Smartfinancial, Inc. · NYSE:SMBK
Smartfinancial — Merger or Acquisition (October 2019)
20 slides from Smartfinancial's merger presentation, Oct 30, 2019
Slide 1: Acquisition of Progressive Financial Group Inc.
Acquisition of Progressive Financial Group Inc. October 29, 2019
Slide 2: Legal Disclaimer: Forward-Looking Statements
Legal Disclaimer Forward-Looking Statements Statements in this presentation may not be based on historical facts and may be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by reference to futu
Slide 3: Compliance Disclosures
Compliance Disclosures Additional Information and Where to Find It This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval with respect to the Proposed Transaction. No offer of securities shall be made exc
Slide 4: Transaction Rationale
Transaction Rationale Adjacent market acquisition of a Tennessee based community bank Strategically Improves branch density in eastern Tennessee while gaining entry to new markets Compelling Opportunity to expand Progressive’s current relationships on a larger, yet similar platform Established clien
Slide 5: Transaction Terms
Transaction Terms Announced Transaction Value (1) Calculated deal price per share of $1,997 Aggregate transaction value of $41.4 million Consideration 65% Stock; 35% cash Fixed Shares Issued 1,292,592.556 shares of SMBK common stock to be issued to Progressive shareholders Two part structure: aggreg
Slide 6: Overview of Progressive Financial Group Inc.
Overview of Progressive Financial Group Inc. Deposit Market Share in Counties of Operation Market Deposits Number Share in Market of Rank Institution (%) ($mm) Branches 1 B.P.C. Corp. 20.4 % $751 13 Company Name Progressive Financial Group Inc. 2 Regions Financial Corp. 15.0 553 7 Key Locations Cook
Slide 7: High Quality, Low-Cost Deposit Base
High Quality, Low-Cost Deposit Base . Progressive has maintained a steady, low-cost deposit base despite prior rate increases . MRQ cost of interest-bearing deposits ranks within top quartile among 118 banks headquartered in Tennessee with under $1.0 billion in assets . Excess liquidity provides opp
Slide 8: Bolstering Our Core Tennessee Market
Bolstering Our Core Tennessee Market Tennessee Branch Footprint ClarksvilleClarksville JamestownJamestown JohnsonJohnson CityCity LebanonLebanon CookevilleCookeville JohnsonJohnson CityCity CookevilleCookeville 81 NashvilleNashville 40 KnoxvilleKnoxville 40 MurfreesboroMurfreesboro CrossvilleCrossvi
Slide 9: Extensive Due Diligence Conducted
Extensive Due Diligence Conducted . Reviewed key aspects of Progressive’s loan portfolio . 100% of the Top 20 Relationships . 100% of loans with an outstanding balance over $500 million . 66% of the construction and development portfolio . 90% of the Commercial Real Estate Portfolio . 77 % of the C&
Slide 10: Key Transaction Assumptions
Key Transaction Assumptions . 30% of Progressive’s annual Noninterest Expense base Expected Cost Savings . 60% realized in 2020 . 100% realized thereafter Merger & Integration Costs . Approximately $4.50 million in after-tax merger expenses . Credit-related fair value loan mark of $5.0 million (2.4%
Slide 11: Core Earnings Ability
Core Earnings Ability . Transaction will allow SMBK to unlock Progressive’s core earnings ability . Baseline earnings of $1.5 million . Meaningful expense savings opportunities LTM Core Earnings Reconciliation ($mm) $5.0 $4.0 $3.0 $3.3 $4.8 $2.0 ($0.4) ($0.4) $1.0 $2.3 $1.5 $0.0 Pre - Tax Net Income
Slide 12: Summary Financial Impact
Summary Financial Impact Key Transaction Impacts (Expected) Capital Impact SMBK Pro 09/30/19 Forma Pro Forma ‘21 > 1.0% / > 11.0% 9.9% 9.1% ROAA / ROATCE TCE / TA ‘20 / ’21 High single-digit / Low- Leverage Ratio 10.0% 9.2% EPS Accretion (1) double digits Common Equity > 20% 11.5% 10.7% IRR Tier 1 R
Slide 13: Meaningful Impact at a Reasonable Price
Meaningful Impact at a Reasonable Price Acquiring a sound bank with a superior funding base at a valuation that compares favorably to both precedent transactions and current trading multiples Price / Tangible Book Value (%) 124% Precedent Southeast 162% Transactions (1) Precedent Tennessee 180% Tran
Slide 14: SMBK M&A Criteria
SMBK M&A Criteria SmartFinancial is committed to balancing organic growth with thoughtful acquisitions and will not make acquisitions simply for the sake of growth Impact SMBK Criteria Acquisition of Progressive TBV Earnback Period < 3 years Meaningful earnings EPS Impact accretion in first full y
Slide 15: Our Combined Company
Our Combined Company Clarksville Cookeville Kingsport Nashville Knoxville 40 Crossville (1) 65 TENNESSEE 75 Pro Forma Pulaski Chattanooga Huntsville Assets $2.7 Billion Fort Payne Hamilton Progressive Branch 59 SMBK Branch Birmingham Loans $2.0 Billion Tuscaloosa ALABAMA Deposits $2.3 Billion Montgo
Slide 16: Appendix
7 ee RES SIVE SmartFinancial, Inc. SAVINGS BANK Appendix
Slide 17: Pro Forma Loan and Deposit Composition
Pro Forma Loan and Deposit Composition SMBK Progressive Pro Forma (1) Consumer & Consumer & Consumer & Other Other Other 2% 2% 4% C&I C&I 16% C&D C&I 9% C&D 17% C&D 10% 11% 11% Non Owner- Occupied CRE Non Owner- 18% Non Owner- Occupied CRE Occupied CRE 1-4 Family 23% 1-4 Family 23% 22% 1-4 Family 24
Slide 18: The Rains Agency
The Rains Agency . Independent insurance agency focused primarily on the Upper Cumberland region . Offers full line of personal, commercial, property and casualty, and life and health insurance . Operated for over 90 years, growing from one-person operation to over 21 employees . Revenues of over $1
Slide 19: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in thousands) 3Q19 Core Pre-Tax Net Income Net Income before Taxes and Discontinued Operations $ 385 Less: Non-Recurring Revenue (84) Plus: Non-Recurring Expense 201 Core Pre-Tax Net Income $ 670 S-Corp Adjusted Core Net Income Pre-Tax Core Net Income $ 670 Adjusted by: As
Slide 20: Non-GAAP Reconciliation (continued)
Non-GAAP Reconciliation (continued) ($ in thousands) 3Q19 SMBK Tangible Common Equity Shareholders' equity (GAAP) $ 306,040 Less: Goodwill and Other Intangible Assets 77,534 Tangible Common Equity (Non-GAAP) $ 228,506 SMBK Tangible Assets Total Assets (GAAP) $ 2,390,485 Less: Goodwill and Other Inta
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