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Press Release

SmartFinancial Announces Earnings with Second Quarter 2019 Net Income of $9.1 million

Company Release - 7/24/2019 5:56 PM ET

Performance Highlights for Second Quarter of 2019

  • Return on average assets of 1.56 percent and net operating return on average assets (Non-GAAP) of 0.96%
  • Asset quality was outstanding with nonperforming assets of 0.17%
  • Recorded $6.4 million merger termination fee
  • Noninterest income to average assets of 1.44%, excluding merger termination fee, amounted to 0.35%
  • Noninterest-bearing demand deposit growth of 34.28% annualized
  • Completed departmental restructuring initiatives

KNOXVILLE, Tenn., July 24, 2019 (GLOBE NEWSWIRE) -- SmartFinancial, Inc. ("SmartFinancial"; NASDAQ: SMBK), today announced net income of $9.1 million for the second quarter of 2019, compared to $3.9 million for the second quarter of 2018.  Diluted net income per share was $0.65 for the second quarter of 2019, compared to $0.32 during the second quarter of 2018. Net operating earnings (Non-GAAP), which excludes securities gains, merger termination fee and merger related and restructuring expenses, totaled $5.6 million in the second quarter of 2019 compared to $4.8 million in the second quarter of 2018.

Billy Carroll, President & CEO, stated: "This was a very solid quarter for our company.  We took advantage of a very positive earnings event, restructured our finance team and centralized our deposit operations, while showing strong core deposit growth and nice core earnings.  We are positioned well to continue building on our strong foundation."

SmartFinancial's Chairman, Miller Welborn, concluded:  "I am very proud of where the bank is at the halfway mark of 2019. We are on track and executing our strategic plan. Our team has truly gelled and we are very excited about what the second half of the year holds as we continue to build value for our stakeholders."

Second Quarter 2019 compared to First Quarter 2019

Net income increased $4.4 million to $9.1 million for the second quarter of 2019, compared to $4.7 million for the first quarter of 2019 primarily due to a $6.4 million fee received in connection with the merger termination with Entegra Financial Corp.  Diluted net income per share was $0.65 for the second quarter of 2019, compared to $0.34 during the first quarter of 2019. Net operating earnings (Non-GAAP) totaled $5.6 million in the second quarter of 2019 compared to $5.5 million in the previous quarter.

Net interest income for the second quarter of 2019 was $20.8 million, a decrease from $21.0 million for the first quarter of 2019. The tax equivalent net interest margin was 3.94% for the second quarter of 2019 compared to 4.10% for the first quarter of 2019.  The tax equivalent average yield on interest-earning assets was 5.17% for the second quarter of 2019, a decrease from 5.25% for the first quarter of 2019, while the yield on interest-bearing liabilities increased to 1.54% for the  second quarter of 2019 from 1.45% for the first quarter of 2019.

The yield on average loans was 5.53% for the second quarter of 2019 compared to 5.62% for the first quarter of 2019. The decrease in yield on average loans was due to lower discount accretion on acquired loans (30 basis points in the second quarter versus 42 basis points in the first quarter).  For the second quarter of 2019, the yield on average loans, excluding accretion, increased 3 basis points to 5.23% from the first quarter of 2019. The cost of average interest-bearing deposits increased to 1.42% for the second quarter of 2019 from 1.32% for the first quarter of 2019.  The increase was driven primarily from the continued competition for deposits.

Provision for loan losses was $393 thousand in the second quarter of 2019, compared to $797 thousand in the first quarter of 2019.  The decrease in provision was primarily due to the larger provision recorded in the prior quarter from higher organic loan growth.  The allowance for loan losses was $9.1 million, or 0.50% of total loans, as of June 30, 2019, compared to $8.7 million, or 0.47% of total loans, as of March 31, 2019.

Nonperforming loans as a percentage of total loans was 0.12% as of June 30, 2019, consistent with the 0.12% reported in the first quarter of 2019.  Total nonperforming assets (which include nonaccrual loans, loans past due 90 days or more and still accruing, and other real estate owned) as a percentage of total assets was 0.17% as of June 30, 2019, compared to 0.18% as of March 31, 2019.

