Smartfinancial, Inc. · NYSE:SMBK
Smartfinancial — Q4 2018 Earnings Presentation
28 slides from Smartfinancial's earnings presentation, Jan 24, 2019
Slide 1: Fourth Quarter 2018 Earnings Release
Fourth Quarter 2018 Earnings Release January 24, 2019
Slide 2: Legal Disclaimer: Forward-Looking Statements
Legal Disclaimer Forward-Looking Statements Certain of the statements made in this presentation may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securiti
Slide 3: Compliance Disclosures
Compliance Disclosures Important Information for Shareholders and Investors 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
Slide 4: Overview of SmartFinancial
Overview of SmartFinancial ▪ SmartFinancial, Inc. (Nasdaq: SMBK) is a $2.3 billion Branch Footprint asset bank holding company headquartered in Knoxville, Tennessee Nashville Knoxville Greensboro ▪ Jonesboro Operates one subsidiary bank, SmartBank, which was founded 40 in January 2007 ARKANSAS ▪ TEN
Slide 5: Culture
Culture 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. Core Values Act with Integrity Del
Slide 6: An Emerging Southeast Acquirer
An Emerging Southeast Acquirer ▪ SmartFinancial is transforming into an experienced and preferred Southeast acquirer, having completed six transactions that added low-cost core deposits in attractive markets across three states ▪ The pending merger of equals announced with Entegra Financial Corporat
Slide 7: 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
Slide 8: Fourth Quarter Financial Highlights
Fourth Quarter Financial Highlights
Slide 9: Performance Trends
Performance Trends ▪ Net Operating Earnings (Non-GAAP) of $5.9 ROAA (%) ROATCE (%) million for the quarter, up 61% from a year 1.17 % 13.09 % 1.07 % 12.00 % 0.99 % 1.00 % 0.98 % 11.04 % 10.84 % earlier 0.89 % 9.94 % 0.85 % 9.44 % 0.80 % 0.81 % 9.04 % 8.96 % 8.10 % ▪ ROAA of 1.17% for the quarter and
Slide 10: Balance Sheet Trends
Balance Sheet Trends Total Assets ($mm) Net Loans ($mm) 2,500 2,000 2,274 1,769 2,062 2,051 1,568 1,578 2,000 1,600 1,721 1,760 1,317 1,368 1,500 1,200 1,062 808 1,000 800 500 400 0 0 YE 2016 YE 2017 Q1'18 Q2'18 Q3'18 Q4'18 YE 2016 YE 2017 Q1'18 Q2'18 Q3'18 Q4'18 Total Deposits ($mm) Book Value Per
Slide 11: Earnings Profile – Fourth Quarter 2018
Earnings Profile – Fourth Quarter 2018 ▪ Net Operating Diluted EPS (Non- GAAP) increased 27% year over 4Q18 3Q18 4Q17 year (“YoY”) Total Interest Income $26,771 $23,068 $17,244 Total Interest Expense 5,324 4,208 1,902 ▪ Earnings Before Income Taxes increased 57% YoY Net Interest Income 21,447 18,860
Slide 12: Net Interest Income
Net Interest Income ▪ Net Interest Margin (FTE) increased quarter to quarter primarily due to higher accretion on acquired loans ▪ Compared to a year ago, Earning Asset Yields are up 16 basis points; the Average Cost of Interest-bearing Liabilities is up 63 basis points ▪ Excluding the effect of pur
Slide 13: Noninterest Income
Noninterest Income ▪ Consistent increases in service charges on deposit accounts, and other noninterest income components ▪ Noninterest Income trending upward, though 4Q18 reported decreased gain on sale of loans and other assets Noninterest Income $2,000,000 $1,500,000 (Loss) Gain on Securities $1,
Slide 14: Noninterest Expense
Noninterest Expense ▪ Efficiency Ratio decreased to 67.7%, the lowest of any quarter since the Cornerstone merger in 2015. Operating Efficiency Ratio (Non-GAAP) was 62.0%. ▪ Salary increases are primarily due to the addition of associates from three completed acquisitions for periods presented ▪ Mer
Slide 15: Attractive Deposit Mix
