team meets regularly to share latest COVID updates or impacts that we are seeing in all regions across our footprint. • Continue to evaluate markets on a case by case basis as to bank operations or any changes that need to be made to protect ass
Slide 6: Third Quarter Financial Highlights
Third Quarter Financial Highlights
Slide 7: Quarterly Highlights
Quarterly Highlights 7 Note: For a reconciliation of Non-GAAP financial measures to their most directly comparable GAAP measures, see the Appendix ($ in thousands, except per share data) 3Q20 2Q20 Change Net interest income 26,043 $ 25,746 $ 297 $ Provision for loan losses 2,634 2,850 (216) Noninter
Slide 8: Operating PTPP Earnings
Operating PTPP Earnings 8 Note: For a reconciliation of Non-GAAP financial measures to their most directly comparable GAAP measures, see the Appendix $6,770 $8,786 $8,039 $7,772 $8,700 $7,890 $8,692 $11,912 $11,296 $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19
Slide 9: Performance Trends
Performance Trends 9 $2,051 $2,274 $2,354 $2,391 $2,390 $2,449 $2,874 $3,266 $3,388 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 Total Assets, Loans, and Deposits ($ in millions) Assets Loans Deposits
Slide 10: Performance Trends
Performance Trends 10 (1) Note: For a reconciliation of Non-GAAP financial measures to their most directly comparable GAAP measures, see the Appendix 1.02 % 1.08 % 0.67 % 0.93 % 0.79 % 1.47 % 1.31 % 1.37 % 1.53 % 1.35 % —% 0.20 % 0.40 % 0.60 % 0.80 % 1.00 % 1.20 % 1.40 % 1.60 % 1.80 % 3Q19 4Q19 1Q20
Slide 11: Performance Trends
Performance Trends 11 (1) Note: For a reconciliation of Non-GAAP financial measures to their most directly comparable GAAP measures, see the Appendix $21.93 $22.33 $22.09 $22.57 $22.96 $16.37 $16.82 $16.40 $16.90 $17.27 $15.00 $18.00 $21.00 $24.00 3Q19 4Q19 1Q20 2Q20 3Q20 Book Value per Share Book V
Slide 12: Net Interest Income
Net Interest Income 12 3Q20 2Q20 Change Loans, less accretion & PPP fees 4.10% 4.25% (0.15%) Accretion 0.16% 0.15% 0.01% PPP Fees 0.30% 0.47% (0.17%) Loans including fees 4.71% 4.87% (0.16%) Loans held for sale 5.57% 4.28% 1.29% Taxable securities 1.64% 1.94% (0.30%) Tax-exempt securities (FTE) 2.32
Slide 13: Operating Noninterest Income (Non-GAAP)
Operating Noninterest Income (Non-GAAP) 13 Note: For a reconciliation of Non-GAAP financial measures to their most directly comparable GAAP measures, see the Appendix $2,195 $2,120 $2,818 $3,495 $4,130 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 3Q19 4Q19 1Q20 2Q20 3Q20 Operating
Slide 14: Operating Noninterest Expense (Non-GAAP)
Operating Noninterest Expense (Non-GAAP) 14 Note: For a reconciliation of Non-GAAP financial measures to their most directly comparable GAAP measures, see the Appendix $14,635 $15,334 $16,697 $17,329 $18,877 $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000 $20,000 3Q19 4Q19 1Q2
Slide 15: Attractive Deposit Mix
Attractive Deposit Mix 15 Noninterest demand 25% Interest-bearing demand 20% Money market and savings 33% Time deposits 22% Deposit Compostion (9/30/20) 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3Q19 4Q19 1Q20 2Q20 3Q20 Historical Cost of Deposits Cost of Deposits Fed Funds Target Cost of Interest Bearing
Slide 16: Overview of Loan Portfolio
Overview of Loan Portfolio 16 C&I 27% C&D 11% CRE, Owner Occupied 20% CRE, Non Owner Occupied 23% Consumer RE 18% Other 1% Loan Composition (9/30/20) $1,865 $1,897 $2,139 $2,408 $2,404 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 3Q19 4Q19 1Q20 2Q20 3Q20 Historical Loan Composition ($mm) C&I C&D CRE,
