Smartfinancial, Inc. · NYSE:SMBK
Smartfinancial — Debt Investor Presentation (October 2018)
31 slides from Smartfinancial's debt investor presentation, Oct 1, 2018
Slide 1: Investor Presentation September 2018
Nasdaq: SMBK Investor Presentation September 2018
Slide 2: Important Information: Forward-Looking Statements
Important Information 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
Slide 3: Offering Summary
Offering Summary Issuer • SmartFinancial, Inc. (Nasdaq: SMBK) Security • Holding Company Subordinated Debt Security Rating • BBB- by Kroll Bond Rating Agency Format • Reg D (settlement through DTC / DTC eligible) Offering Amount • $30.0 million (to grow) Maturity • 10 years Optional Redemption • Non
Slide 4: SMBK Capital Ratios Impact of Offering
SMBK Capital Ratios Impact of Offering 16.0% 200% 12.6% 12.0% 11.2% 11.0% 150% 10.8% 10.6% 10.6% 10.8% 10.6% 10.6% 9.8% 9.3% 9.3% 9.0% 107% 8.7% 8.6% 104% 106% 8.0% 100% 4.0% 50% 0.0% 0% TCE / TA Leverage Ratio CET1 Ratio Tier 1 Ratio Total Capital Ratio Double Leverage Ratio (3) Standalone Pro Form
Slide 5: Our Management Team
Our Management Team Over 26 years in banking Over 15 years in banking Over 23 years in banking and Over 20 years in financial Led company from start-up in Responsible for driving key financial services services 2007 to over $2.0 billion in strategic initiatives and Responsible for driving M&A, Overs
Slide 6: Investment Summary
Investment Summary Experienced management team with ties to the local markets Strong risk management culture with disciplined underwriting process and exceptional asset quality Proven ability to execute a disciplined growth strategy, both organically and through strategic acquisitions Presence in at
Slide 7: Overview of SmartFinancial
Overview of SmartFinancial (1) • SmartFinancial, Inc. (Nasdaq: SMBK) is a $2.3 billion asset bank Branch Footprint holding company headquartered in Knoxville, Tennessee ‒ Operates one subsidiary bank, SmartBank, which was Nashville Knoxville Greensboro Jonesboro founded in January 2007 40 ‒ Located
Slide 8: Our History
Our History 1/8/07 8/20/15 2/29/16 5/19/17 11/1/17 6/27/18 SmartBank opened Announced ~$14.6mm Charter Completed Completed acquisition of Announced first office in private placement of combination of Acquisition of Capstone Bancshares, Inc. proposed Pigeon Forge, common stock SmartBank and Cleveland
Slide 9: Core Strategy
Core Strategy $2.1 Billion in Assets After 3 Completed Whole Management Team with Bank Acquisitions Opportunity to Create a Decades of Banking & M&A Regional Southeastern Experience Community Bank Attractive Demographics Strong Asset Quality and Growth Opportunities in Primary Markets Potential to G
Slide 10: Improving the Diversification of Our Franchise
Improving the Diversification of Our Franchise 2011 2015 Today Gulf Coast Gulf Coast 14% 17% Northeast Northeast Central TN TN Northeast Alabama Market 35% 23% TN 25% 100% Southeast TN Southeast 48% TN Loans by by Loans 31% North AL / Middle TN 7% 2011 2015 Today Gulf Coast 6% Gulf Coast 9% Central
Slide 11: Attractive Markets of Operation
Attractive Markets of Operation Knoxville MSA ‘18 – ‘23 Proj. Population Growth (%) • Third largest MSA by population in Tennessee 8.0% 7.7% • Knoxville is among the 10 fastest-growing U.S. cities with roughly 25% of 6.9% 6.7% employers in the area expecting to hire 6.3% 6.0% • Home to The Universit
