Slide 1: Investor Call 3Q 2021
INVESTOR CALL 3Q 2021 October 20, 2021, 10:00am ET Webcast: www.smartbank.com (Investor Relations) Audio Only: 1-844-200-6205 Access Code: 289025 Miller Welborn Chairman of the Board Billy Carroll President & CEO Ron Gorczynski CFO 1
Slide 2: Disclosures
DISCLOSURES Forward-Looking Statements Non-GAAP Financial Measures This presentation may contain statements that are based on management’s current estimates Statements included in this presentation include Non-GAAP financial measures and should be or expectations of future events or future results,
Slide 3: Quarterly Highlights: Third Quarter 2021
QUARTERLY HIGHLIGHTS: THIRD QUARTER 2021 $0.63 $4.4 EARNINGS PER SHARE BOOK VALUE PER SHARE DILUTED OPERATING BILLION IN TOTAL EPS1 ASSETS $0.61 $0.63 $0.58 $0.60 $24.71 $25.28 $22.96 $0.44 $18.69 $19.03 $0.42 7% 9% $17.27 QOQ2 ANNUALIZED QOQ ANNUALIZED TANG. BOOK VALUE ORGANIC LOAN3 PER SHARE GROWT
Slide 4: SmartFinancial: Expanding Southeast Franchise
SMARTFINANCIAL: EXPANDING SOUTHEAST FRANCHISE $4.4 NASHVILLE KNOXVILLE BILLION IN TOTAL ASSETS HUNTSVILLE CHATTANOOGA $2.7 BILLION IN TOTAL BIRMINGHAM LOANS TUSCALOOSA AUBURN $3.8 MONTGOMERY BILLION IN TOTAL DEPOSITS DOTHAN LEGACY SMARTBANK BRANCH OFFICES MOBILE TALLAHASSEE NEW SMARTBANK BRANCH OFFI
Slide 5: Market Area: Targeting Industry Rich Growth Markets
MARKET AREA: TARGETING INDUSTRY RICH GROWTH MARKETS SMARTBANK IS FOCUSED ON BUILDING MUSCLE IN ITS EXPANDING, FAST GROWING SOUTHEAST MARKET AREAS EXPANDING MARKETS 127% 14% 0.5% LARGER DEPOSIT BASE HIGHER MEDIAN HOUSEHOLD INCOME FASTER PROJECTED POPULATION GROWTH VS. LEGACY MARKETS1 51% 2.4% 19% LAR
Slide 6: 2021 Achievements: A Robust Year of Progress
2021 ACHIEVEMENTS: A ROBUST YEAR OF PROGRESS ACQUISITION OF SEVIER COUNTY BANCSHARES: >34% MARKET SHARE IN SEVIER COUNTY, TN 1 $219 MILLION IN LOANS 2 >65% TOTAL NONINTEREST EXPENSE SAVINGS $436 MILLION IN DEPOSITS ACQUISITION OF FOUNTAIN EQUIPMENT FINANCE: 6 BUSINESS DEVELOPMENT TEAM MEMBERS 1 NEW
Slide 7: Balance Sheet: Continued Balance Sheet Expansion
BALANCE SHEET: CONTINUED BALANCE SHEET EXPANSION $ in Millions TOTAL LOANS TOTAL DEPOSITS CAGR1 OF 20% SINCE 2017 LOANS TO DEPOSITS R ATIO OF 70% $3,799 $ 3 , 0 0 0 1 0 . 0 0% $ 4 , 0 0 0 2 . 5 0 % $2,653 $2,487 $2,468 $ 3 , 5 0 0 9 . 0 0% $ 2 , 5 0 0 $2,382 $3,139 $3,048 2 . 0 0 % $2,805 $ 3 , 0 0
Slide 8: Loan Portfolio: Strong Organic Loan Growth