Noninterest income increased by $6.7 million to $8.4 million for the second quarter of 2019 compared to $1.7 million for the first quarter of 2019 primarily due to the $6.4 million merger termination fee, and to a lesser extent, increases in mortgage banking of $110 thousand and wealth revenue of $86 thousand.  Noninterest income to average assets (excluding the $6.4 million merger termination fee) of .35% for the second quarter of 2019 increased from .30% in the first quarter of 2019.

Noninterest expense increased by $1.2 million to $16.8 million for the second quarter of 2019 compared to $15.6 million for the  first quarter of 2019 including merger related and restructuring expenses of  $1.8 million for the second quarter of 2019 compared to $923 thousand for the first quarter of 2019.  Operating noninterest expense (excludes merger related and restructuring expenses) increased by $357 thousand to $15.0 million for the second quarter of 2019 compared to $14.6 million for the first quarter of 2019.  This increase was primarily due to increases in personnel expense. Operating noninterest expense to average assets of 2.57% for the second quarter of 2019 decreased from 2.60% in the first quarter of 2019.

Income tax expense was $2.9 million in the second quarter of 2019 compared to $1.6 million in the first quarter of 2019.  The overall effective tax rate was 24.1% for the second quarter of 2019 compared to 25.1% in the first quarter of 2019.  The first quarter of 2019 included non-deductible merger related expenses which were subsequently deductible in the second quarter stemming from the acquisition termination.

Second Quarter 2019 compared to Second Quarter 2018

Net income increased by $5.2 million to $9.1 million for the second quarter of 2019 compared to $3.9 million for the second quarter of 2018 primarily due to $6.4 million fee received for the merger termination of Entegra Financial Corp and the operating effects of the Tennessee Bancshares, Inc. and Foothills Bancorp, Inc. acquisitions which were completed in the second and fourth quarters of 2018, respectively. Diluted net income per share was $0.65 for the second quarter of 2019, compared to $0.32 for the second quarter of 2018.  Net operating earnings (Non-GAAP) totaled $5.6 million in the second quarter of 2019 compared to $4.8 million for the second quarter of 2018.

Net interest income for the second quarter of 2019 was $20.8 million, an increase from $19.5 million for the second quarter of 2018. The tax equivalent net interest margin was 3.94% for the second quarter of 2019 compared to 4.57% for the second quarter of 2018.  The tax equivalent average yield on interest-earning assets was 5.17% for the second quarter of 2019 decreasing from 5.37% for the second quarter of 2018, while the yield on interest bearing liabilities increased to 1.54% for the second quarter of 2019 from 1.00% for the second quarter of 2018.

The yield on average loans was 5.53% for the second quarter of 2019 compared to 5.79% for the second quarter of 2018. The decrease in yield on average loans was primarily due to lower discount accretion on acquired loans (30 basis points in the second quarter of 2019 versus 68 basis points in the second quarter of 2018), offset by increases in yield of average loans of 12 basis points.  For the second quarters of 2019 and 2018, the yield on average loans, excluding accretion, was 5.23% and 5.11%, respectively. The cost of average interest-bearing deposits increased to 1.42% for the second quarter of 2019 from 0.96% for the second quarter of 2018.  This increase was due to increases in deposit rates from federal rate increases and increased competition.

Provision for loan losses was $393 thousand in the second quarter of 2019, compared to $617 thousand in the second quarter of 2018. The decrease in provision was primarily due to slower organic loan growth experienced during the second quarter of 2019 when compared to the second quarter of 2018. The allowance for loan losses was $9.1 million, or 0.50% of total loans, as of June 30, 2019, compared to $7.1 million, or 0.45% of total loans, as of June 30, 2018.

Nonperforming loans as a percentage of total loans was 0.12%  as of June 30, 2019, a decrease from 0.14% in the prior year quarter. Total nonperforming assets (which include nonaccrual loans, loans past due 90 days or more and still accruing, and other real estate owned) as a percentage of total assets was 0.17% as of June 30, 2019, compared to 0.28% as of June 30, 2018.

Noninterest income increased by $6.8 million to $8.4 million for the second quarter of 2019 compared to $1.6 million for the second quarter of 2018 primarily due to the $6.4 million merger termination fee and to a lesser extent, increases in deposit services charges of $150 thousand, increases in mortgage banking of $71 thousand and wealth revenue of $112 thousand. Noninterest income to average assets (excluding the $6.4 million termination fee) of 0.35% for the second quarter of 2019 increased from 0.33% in the second quarter of 2018.