Slide 12: Deposit Market Share by State
Deposit Market Share by State Alabama Florida Deposits Market Deposits Market Rank Institution ($mm) Share Branches Rank Institution ($mm) Share Branches 1 Regions Financial Corp. $22,628 22.93 % 218 1 Bank of America Corp. $106,900 20.11 % 549 2 Banco Bilbao Vizcaya Argentaria SA 13,843 14.03 89 2
Slide 13: Deposit Market Share by Major MSAs
Deposit Market Share by Major MSAs Sevierville, TN MSA Chattanooga, TN-GA MSA Deposits Market Deposits Market Rank Institution ($mm) Share Branches Rank Institution ($mm) Share Branches 1 CNB Bancshares Inc. $652 27.10 % 13 1 First Horizon National Corp. $2,479 25.65 % 18 2 SmartFinancial, Inc. 484
Slide 14: Disciplined M&A Process
Disciplined M&A Process • 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 committe
Slide 15: Additional Acquisition Opportunities
Additional Acquisition Opportunities • Includes all banks and thrifts headquartered in select Alabama, Florida, Georgia, North Carolina, South Carolina and Tennessee markets with total assets between $300 million and $2.0 billion(1) Opportunities by State # of Assets Nashville Knoxville NORTH State
Slide 16: Our Balance Sheet Growth
Our Balance Sheet Growth Historical Balance Sheet $2,400 $2,291 (1) CAGR $2,062 Assets 38.0 % $1,903 $1,760 Deposits 37.5 $1,721 $1,717 $1,730 $1,800 Gross Loans 41.4 $1,575 $1,439 $1,500 $1,323 $1,374 $1,200 $1,024 $1,062 $907 $858 $813 $728 $600 $0 (1) 2015 2016 2017 Q1 '18 Q2 '18 Pro Forma Assets
Slide 17: Profitability Metrics
Profitability Metrics ROAA (%) ROATCE (%) 1.20% 14.0% 1.04% 11.9% 0.91% 0.82% 10.1% 0.90% 10.5% 0.77% 0.79% 9.5% 7.2% 7.6% 8.3% 0.57% 0.60% 0.60% 7.0% 0.36% 0.42% 5.9% 0.22% 3.9% 3.9% 0.30% 3.5% 2.7% 0.00% 0.0% 2015 2016 2017 Q1 '18 Q2' 18 2015 2016 2017 Q1 '18 Q2 '18 Net Interest Margin (%) Efficie
Slide 18: Attractive Deposit Mix
Attractive Deposit Mix Deposit Composition (6/30/18) Historical Deposit Composition ($mm) $2,000 $1,907 Non-interest $1,720 Demand 18% $576 Time Deposits $1,501 30% $1,500 $1,440 Interest-bearing $536 Demand 14% $453 $443 MMDA & Savings 38% Cost of Deposits: $1,000 $908 $859 $724 0.79% $633 $492 $31
Slide 19: Overview of Loan Portfolio
Overview of Loan Portfolio Loan Composition (6/30/18)(1) Historical Loan Composition ($mm) Consumer $2,000 C&I & Other 16% 2% $1,734 C&D $37 12% $1,575 $35 $272 $1,500 $1,374 Non $1,323 $259 $35 Owner- $37 Occupied $234 $381 $215 CRE $358 22% $1,000 $813 $303 $331 $360 1-4 Family $728 $8 24% $7 $85
Slide 20: Diversified C&D / CRE Portfolio
Diversified C&D / CRE Portfolio C&D Composition (6/30/18) Non-Owner-Occupied CRE Composition (6/30/18) Unimproved Multifamily Land Other Non Farm 8% 4% Non Residential Self Storage Permanent Construction Only Permanent Financing Financing Improved Lots Loans 15% 1% Hospitality 5% 10% Permanent Finan
Slide 21: Loan Concentrations Over Time
Loan Concentrations Over Time C&D / Total Bank Capital (%) CRE / Total Bank Capital (%) 200% 600% 150% 450% 113% 336% 305% 100% 89% 94% 283% 290% 284% 289% 100% 300% 81% 82% 50% 150% 0% 0% (1) (1) (2) (2) 2015 2016 2017 Q1' 18 Q2 '18 Pro Forma 2015 2016 2017 Q1' 18 Q2 '18 Pro Forma Data as of 12/31