Attractive Deposit Mix Deposit Composition (12/31/18) Historical Deposit Composition ($mm) $2,500 Noninterest Demand Time 17% Deposits Interest- $2,000 $1,922 34% bearing Demand $1,717 $1,707 16% $1,500 $649 Money $1,500 $1,439 $536 Market and $569 Savings $453 33% $443 $1,000 $642 $633 $570 $491 Hi
Slide 16: Overview of Loan Portfolio
Overview of Loan Portfolio Loan Composition (12/31/18) Historical Loan Composition ($mm) Other $2,500 1% Residential RE 23% $2,000 C&I CRE, Non $1,777 17% Owner $1,585 Occupied $1,575 $408 27% $1,500 $1,374 CRE, C&D $1,323 $356 $352 Owner 11% Occupied $293 $299 21% $488 $1,000 $386 $400 $362 $375 Hi
Slide 17: Asset Quality
Asset Quality ▪ Superior asset quality, with Nonperforming Nonperforming Assets Assets at 0.24% of Total Assets ▪ $8,000 0.40% Remaining fair value discounts on acquired $6,000 0.30% loans are more than 2.6x the current Allowance $4,000 0.20% For Loan Losses $2,000 ▪ $0 0.10% Acquisitions are marked
Slide 18: Appendix
RN SmartFinancial, Inc. Appendix
Slide 19: Non-GAAP Reconciliations
Non-GAAP Reconciliations 4Q18 3Q18 2Q18 1Q18 4Q17 Net interest income - ex purchase acct. adj. Net interest income (GAAP) $ 21,447 $ 18,860 $ 19,538 $ 16,811 $ 15,342 Taxable equivalent adjustment 94 35 23 12 16 Net interest income TEY 21,541 18,896 19,561 16,823 15,358 Purchase accounting adjustmen
Slide 20: Non-GAAP Reconciliations
Non-GAAP Reconciliations 4Q18 3Q18 2Q18 1Q18 4Q17 Operating Earnings Net income (GAAP) $ 6,444 $ 4,324 $ 3,931 $ 3,415 $ 38 Securities (gains) losses (2) - 1 - - Merger costs 1,322 838 1,123 498 1,694 Tax charge related to change in tax law and tax benefit (1,600) - - - 2,440 Income tax effect of ad
Slide 21: Transformative Merger of Equals
Transformative Merger of Equals
Slide 22: Our Combined Leadership Team
Our Combined Leadership Team Miller Welborn Chairman 12 SMBK Directors 5 ENFC Directors Billy Carroll, Jr. Roger Plemens President & CEO President of the Carolinas Greg Davis David Bright Rhett Jordan Gary Petty Chief Lending Officer Chief Financial Officer Chief Credit Officer Chief Risk Officer Ry
Slide 23: Building Significant Scarcity Value
Building Significant Scarcity Value ▪ Increases depth of executive leadership team and Board of Directors highly capable of running a pro forma ~$4.0 billion asset, NASDAQ-traded financial institution ▪ Advances combined entity into the top 20 largest publicly traded banks headquartered in its combi
Slide 24: Pro Forma Footprint and Highlights
Pro Forma Footprint and Highlights Pro Forma Highlights (as of 09/30/18) Nashville North Knoxville Murfreesboro Carolina Assets ($mm) 3,940 Tennessee Asheville Loans ($mm) 2,798 Chattanooga Deposits ($mm) 3,153 Greenville (1) Huntsville TCE Ratio (%) 8.7% South Branches 47 Alabama Gainesville Caroli
Slide 25: Pro Forma Deposit Market Share
Pro Forma Deposit Market Share Pro Forma Counties of Operation North Market Deposits in Number Nashville Knoxville Carolina Share Market of Murfreesboro Rank Institution (%) ($000) Branches Tennessee Asheville 1 Regions Financial Corp. (AL) 10.27 9,206,647 131 2 SunTrust Banks Inc. (GA) 8.44 7,560,4
Slide 26: Combined Presence in Several Key Markets
Combined Presence in Several Key Markets ▪ Creates a combined presence in five of the top 25 largest MSAs in a region covering Alabama, Florida, Georgia, North Carolina, South Carolina and Tennessee ▪ Outside of top 25 MSAs, the combined company enhances total deposit market share from existing lega
Slide 27: 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 27
Slide 28: SmartFinancial, Inc.
RN SmartFinancial, Inc.