Smartfinancial, Inc. · NYSE:SMBK
Smartfinancial — Q3 2022 Earnings Presentation
22 slides from Smartfinancial's earnings presentation, Oct 25, 2022
Slide 1: Investor Call 3Q 2022
INVESTOR CALL 3Q 2022 October 25, 2022, 10:00am ET Webcast: www.smartbank.com (Investor Relations) Audio Only: 1-833-927-1758 Access Code: 380946 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 2022
QUARTERLY HIGHLIGHTS: THIRD QUARTER 2022 $0.69 $4.8 EARNINGS PER SHARE BOOK VALUE PER SHARE DILUTED OPERATING BILLION IN TOTAL $0.69 EPS1 ASSETS $0.68 $25.28 $24.88 $24.56 $20.15 $20.43 $19.03 $18.69 $18.02 5.6% 15% $0.63 $18.69 $18.02 QOQ2 ANNUALIZED QOQ ANNUALIZED $0.61 $0.61 $0.61 TANG. BOOK VALU
Slide 4: SmartFinancial: Expanding Southeast Franchise
SMARTFINANCIAL: EXPANDING SOUTHEAST FRANCHISE $4.8 NASHVILLE KNOXVILLE BILLION IN TOTAL ASSETS CHATTANOOGA HUNTSVILLE $3.1 BILLION IN TOTAL BIRMINGHAM LOANS TUSCALOOSA AUBURN $4.3 MONTGOMERY BILLION IN TOTAL DEPOSITS DOTHAN SMARTBANK BRANCH OFFICES MOBILE LOAN PRODUCTION OFFICE 40 PENSACOLA PANAMA C
Slide 5: Market Area: Targeting Industry Rich Growth Markets
MARKET AREA: TARGETING INDUSTRY RICH GROWTH MARKETS $ in Billions LEGACY MARKETS1: STRONG RELATIONSHIPS / DEEP MARKET PENETRATION Forbes CAGR: 8% $ 2 $2.3 SMBK LOANS $ 2 $ 2 $2.1 Top 200 $ 2 $2.0 Best Places $ 2 $ 2 $ 2 for Business and 12/31/20 12/31/21 9/30/22 Careers SMARTBANK BRANCH OFFICES CAGR
Slide 6: 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 72% $4,282 $4,280 $3 , 5 00 10 . 0 0% $ 4, 50 0 3 . 0 0% $4,191 $3,099 $4,022 $2,994 $ 4, 00 0 $3 , 0 00 9 . 0 0% $2,806 2 . 5 0% $2,693 $ 3, 50 0 $2 , 5 00 $
Slide 7: Loan and Deposit Portfolio: Strong Organic Growth
LOAN AND DEPOSIT PORTFOLIO: STRONG ORGANIC GROWTH $ in Millions LOAN COMPOSITION DEPOSIT COMPOSITION POSITIVE MARKET MOMENTUM CORE DEPOSIT GROWTH OUTPACING DRIVING ORGANIC GROWTH TIME DEPOSIT CONTRACTION $3,099 $2,994 3% $4,282 $4,280 $4,191 $2,806 $4,022 12% 11% $2,653 $2,693 18% $3,799 13% 18% 14%
Slide 8: Asset Quality: Strong Underwriting Pays Dividends
ASSET QUALITY: STRONG UNDERWRITING PAYS DIVIDENDS $ in Thousands NONPERFORMING ASSETS DELINQUENT AND NONACCRUALS / TOTAL LOANS $ 1 0 ,0 0 0 1 .5 0 % 1 .7 0 % $ 1 4 ,0 0 0 1 .5 0 % 1 .3 0 % $ 8 ,0 0 0 $ 1 2 ,0 0 0 1 .3 0 % 1 .1 0 % $6,059 0 .9 0 % $ 1 0 ,0 0 0 $8,991 1 .1 0 % $7,768 $ 6 ,0 0 0 $5,058
Slide 9: Reserve Reconciliation
RESERVE RECONCILIATION: $ in Thousands $22,769 2 .0 0 % $21,938 $ 2 4 ,0 0 $20,078 $ 2 2 ,0 0 $ 2 0 ,0 0 $19,295 $19,352 1 .5 0 % $ 1 8 ,0 0 $15,483 $14,913 $14,737 $ 1 6 ,0 0 $14,465 $ 1 4 ,0 0 $13,001 1 .0 0 % $ 1 2 ,0 0 0.76% $ 1 0 ,0 0 0.74% 0.74% 0.74% 0.75% $ 8 ,0 0 0 0 .5 0 % $ 6 ,0 0 0 $ 4 ,
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 REVENUE2 $ 1 ,2 0 0 DEPLOYING EXCESS FUNDING 5 0 .0 % MAINTAINING REVENUE DESPITE $1,091 $1,045 4 5 .0 % CHALLENGING MARGIN ENVIRONMENT $ 1 ,0 0 0 6 .0 0 % $ 4 5 ,0 0 0
Slide 11: Interest Rate Sensitivity