Noninterest expense increased by $1.5 million to $16.8 million for the second quarter of 2019 compared to $15.3 million for the second quarter of 2018 and included $1.8 million in merger related and restructuring expenses for the second quarter of 2019 compared to $1.1 million for the second quarter of  2018. Operating noninterest expense (excludes merger related and restructuring expenses) increased by $864 thousand to $15.0 million for the second quarter of 2019 compared to $14.1 million for the second quarter of 2018.  This increase was primarily due to increases in personnel expense, as the second quarter of 2019 included the full effects of acquisitions completed during the prior reporting periods. Operating noninterest expense to average assets of 2.57% for the second quarter of 2019 decreased from 2.95% in the second quarter of 2018.

Income tax expense was $2.9 million in the second quarter of 2019 compared to $1.3 million in the second quarter of 2018. The overall effective tax rate was 24.1% for the second quarter of 2019 compared 24.8% for the second quarter of 2018.

Certain captions and amounts in the prior periods presented were reclassified to conform to the current presentation.  Such reclassifications had no effect on net income or shareholders' equity.

Conference Call Information

SmartFinancial will to issue its earnings release for the second quarter of 2019 on Wednesday, July 24, 2019, and will host a conference call on Thursday, July 25, 2019 at 10:00 a.m. ET.  To access this interactive teleconference, dial (888) 317-6003 or (412) 317-6061 and enter the confirmation number, 8611763.  A replay of the conference call will be available through July 25, 2020, by dialing (877) 344-7529 or (412) 317-0088 and entering the confirmation number, 10133629.  Conference call materials (earnings release & conference call presentation) will be published on the company’s webpage located at http://www.smartfinancialinc.com/CorporateProfile), at 9:00 am ET prior to the conference call.

About SmartFinancial, Inc.

SmartFinancial, Inc., based in Knoxville, Tennessee, is the bank holding company for SmartBank. SmartBank is a full-service commercial bank founded in 2007, with 29 branches across Tennessee, Alabama, and the Florida Panhandle.  Recruiting the best people, delivering exceptional client service, strategic branching, and a disciplined approach to lending have contributed to SmartBank’s success. More information about SmartFinancial can be found on its website: www.smartfinancialinc.com.

Source
SmartFinancial, Inc.

Investor Contacts 
Billy CarrollRon Gorczynski
President & CEOExecutive Vice President, Chief Financial Officer
(865) 868-0613  billy.carroll@smartbank.com(865) 437-5724  ron.gorczynski@smartbank.com
  
Media Contact 
Kelley Fowler 
Senior Vice President, Public Relations & Marketing 
(865) 868-0611  kelley.fowler@smartbank.com 

Non-GAAP Financial Matters
Statements included in this presentation include Non-GAAP financial measures and should be read along with the accompanying tables, which provide a reconciliation of Non-GAAP financial measures to GAAP financial measures. SmartFinancial management uses several Non-GAAP financial measures, including: (i) net operating earnings, (ii) net operating return on average assets, (iii) net operating return on average shareholder equity, (iv) return on average tangible common equity, (v) net operating return on average tangible common equity, (vi) operating efficiency ratio; (vii) tangible common equity; and (viii) average tangible common equity in its analysis of the company's performance. Net operating earnings excludes the following from net income: securities gains and losses, merger termination fee, merger related and restructuring expenses, the effect of the December, 2017 tax law change on deferred tax assets, tax benefit from director options previously exercised, and the income tax effect of adjustments. Net operating return on average equity is the annualized net operating earnings divided by average assets. Net operating return on average equity is the annualized net operating earnings divided by average equity. Return on average tangible common equity is the annualized net income divided by average tangible common equity. Net operating return on average tangible common equity is the annualized net operating earnings divided by average tangible common equity (Non-GAAP). The operating efficiency ratio includes an adjustment for taxable equivalent yields and excludes securities gains and losses and merger related and restructuring expenses from the efficiency ratio. Tangible common equity and average tangible common equity excludes goodwill and other intangible assets. Management believes that Non-GAAP financial measures provide additional useful information that allows readers to evaluate the ongoing performance of the company and provide meaningful comparisons to its peers. Non-GAAP financial measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider SmartFinancial's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the company. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition as reported under GAAP.

