Smartfinancial, Inc. · NYSE:SMBK
Smartfinancial — Q4 2019 Earnings Presentation
26 slides from Smartfinancial's earnings presentation, Jan 22, 2020
Slide 1: Fourth Quarter 2019 Earnings Release
Fourth Quarter 2019 Earnings Release January 21, 2020
Slide 2: Legal Disclaimer: Forward-Looking Statements
Legal Disclaimer Forward-Looking Statements This news release may contain statements that are based on management’s current estimates or expectations of future events or future results, and that may be deemed to constitute forward-looking statements as defined under the Private Securities Litigation
Slide 3: Overview of SmartFinancial
Overview of SmartFinancial . SmartFinancial, Inc. (Nasdaq: SMBK) is a $2.4 billion Branch Footprint asset bank holding company headquartered in Knoxville, Tennessee Nashville Knoxville Greensboro . Jonesboro Operates one subsidiary bank, SmartBank, which was founded in 40 January 2007 ARKANSAS . Loc
Slide 4: 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 5: Fourth Quarter Financial Highlights
Fourth Quarter Financial Highlights
Slide 6: Solid Earnings Track Record
Solid Earnings Track Record $8,000 Capstone Southern Foothills Acquisition Acquisition Acquisition $6,000 GAAP) - $4,000 $2,000 Net Operating Net (Non Operating Earnings ($000) $0 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 Net Operating Earnings, Less Accretion Accretion, Net of Tax ($ in thousand
Slide 7: Performance Trends
Performance Trends . Net Operating Earnings (Non-GAAP) of $6.5 ROAA (%) ROATCE (%) million for the quarter, up 10% from a year 1.56 % 16.8 % earlier 1.17 % 13.1 % 1.07 % 1.12 % 1.08 % 12.0 % 0.96 % 1.01 % 1.02 % 10.8 % 11.6 % 11.1 % 0.98 % 10.3 % 10.5 % 10.6 % 0.84 % 9.3 % . ROAA of 1.12% for the qu
Slide 8: Balance Sheet Trends
Balance Sheet Trends Total Assets ($mm) Net Loans ($mm) $2,000 $2,500 $2,391 $2,449 $1,893 $2,354 $2,390 $1,832 $1,828 $1,858 $2,274 $1,769 $2,300 $1,800 $2,100 $1,600 $1,900 $1,400 $1,700 $1,200 $1,500 $1,000 4Q18 1Q19 2Q19 3Q19 4Q19 4Q18 1Q19 2Q19 3Q19 4Q19 Total Deposits ($mm) Book Value Per Shar
Slide 9: Net Interest Income
Net Interest Income . Net Interest Margin (FTE) decreased quarter-to-quarter primarily due to the three Federal rate decreases during the third and fourth quarters of 2019 . Compared quarter-to-quarter, Earning Asset Yields have decreased 13 basis points; the Average Cost of Interest-bearing Liabili
Slide 10: Operating (Non-GAAP) Noninterest Income
Operating (Non-GAAP) Noninterest Income . Consistent increases in service charges on deposit accounts . Slight decline in mortgage banking income linked quarter, continued growth year-over-year . Other noninterest income components stable over quarters presented ($ in thousands) Operating (Non-GAAP)
Slide 11: Operating (Non-GAAP) Noninterest Expense
Operating (Non-GAAP) Noninterest Expense . Operating Efficiency Ratio (Non-GAAP) remained under 65% for the fifth consecutive quarter . Salary increases are driven by our continued investment in hiring talented revenue producing associates in order to complement our strategic initiatives . Continued
Slide 12: Attractive Deposit Mix
Attractive Deposit Mix Deposit Composition (12/31/19) Historical Deposit Composition ($mm) $2,500 Noninterest Demand $2,047 $1,994 $2,012 $1,998 Time 18% $2,000 $1,922 Deposits 33% Interest- $635 $673 $647 $680 bearing $649 $1,500 Demand Money 19% Market and Savings $623 30% $1,000 $698 $648 $635 $6
Slide 13: Overview of Loan Portfolio