LOAN PORTFOLIO: STRONG ORGANIC LOAN GROWTH $ in Millions LOAN COMPOSITION QUARTERLY LOAN GROWTH ORGANIC GROWTH DESPITE 12% QOQ NET NEW LOAN GROWTH1 MARKET HEADWINDS TOTAL 12%, $276 $2,653 3% $2,487 $2,468 $2,404 $2,382 18% LEASES & OTHER 1%, $1 17% 18% 18% 19% 12% 11% 11% 12% CONSUMER RE 8%, $34 12%
Slide 9: Deposit Portfolio: Continued Core Deposit Growth
DEPOSIT PORTFOLIO: CONTINUED CORE DEPOSIT GROWTH $ in Millions DEPOSIT COMPOSITION QUARTERLY DEPOSIT GROWTH CORE DEPOSIT GROWTH OUTPACING 21% QOQ NET NEW DEPOSIT GROWTH1 TIME DEPOSIT CONTRACTION $3,799 TOTAL 21%, $660 15% $3,139 $3,048 $2,805 16% 17% $2,652 TIME DEPOSITS 20%, $96 20% 37% 22% 36% 35%
Slide 10: Liquidity Utilization: Margin Management While Driving Revenue
LIQUIDITY UTILIZATION: MARGIN MANAGEMENT WHILE DRIVING REVENUE $ in Millions $ in Thousands CASH AND SECURITIES MARGIN / OPERATING REVENUE $ 1 ,2 0 0 DEPLOYING EXCESS FUNDING 5 0 .0 % 14% QOQ OPERATING REVENUE GROWTH $1,091 4 5 .0 % $ 1 ,0 0 0 4 .5 0 % $ 4 0 ,0 0 0 4 0 .0 % $36,646 3 5 .0 % $ 3 5 ,0
Slide 11: Noninterest Revenue Details: Growing Fee Income
NONINTEREST REVENUE DETAILS: GROWING FEE INCOME $ in Thousands OPERATING NONINTEREST INCOME1 DIFFERENTIATED REVENUE STREAMS CONTINUING TO STRENGTHEN BUILDING A FAMILY OF DIVERSIFIED REVENUE GENERATORS $6,264 $5,691 $5,143 $4,511 $4,130 3Q20 4Q20 1Q21 2Q21 3Q21 SERVICE CHARGES ON DEPOSIT ACCOUNTS MOR
Slide 12: Operating Expense: Investing in Growth
OPERATING EXPENSE: INVESTING IN GROWTH $ in Thousands EFFICIENCY R ATIO OPERATING NONINTEREST EXPENSE1 EXECUTING ON MARKET EXPANSION OPPORTUNITIES ELEVATED EXPENSES RELATED TO ACQUISITION AND LIFT-OUTS $22,845 $20,425 65% $19,251 $19,361 64% 63% 64% $18,877 63% 61% 62% 62% 61% 60% 3Q20 4Q20 1Q21 2Q2
Slide 13: Operating Expense: Technology Investment
OPERATING EXPENSE: TECHNOLOGY INVESTMENT INVESTING IN OUR PLATFORM TO MAKE SMARTBANK AN EASIER ORGANIZATION WITH WHICH TO DO BUSINESS Enhanced work Teller ATM fleet from home Branch network Core OS platform modernization replacement with security upgrade modernization upgrade bank-wide ITM upgrade D
Slide 14: Asset Quality: Strong Underwriting Pays Dividends
ASSET QUALITY: STRONG UNDERWRITING PAYS DIVIDENDS $ in Thousands NONPERFORMING ASSETS DELINQUENT AND NONACCRUALS / TOTAL LOANS $ 1 4 ,0 0 0 1 .5 0 % $ 1 4 ,0 0 0 1 .5 0 % $ 1 2 ,0 0 0 1 .3 0 % $ 1 2 ,0 0 0 $11,756 1 .3 0 % $10,401 $10,180 $9,606 1 .1 0 % 1 .1 0 % $ 1 0 ,0 0 0 $ 1 0 ,0 0 0 $7,768 0 .