INTEREST R ATE SENSITIVITY $ in Millions $ in Thousands FIXED VS. VARIABLE R ATE LOANS STATIC SHOCK / R ATE R AMP ANALYSIS1 ▲ $1.9 BILLION FIXED R ATE LOANS $4,844 , 3.1% INTERST INCOME % CHANGE ▲ $1.2 BILLION VARIABLE R ATE LOANS ▲ $668 MILLION SHORT TERM VARIABLE RATE (1 - 3 MONTH RESET) $3,368 ,
Slide 12: Noninterest Revenue Details: Growing Fee Income
NONINTEREST REVENUE DETAILS: GROWING FEE INCOME $ in Thousands OPERATING NONINTEREST INCOME1 DIFFERENTIATED REVENUE STREAMS FOCUSED ON RECURRING FEE INCOME BUILDING A FAMILY OF DIVERSIFIED REVENUE GENERATORS $7,111 $7,229 $6,806 $6,264 $6,250 3Q21 4Q21 1Q22 2Q22 3Q22 SERVICE CHARGES ON DEPOSIT ACCOU
Slide 13: Operating Expense: Investing in Growth
OPERATING EXPENSE: INVESTING IN GROWTH $ in Thousands OPERATING EFFICIENCY R ATIO1 OPERATING NONINTEREST EXPENSE1 EXECUTING ON EXPANSION OPPORTUNITIES DISCIPLINED FOCUS ON EXPENSE CONTAINMENT $27,143 $25,845 $25,061 $25,279 68% 68% $22,845 64% 63% 62% 3Q21 4Q21 1Q22 2Q22 3Q22 3Q21 4Q21 1Q22 2Q22 3Q2
Slide 14: Capital: Well Capitalized – Building Book Value
CAPITAL: WELL CAPITALIZED – BUILDING BOOK VALUE TCE / TA1 LEVERAGE R ATIO BUILDING SHAREHOLDER VALUE 7.5% 7.2% TANGIBLE BOOK VALUE PER SHARE (TBVPS)1 6.8% 6.7% 6.5% $ 2 4 .0 0 8.4% 7.5% 7.4% 7.5% 7.4% $ 2 2 .0 0 5% $20.43 WELL CAPITALIZED $ 2 0 .0 0 $19.26 $19.17 $17.92 $17.77 $18.02 $ 1 8 .0 0 $16.
Slide 15: 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 16: Appendix
Wy SmartFinancial APPENDIX
Slide 17: Income Statement: Detailed Third Quarter Results
INCOME STATEMENT: DETAILED THIRD QUARTER RESULTS 3Q22 vs. 2Q22 3Q21 ($ in thousands, except per share data) 3Q22 2Q22 3Q21 % Chg. % Chg. Net Interest Income $ 36,708 $ 33,062 $ 30,382 11% 21% Provision for Loan & Lease losses 974 1,250 1,149 Noninterest Income 6,250 7,229 6,309 (14%) (1%) Noninteres
Slide 18: Operating Expense: Technology Initiatives
OPERATING EXPENSE: TECHNOLOGY INITIATIVES EMBRACING TECHNOLOGY TO INCREASE EFFICIENCY AND CREATE STREAMLINED PROCESSES Branch Treasury Teller New Consumer Loan Payment Network Management Modernization Personal Technology Modernization Platform Upgrade Bank-Wide Finance Tools Expansion Q2 2021 Q1 202
Slide 19: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION $ in Thousands, except per share data 3Q22 2Q22 1Q22 4Q21 3Q21 1. Operating return on average assets (Non-GAAP) is Operating Earnings the annualized operating earnings (Non-GAAP) Net Income (GAAP) $ 11,543 $ 10,215 $ 8,259 $ 6,655 $ 9,600 divided by average assets. Noninteres
Slide 20: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION $ in Thousands, except per share data 3Q22 2Q22 1Q22 4Q21 3Q21 Tangible Common Equity: 1. Book value per share is computed by dividing total Shareholders' Equity (GAAP) $ 414,711 $ 420,427 $ 420,042 $ 429,430 $ 424,720 stockholders’ equity by common shares Less Goodwill And O
Slide 21: 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 21
Slide 22: _SmartFinancial : L =
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