Smartfinancial, Inc. · NYSE:SMBK
Smartfinancial — Q2 2018 Earnings Presentation
26 slides from Smartfinancial's earnings presentation, Jul 25, 2018
Slide 1: Second Quarter 2018 Earnings Call
Second Quarter 2018 Earnings Call June 25, 2018
Slide 2: Legal Disclaimer
Legal Disclaimer Forward-Looking Statements Certain of the statements made in this presentation may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-look
Slide 3: Important Information for Shareholders
Important Information Important Information for Shareholders This presentation shall not constitute an offer to sell, the solicitation of an offer to sell, or the solicitation of an offer to buy any securities or the solicitation of any vote or approval, nor shall there be any sale of securities in
Slide 4: The SmartFinancial Story
The SmartFinancial Story pro forma for SmartBankpending transactionwas founded in 2007 as a de novo bank in East Tennessee and has grown to an approximate $2.2 billion-asset franchise through prudent organic growth and a thoughtful series of mergers ( ) The core franchise in East Tennessee has been
Slide 5: Culture
Culture building a culture Associates thrive empowered leaders core values We are critical part of ourwhere culture and are to be . The that we have established as a company help us operate in unison and have become a . Our Associates are key to SmartBank’s success. Core Values A Delivering Exhibiti
Slide 6: Our Business Strategy
Our Business Strategy Create a valuable southeastern banking franchise through organic growth in strong markets, coupled with an acquisition model positioning our company as a partner of choice for banks in our region Continually improve earnings and efficiency metrics as we build out our model with
Slide 7: An Emerging Southeast Acquirer
An Emerging Southeast Acquirer SmartFinancial is transforming into an experienced and preferred Southeast acquirer, having completed five transactions that added low-cost core deposits in attractive markets across three states Nearly three-fourths of the total franchise’s assets and core deposits, i
Slide 8: Disciplined Acquisition Strategy
Disciplined Acquisition Strategy SmartFinancial has adhered to a disciplined set of merger criteria including: No more than 3 years of initial TBV-per-share dilution Meaningful EPS accretion in the first full year of operations Conservative loan marks Franchise additive SmartFinancial is committed t
Slide 9: Financial Highlights
Second Quarter 2018 Earnings Call FINANCIAL HIGHLIGHTS
Slide 10: Second Quarter 2018 Highlights
Second Quarter 2018 Highlights Net Income of $3.9 million for the quarter, up 139% from a year earlier ROAA of 0.81% for the quarter and Net Operating ROAA (Non-GAAP) of 1.00% fully taxable equivalent “FTE” Net Interest Margin ( ) of 4.57%, up 42 basis points from a year earlier Nonperforming Assets
Slide 11: Summary Results
Summary Results ROAA Net Operating ROAA (Non-GAAP) Net Interest Income / Average Assets 1.00% 4.10% 4.00% 0.75% 3.90% 0.50% 3.80% 0.25% 3.70% 0.00% 3.60% Noninterest Income / Average Assets Noninterest Expense / Average Assets 0.50% 3.40 % 0.40% 3.30 % 0.30% 3.20 % 0.20% 0.10% 3.10 % 0.00% 3.00 % 11
Slide 12: Earnings Profile – Second Quarter 2018
Earnings Profile – Second Quarter 2018 2Q18 1Q18 2Q17 EPS increased 60% year over Total Interest Income $22,993 $19,378 $11,517 year (“YoY”) Total Interest Expense 3,455 2,567 1,268 Earnings Before Income Net Interest Income 19,538 16,811 10,249 Taxes increased 120% YoY Provision for Loan Losses 617
Slide 13: Net Interest Income
Net Interest Income Net Interest Margin (FTE) increased quarter to quarter primarily due to increases on the yields of both core loans and securities, and higher purchase accounting adjustments on acquired loans Compared to a year ago, Earning Asset Yields are up 72 basis points; the Average Cost of