Slide 17: Asset Quality
Asset Quality 17 $5,388 $7,156 $15,821 $9,005 $6,089 0.29% 0.38% 0.74% 0.37% 0.25% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 1.60% 1.80% $0 $5,000 $10,000 $15,000 $20,000 3Q19 4Q19 1Q20 2Q20 3Q20 Delinquent and Nonaccruals / Total Loans ($ in thousands) Total Delinquent and Nonaccrual Loans Total De
Slide 18: COVID-19 Modified Loans
COVID-19 Modified Loans 18 Source: Company information Note: As of September 30, 2020 78.5% 20.4% 1.0% 9.7% 1.6% 0.03% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% October November December Remaining COVID Modification Maturities % Number of Remaining Modified Loans Total O/S Balance o
Slide 19: Modified Hospitality Loans
Modified Hospitality Loans 19 Source: Company information Note: As of September 30, 2020 ($ in thousands) Region O/S Balance % Exposure by Region Average LTV Alabama 25,648 $ 45.6% 35.0% FL Panhandle 693 1.1% 62.4% Northeast TN 15,498 27.6% 46.1% Middle TN 13,741 24.6% 64.0% Southeast TN 643 1.1% 40
Slide 20: Modified Restaurant Loans
Modified Restaurant Loans 20 Source: Company information Note: As of September 30, 2020 ($ in thousands) Region O/S Balance % Exposure by Region Alabama 155 $ 0.5% FL Panhandle 18,405 60.6% Northeast TN 231 0.8% Middle TN 3,474 11.3% Southeast TN 8,115 26.8% Total Modifications 30,380 100.0% Total R
Slide 21: Paycheck Protection Program
Paycheck Protection Program 21 Client, 67.8% Non-Client, 32.2% Total PPP Loans: Client vs. Non-Client ($ in thousands) Source: Company information Note: As of September 30, 2020 State Loan Amount Loan Count Client Loan Amount Non-Client Loan Amount Alabama $59,253 557 40,174 $ 19,079 $ Florida 21,72
Slide 22: Reserve Reconciliation
Reserve Reconciliation 22 ($ in thousands) 3Q19 4Q19 1Q20 2Q20 3Q20 Allowance for Loan Losses - Originated 9,674 $ 9,969 $ 12,412 $ 14,590 $ 16,704 $ Allowance for Loan Losses - Acquired 118 274 1,019 1,664 2,113 Acquired Loan Fair Value Discounts 16,784 15,348 17,237 16,187 15,141 Total Reserves 26
Slide 23: Current Capital Position
Current Capital Position 23 Note: Data as of the three months ended each respective quarter Basel III Regulatory Capital Minimum To Be Considered “Well Capitalized” 9.88% 9.93% 8.96% 8.09% 7.97% 0.0% 4.0% 8.0% 12.0% 16.0% 3Q19 4Q19 1Q20 2Q20 3Q20 10.02% 10.34% 10.28% 8.83% 8.78% 0.0% 4.0% 8.0% 12.0%
Slide 24: Appendix
ally, SmartFinancial Appendix
Slide 25: Non-GAAP Reconciliations
Non-GAAP Reconciliations 25 1. Operating return on average assets (Non-GAAP) is the annualized operating earnings (Non-GAAP) divided by average assets. 2. Operating PTPP return on average assets (Non-GAAP) is the annualized operating PTPP earnings (Non-GAAP) divided by average assets. 3. Return on a
Slide 26: Non-GAAP Reconciliations
Non-GAAP Reconciliations 26 1. Book value per share is computed by dividing total stockholders’ equity by common shares outstanding. Tangible book value per share is computed by dividing total stockholders’ equity, less goodwill and other intangible assets by common shares outstanding ($ in thousand
Slide 27: Investor Contact
Investor Contact 27 Billy Carroll President & CEO 865.868.0613 billy.carroll@smartbank.com Miller Welborn Chairman 423.385.3067 miller.welborn@smartbank.com 5401 Kingston Pike, Suite 600 Knoxville, TN 37919
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