Slide 22: Superior Asset Quality
Superior Asset Quality NPAs / Loans + OREO (%) (1) NCOs / Average Loans (%) 2.00% 0.40% 1.54% 1.50% 0.30% 1.00% 0.20% 0.49% 0.38% 0.33% 0.36% 0.50% 0.10% 0.09% 0.02% 0.00% 0.00% 0.01% 0.00% 0.00% 2015 2016 2017 Q1 '18 Q2 '18 2015 2016 2017 Q1 '18 Q2 '18 Reserves / Loans (%) Reserves / NPLs (%) 0.80%
Slide 23: SMBK Current Capital Position
SMBK Current Capital Position TCE / TA (%) Leverage Ratio (%) 10.0% 12.0% 9.3% 9.3% 9.0% 10.5% 9.0% 8.7% 10.5% 9.8% 9.8% 9.6% 8.2% 9.5% 8.0% 9.3% 8.0% 9.0% 7.0% 7.5% 6.0% 6.0% 2015 2016 2017 Q1 '18 Q2 '18 Pro Forma(1) 2015 2016 2017 Q1 '18 Q2 '18 Pro Forma(1) CET1 Ratio (%) Total Capital Ratio (%) 1
Slide 24: Positioned For Rising Interest Rates
Positioned For Rising Interest Rates SMBK Interest Rate Sensitivity June 30, 2018 Net Interest Income Economic Value of Equity % Change % Change Change in Interest Rates From Base Policy Limit From Base Policy Limit Up 400 bps -3.1 % +/-25.0 % -20.1 % +/-35.0 % Up 300 bps -1.0 +/-20.0 -14.6 +/-30.0
Slide 25: Appendix
Appendix ‘Me SmartFinancial, Inc.
Slide 26: Historical Financial Highlights
Historical Financial Highlights Twelve months ended Pro December 31, Standalone Forma(1) 2015 2016 2017 Q1 '18 Q2 '18 Balance Sheet Data: Total Assets $1,023,963 $1,062,456 $1,720,771 $1,760,425 $2,062,232 $2,291,008 Total Loans 727,715 813,376 1,323,258 1,374,256 1,575,435 1,730,238 Deposits 858,48
Slide 27: Historical Interest Coverage
Historical Interest Coverage Historical Interest Coverage 2014 2015 2016 2017 Q1 ‘18 Q2 '18 Pro Forma (1) Bank-Level Equity $55,412 $56,197 $100,023 $168,103 $212,961 $257,056 $293,908 Consolidated Equity 55,888 100,177 105,240 205,852 208,949 247,487 277,594 Double Leverage Ratio 99% 56% 95% 82% 10
Slide 28: Non-GAAP Reconciliations: TCE / TA
Non-GAAP Reconciliations TCE / TA 2015 2016 2017 Q1 ‘18 Q2 '18 Pro Forma (1) Pro Forma (2) Shareholders' Equity (GAAP) $88,177 $93,240 $205,852 $208,949 $247,487 $277,594 $277,594 Less: Intangible Assets 6,941 6,636 50,837 50,660 68,449 86,051 86,050 Tangible Common Equity $81,236 $86,604 $155,015 $
Slide 29: Non-GAAP Reconciliations: Core Net Income & Core ROAA
Non-GAAP Reconciliations Core Net Income & Core ROAA 2015 2016 2017 Q1 ‘18 Q2 '18 Net Income before Extraordinary (GAAP) $1,510 $5,799 $5,015 $3,415 $3,932 Less: After-Tax Nonrecurring Items, Including Merger-Related Expenses (783) (38) (1,477) (393) (888) Plus: After-Tax Amortization of Intangibles
Slide 30: Non-GAAP Reconciliations: Core ROATCE
Non-GAAP Reconciliations Core ROATCE 2015 2016 2017 Q1 ‘18 Q2 '18 Core Net Income $2,445 $6,035 $9,200 $3,957 $5,001 Average Tangible Common Equity $62,433 $83,920 $120,810 $156,652 $168,664 Core ROATCE 3.92 % 7.19 % 7.62 % 2.53 % 2.96 % Multiplied by: Annualization Factor 1.00 1.00 1.00 4.00 4.00 C
Slide 31: Non-GAAP Reconciliations: Core Efficiency Ratio
Non-GAAP Reconciliations Core Efficiency Ratio 2015 2016 2017 Q1 ‘18 Q2 '18 Total Noninterest Expense $23,166 $32,500 $39,082 $13,222 $15,272 Less: Nonrecurring Expenses, Including Merger-Related Expenses 1,257 258 2,417 498 1,123 Less: Foreclosure & Repossession Expense 289 236 84 336 465 Less: Amo
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