Slide 14: Noninterest Income
Noninterest Income 2Q18 Noninterest Income increased primarily due to higher other noninterest income Quarterly Noninterest Income has trended higher over the last five quarters from approximately $1.2 million in 2Q17 to $1.6 million in 2Q18 Noninterest Income $2,000,000 $1,500,000 (Loss) Gain on Se
Slide 15: Noninterest Expense
Noninterest Expense Efficiency Ratio decreased to 72.3%, the lowest of any quarter since the Cornerstone merger in 2015. Operating Efficiency Ratio (Non-GAAP) was 64.8%; Salary increases are primarily due to the addition of associates from the Tennessee Bancshares acquisition during the quarter Data
Slide 16: Balance Sheet
Balance Sheet 2Q18 1Q18 2Q17 Assets increased primarily due to the Cash & Cash Equivalents $ 170,235 $ 96,710 $ 82,835 Securities Available for Sale 156,577 156,210 132,762 Tennessee Bancshares acquisition Other Investments 8,273 7,808 6,080 Total Loans 1,575,434 1,374,256 865,421 Cash & Cash Equiva
Slide 17: Loan & Deposit Composition 2Q18
Loan & Deposit Composition 2Q18 17
Slide 18: CRE Ratios
CRE Ratios C&D levels (100 Ratio) are still well below regulatory guidance levels Total CRE levels (300 Ratio) remained relatively stable quarter to quarter Managing these ratios are part of our overall organic growth, merger opportunity and capital management strategies 100 Ratio 300 Ratio 150% 350
Slide 19: Asset Quality
Asset Quality Excellent asset quality, with Nonperforming Assets at 0.25% of Total Assets Remaining fair value discounts on acquired loans are more than 2.9x the current Allowance For Loan Losses Acquisitions are marked conservatively for potential losses Nonperforming Assets Loan Discounts $6,000 0
Slide 20: Supplemental Information
Alb, SmartFinancial, Inc. Supplemental Information
Slide 21: Loan Composition Over Time
Loan Composition Over Time Loan balance increases due to acquired loans and organic growth Loan composition shifted slightly, with Owner Occupied CRE and Residential RE contributing to a larger percent of the portfolio $1,800,000 $1,600,000 $1,400,000 $1,200,000 Other Residential RE $1,000,000 CRE,
Slide 22: Deposit Composition Over Time
Deposit Composition Over Time Well diversified deposit mix growth of money market, savings, and noninterest demand replacing mostly wholesale time deposits Cost of funds increased just 27 bps while Fed Funds has increased 75 bps over the last year $1,800,000 2.00% $1,500,000 1.50% $1,200,000 Time De
Slide 23: Non-GAAP Reconciliations
Non-GAAP Reconciliations 2Q18 1Q18 4Q17 3Q17 2Q17 Net interest income - ex purchase acct. adj. Net interest income (GAAP) $ 19,538 $ 16,811 $ 15,342 $ 10,924 $ 10,249 Taxable equivalent adjustment 23 16 22 21 21 Net interest income TEY 19,561 16,827 15,364 10,945 10,270 Purchase accounting adjustmen
Slide 24: Non-GAAP Reconciliations
Non-GAAP Reconciliations 2Q18 1Q18 4Q17 3Q17 2Q17 Operating Earnings Net income (GAAP) $ 3,932 $ 3,415 $ 38 $ 1,685 $ 1,648 Securities (gains) losses 1 - - (144) - Merger costs 1,123 498 1,694 303 420 Revaluation of deferred tax assets due to change in tax law - - 2,482 - - Income tax effect of adju
Slide 25: SmartFinancial, Inc. Management
SmartFinancial, Inc. Management Over 26 years in banking Over 15 years in banking Over 23 years in banking and financial services Led company from start- Responsible for driving key strategic initiatives Responsible for driving up in 2007 to over $2.0 and oversees the Board of billion today Director
Slide 26: Investor Contacts
Investor Contacts Billy Carroll Miller Welborn President & CEO Chairman (865) 868-0613 (423) 385-3067 Billy.Carroll@SmartBank.com Miller.Welborn@SmartBank.com SmartFinancial, Inc. 5401 Kingston Pike, Suite 600 Knoxville, TN 37919