Smartfinancial, Inc. · NYSE:SMBK
Smartfinancial — Q2 2020 Earnings Presentation
28 slides from Smartfinancial's earnings presentation, Jul 21, 2020
Slide 1: Investor Call 2Q 2020
INVESTOR CALL 2Q 2020 July 22, 2020, 10:00am Webcast: www.smartbank.com (Investor Relations) Audio Only: 888-317-6003 Confirmation #: 5925756 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 $3.3 billion asset bank holding company headquartered in Knoxville, Tennessee ▪ Operates one subsidiary bank, SmartBank, which was founded in January 2007 ▪ Located primarily in attractive, high-growth markets throughout East/Mi
Slide 4: Culture
Culture 4 We are building a culture where Associates thrive and are empowered to be leaders. The core values that we have established as a company help us operate in unison and have become a critical part of our culture. Our Associates are key to SmartBank’s success. POSITIONING STATEMENT At SmartBa
Slide 5: COVID-19 Update
COVID-19 Update 5 COVID-19 Actions • Pandemic Response Team meets regularly to share latest COVID updates or impacts that we are seeing in all regions across our footprint. • Continue to evaluate markets on a case by case basis as to bank operations or any changes that need to be made to protect ass
Slide 6: Second Quarter Financial Highlights
Second Quarter Financial Highlights
Slide 7: Quarterly Highlights
Quarterly Highlights 7 Note: For a reconciliation of Non-GAAP financial measures to their most directly comparable GAAP measures, see the Appendix ($ in thousands, except per share data) 2Q20 1Q20 Change Net interest income 25,746 $ 22,571 $ 3,175 $ Provision for loan losses 2,850 3,200 (350) Nonint
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 $6,967 $6,770 $8,786 $8,039 $7,772 $8,700 $7,890 $8,692 $11,912 $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4
Slide 9: Performance Trends
Performance Trends 9 $2,062 $2,051 $2,274 $2,354 $2,391 $2,390 $2,449 $2,874 $3,266 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 Total Assets, Loans and Deposits ($ in millions) Assets Loans Deposits
Slide 10: Performance Trends
Performance Trends 10 1.56 % 1.01 % 1.12 % 0.43 % 0.79 % 0.67 % 0.93 % 1.47 % 1.31 % 1.37 % 1.53 % —% 0.20 % 0.40 % 0.60 % 0.80 % 1.00 % 1.20 % 1.40 % 1.60 % 1.80 % 2Q19 3Q19 4Q19 1Q20 2Q20 ROAA (%): Reported, Operating, Operating PTPP ROAA ROAA Operating ROAA ⁽¹⁾ Operating PTPP ROAA ⁽¹⁾ 16.8 % 10.5
Slide 11: Performance Trends
Performance Trends 11 57.5 % 63.0 % 67.0 % 74.0 % 64.3 % 45.0 % 50.0 % 55.0 % 60.0 % 65.0 % 70.0 % 75.0 % 80.0 % 2Q19 3Q19 4Q19 1Q20 2Q20 Efficiency Ratio (%) Efficiency Ratio Operating Efficiency Ratio ⁽¹⁾ $21.47 $21.93 $22.33 $22.09 $22.57 $15.86 $16.37 $16.82 $16.40 $16.90 $15.00 $18.00 $21.00 $2
Slide 12: Net Interest Income
Net Interest Income 12 3.94% 3.91% 3.84% 3.90% 3.63% 5.53% 5.48% 5.36% 5.35% 4.87% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 2Q19 3Q19 4Q19 1Q20 2Q20 Net Interest Margin Net Interest Margin (FTE) Loan Yield Cost of Funds Interest Bearing Liabilities ($mm) 2Q20 1Q20 Change Cash and cash equivalents $
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 $1,983 $2,195 $2,120 $2,818 $3,495 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 2Q19 3Q19 4Q19 1Q20 2Q20 Operating Nonint
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 $15,013 $14,635 $15,334 $16,697 $17,329 $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000 $20,000 2Q19 3Q19 4Q1
Slide 15: Attractive Deposit Mix
Attractive Deposit Mix 15 Noninterest demand 25% Interest-bearing demand 19% Money market and savings 30% Time deposits 26% Deposit Compostion (6/30/20) $2,012 $1,998 $2,047 $2,342 $2,540 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 2Q19 3Q19 4Q19 1Q20 2Q20 Historical Deposit Compostion ($mm) Noninter
Slide 16: Overview of Loan Portfolio
Overview of Loan Portfolio 16 C&I 26% C&D 12% CRE, Owner Occupied 19% CRE, Non Owner Occupied 23% Consumer RE 19% Other <1% Loan Composition (6/30/20) 273.0% 91.7% 0% 100% 200% 300% 400% 2Q19 3Q19 4Q19 1Q20 2Q20 CRE Ratios CRE C&D $1,833 $1,865 $1,897 $2,139 $2,408 $0 $500 $1,000 $1,500 $2,000 $2,50
Slide 17: Asset Quality
Asset Quality 17 • NPAs increased due to the acquisition of ORE assets from PFG in Q1 2020 • Delinquencies remain at low levels • Asset quality remains strong with nonperforming assets to total assets of 0.28% • Credit quality remains strong with classified loans / total loans of 0.27% • Disciplined
Slide 18: COVID-19 Modified Loans
COVID-19 Modified Loans 18 Source: Company information Note: As of June 30, 2020 5.0% 44.8% 6.5% 8.8% 28.2% 6.5% 0.2% 25.6% 15.7% 14.7% 11.3% 1.8% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% June July August September October November December COVID Modification Maturities % Numb
Slide 19: Modified Hospitality Loans
Modified Hospitality Loans 19 Alabama 23% FL Panhandle 20% Northeast TN 35% Middle TN 9% Southeast TN 13% % Exposure by Region Alabama FL Panhandle Northeast TN Middle TN Southeast TN 31.0% 4.7% 23.8% 40.5% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% July August September October Hospi
Slide 20: Modified Restaurant Loans
Modified Restaurant Loans 20 25.0% 2.2% 22.8% 41.3% 6.5% 2.2% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% July August September October November December Restaurant Modification Expiration by Month Source: Company information Note: As of June 30, 2020 ($ in thousands) Category Loan Cou
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) Industry Loan Amount Professional Services 42,479 $ Restaurants 39,318 Manufacturing 23,048 Medical 20,974 Construction 17,017 All Other Industries 150,860 Total 293,696 $ Total PPP
Slide 22: Reserve Reconciliation
Reserve Reconciliation 22 0.00% 0.30% 0.60% 0.90% $0 $5 $10 $15 $20 2Q19 3Q19 4Q19 1Q20 2Q20 Total Reserves ($mm) Allowance for Loan Losses Acquired Loan Fair Value Discounts Allowance for Loan Losses / Total Loans ($ in thousands) 2Q19 3Q19 4Q19 1Q20 2Q20 Allowance for Loan Losses - Originated 8,97
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” 9.57% 9.88% 9.93% 8.96% 8.09% 0.0% 4.0% 8.0% 12.0% 16.0% 2Q19 3Q19 4Q19 1Q20 2Q20 TCE / TA (%) 9.92% 10.02% 10.34% 10.28% 8.83% 0.0% 4.
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 ($ in thousands) 2Q20 1Q20 4Q19 3Q19 2Q19 Tangible Common Equity Shareholders' equity (GAAP) $ 343,488 336,200 $ 312,747 $ 306,040 $ 299,611 $ Less goodwill and other intangible assets 86,327 86,503 77,193 77,534 78,348 Tangible Common Equity (Non-GAAP) $ 257,161 249,697
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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