Slide 15: Paycheck Protection Program (PPP): Winding Down
PAYCHECK PROTECTION PROGRAM (“PPP”): WINDING DOWN 2020 PPP Vintage PPP Remaining Balance, 1% Originated Acquired O/S Balance Forgiven # of Loans 2,957 25 40 2,942 % of Total 1% 99% Total Loan Balance $ 300,789 $ 2,208 $ 3,894 $ 299,103 % of Total 1% 99% PPP Forgiven, Total Fees $ 10,068 $ - 99% 2021
Slide 16: Reserve Reconciliation
RESERVE RECONCILIATION: $ in Thousands $18,817 $19,295 $18,346 $18,370 $18,310 $ 2 0 ,0 0 2 .0 0 % $ 1 8 ,0 0 $15,141 $14,467 $ 1 6 ,0 0 1 .5 0 % $ 1 4 ,0 0 $12,951 $12,982 $13,001 $ 1 2 ,0 0 $ 1 0 ,0 0 1.00% 0.96% 1 .0 0 % 0.91% 0.86% 0.76% $ 8 ,0 0 0 $ 6 ,0 0 0 0 .5 0 % $ 4 ,0 0 0 $ 2 ,0 0 0 $ - 0
Slide 17: Capital: Well Capitalized – Building Book Value
CAPITAL: WELL CAPITALIZED – BUILDING BOOK VALUE TCE / TA1 LEVERAGE R ATIO BUILDING SHAREHOLDER VALUE TANGIBLE BOOK VALUE PER SHARE1 $ 2 1 .0 0 8.8% 8.7% 8.6% 8.4% 8.4% 8.0% 8.0% 7.9% 8.1% $19.03 7.5% $18.69 $18.39 $ 1 9 .0 0 $17.92 5% $ 1 7 .0 0 $16.82 WELL CAPITALIZED $ 1 5 .0 0 $14.64 $13.90 $ 1 3
Slide 18: Why SmartBank: Investment Highlights
WHY SMARTBANK: INVESTMENT HIGHLIGHTS ENGAGED MANAGEMENT TEAM $ LOW-COST DEPOSIT BASE SOLID CREDIT QUALITY AND UNDERWRITING STABLE MARKETS EXPERIENCING POPULATION EXPANSION GROWING BUSINESS LINES WITH REVENUE DIVERSIFICATION FRANCHISE SCARCITY VALUE – BUILDING SOUTHEAST DENSITY HISTORY OF DEFENDING B
Slide 19: Appendix
ly, SmartFinancial APPENDIX
Slide 20: Income Statement: Detailed Third Quarter Results
INCOME STATEMENT: DETAILED THIRD QUARTER RESULTS 3Q21 vs. 2Q21 3Q20 ($ in thousands, except per share data) 3Q21 2Q21 3Q20 % Chg. % Chg. Net Interest Income $ 30,382 $ 26,897 $ 26,043 13% 17% Provision for Loan & Lease losses 1,149 (5) 2,634 Noninterest Income 6,309 5,143 4,121 23% 53% Noninterest E
Slide 21: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION $ in Thousands, except per share data 3Q21 2Q21 1Q21 4Q20 3Q20 Operating Earnings 1. Note: “ADECA” represents a loan program Net Income (GAAP) $ 9,600 $ 8,778 $ 9,756 $ 9,030 $ 6,395 administered by the Alabama Department of Noninterest Income: Economic and Community Affairs
Slide 22: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION $ in Thousands, except per share data 3Q21 2Q21 1Q21 4Q20 3Q20 Tangible Common Equity: 1. Book value per share is computed by dividing total Shareholders' Equity (GAAP) $ 424,720 $ 373,393 $ 364,058 $ 357,168 $ 349,789 stockholders’ equity by common shares Less Goodwill And O
Slide 23: Contact
CONTACT MILLER WELBORN BILLY CARROLL RON GORCZYNSKI CHAIRMAN PRESIDENT & CEO CHIEF FINANCIAL OFFICER 423.385.3067 865.868.0613 865.437.5724 MILLER.WELBORN@SMARTBANK.COM BILLY.CARROLL@SMARTBANK.COM RON.GORCZYNSKI@SMARTBANK.COM 5401 KINGSTON PIKE, SUITE 600 KNOXVILLE, TN 37919 23
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