Overview of Loan Portfolio Loan Composition (12/31/19) Historical Loan Composition ($mm) Other $2,500 <1% Consumer RE 22% CRE, Non $2,000 $1,903 Owner $1,841 $1,837 $1,868 Occupied C&I $1,777 18% 25% $423 $411 $406 $406 $407 $1,500 CRE, C&D Owner $476 Occupied 12% $473 $464 $468 $488 23% $1,000 $416
Slide 14: Asset Quality
Asset Quality . Superior asset quality, with Nonperforming Assets at 0.21% of Total Assets compared to the Nonperforming Assets ($ in thousands) Southeast Peer Median (1) of 0.59% $9,000 1.00% . Remaining fair value discounts on acquired $6,000 0.59% 0.70% loans are 1.5x the current Allowance For Lo
Slide 15: Reported and Operating (Non-GAAP) Earnings
Reported and Operating (Non-GAAP) Earnings . Fourth quarter 2019 operating earnings increased 8% from the prior linked quarter, and increased 10% to same prior year quarter . Quarterly operating earnings overall had directionally consistent growth . Full year operating earnings increased 21% from 20
Slide 16: Summary of Moving Forward Initiatives
Summary of Moving Forward Initiatives The company is Moving Forward with several major initiatives: Initiatives Completed On-Going 2020 . Centralization of operational areas . Centralization of finance group . Bank-wide organizational chart planning to gain efficiencies . Core data processing
Slide 17: Noteworthy Accomplishments in 2019
Noteworthy Accomplishments in 2019 Announced the Acquisition Debuted on Fortune’s 100 Named “A Top Workplace” of Progressive Savings Bank Fastest-Growing Companies 3-Years Running 9 The proposed transaction will bolster The Fortune 100 Fastest-Growing For the third year in a row, SmartBank was Smart
Slide 18: Acquisition of Progressive Financial Group, Inc.
Acquisition of Progressive Financial Group, Inc.
Slide 19: SMBK M&A Criteria
SMBK M&A Criteria SmartFinancial is committed to balancing organic growth with thoughtful acquisitions and will not make acquisitions simply for the sake of growth Impact SMBK Criteria Acquisition of Progressive TBV Earnback Period < 3 years Meaningful earnings EPS Impact accretion in first full y
Slide 20: Overview of Progressive Financial Group Inc.
Overview of Progressive Financial Group Inc. Deposit Market Share in Counties of Operation Market Deposits Number Share in Market of Rank Institution (%) ($mm) Branches 1 B.P.C. Corp. 20.4 % $751 13 Company Name Progressive Financial Group Inc. 2 Regions Financial Corp. 15.0 553 7 Key Locations Cook
Slide 21: Bolstering Our Core Tennessee Market
Bolstering Our Core Tennessee Market Tennessee Branch Footprint ClarksvilleClarksville JamestownJamestown JohnsonJohnson CityCity LebanonLebanon CookevilleCookeville JohnsonJohnson CityCity CookevilleCookeville 81 NashvilleNashville 40 KnoxvilleKnoxville 40 MurfreesboroMurfreesboro CrossvilleCrossvi
Slide 22: Appendix
Alb, SmartFinancial, Inc. Appendix
Slide 23: Non-GAAP Reconciliations
Non-GAAP Reconciliations ($ in thousands) 4Q19 3Q19 2Q19 1Q19 4Q18 Net interest income - ex purchase acct. adj. Net interest income (GAAP) $ 21,104 $ 21,140 $ 20,802 $ 20,997 $ 21,447 Taxable equivalent adjustment 116 110 116 115 94 Net interest income TEY 21,220 21,250 20,918 21,112 21,541 Purchase
Slide 24: Non-GAAP Reconciliations
Non-GAAP Reconciliations ($ in thousands, except per share data) 4Q19 3Q19 2Q19 1Q19 4Q18 Operating Earnings Net income (GAAP) $ 6,733 $ 5,963 $ 9,121 $ 4,731 $ 6,444 Noninterest income: Securities (gains) losses - (1) (33) - (2) ADECA termination proceeds (720) - - - - Merger termination fee - - (6
Slide 25: 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 25
Slide 26: Alb,
Alb, SmartFinancial, Inc.