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 U.S. federal securities laws.  These statements are not historical in nature and can generally be identified by such words as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “may,” “estimate,” and similar expressions. All forward-looking statements are subject to risks, uncertainties, and other factors that may cause the actual results of SmartFinancial to differ materially from future results expressed or implied by such forward-looking statements. Such risks, uncertainties, and other factors include, among others, (1) the risk of litigation related to the termination of our agreement and plan of merger with Entegra Financial Corp. (the “Entegra Merger Agreement”) or the abandonment of the transactions that were contemplated by the Entegra Merger Agreement; (2) reputational risk resulting from the termination of the Entegra Merger Agreement; (3) potential changes to, or the risk that we may not be able to execute on, our business strategy as a result of the termination of the Entegra Merger Agreement; (4) the risk that cost savings and revenue synergies from recently completed acquisitions may not be realized or may take longer than anticipated to realize, (5) disruption from recently completed acquisitions with customer, supplier, employee, or other business relationships, (6) our ability to successfully integrate the businesses acquired as part of previous acquisitions with the business of SmartBank, (7) changes in management’s plans for the future, (8) prevailing, or changes in, economic or political conditions, particularly in our market areas, (9) credit risk associated with our lending activities, (10) changes in interest rates, loan demand, real estate values, or competition, (11) changes in accounting principles, policies, or guidelines, (12) changes in applicable laws, rules, or regulations, and (13) other general competitive, economic, political, and market factors, including those affecting our business, operations, pricing, products, or services. These and other factors that could cause results to differ materially from those described in the forward-looking statements can be found in SmartFinancial’s most recent annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, in each case filed with or furnished to the Securities and Exchange Commission (the “SEC”) and available on the SEC’s website (www.sec.gov). Undue reliance should not be placed on forward-looking statements.  SmartFinancial disclaims any obligation to update or revise any forward-looking statements contained in this release, which speak only as of the date hereof, whether as a result of new information, future events, or otherwise.


 

SmartFinancial, Inc. and Subsidiary          
Condensed Consolidated Financial Information (unaudited)    
(In thousands except share and per share data)    
  As of and for The Three Months Ended
 June 30, March 31, December 31, September 30, June 30,
   2019   2019   2018   2018   2018 
Selected Performance Ratios (Annualized) 
Return on average assets  1.56%  0.84%  1.17%  0.85%  0.82%
Return on average shareholder equity  12.34%  6.71%  9.44%  6.86%  6.76%
Return on average tangible common equity (Non-GAAP)¹  16.78%  9.26%  13.09%  9.45%  8.96%
Noninterest income / average assets  1.44%  0.30%  0.31%  0.36%  0.33%
Noninterest expense / average assets  2.88%  2.77%  2.84%  2.90%  3.15%
Efficiency ratio  57.53%  68.65%  67.71%  71.33%  72.34%
Net operating return on average assets (Non-GAAP)¹  0.96%  0.98%  1.07%  0.98%  1.00%
Net operating return on average shareholder equity (Non-GAAP)¹  7.58%  7.81%  8.65%  7.88%  8.33%
Net operating return on average tangible common  equity (Non-GAAP)¹  10.31%  10.79%  12.00%  10.84%  11.04%
Net interest income / average assets  3.56%  3.73%  3.90%  3.70%  4.03%
Operating efficiency ratio (Non-GAAP)¹  65.56%  64.25%  61.72%  67.17%  66.92%
Yield on loans  5.53%  5.62%  5.81%  5.43%  5.79%
Yield on earning assets  5.15%  5.27%  5.34%  5.02%  5.34%
Yield on earning assets, FTE  5.17%  5.25%  5.36%  5.03%  5.37%
Cost of interest-bearing deposits  1.42%  1.32%  1.21%  1.11%  0.96%
Cost of total deposits  1.18%  1.10%  1.00%  0.91%  0.79%
Cost of interest-bearing liabilities  1.54%  1.45%  1.33%  1.15%  1.00%
Net interest margin  3.92%  4.11%  4.28%  4.11%  4.53%
Net interest margin, FTE  3.94%  4.10%  4.28%  4.11%  4.57%
Net interest spread  3.63%  3.80%  4.01%  3.88%  4.38%
Pre-tax pre-provision income / average assets  2.12%  1.26%  1.36%  1.16%  1.21%
Per Common Share 
Net income, basic $0.65  $0.34  $0.48  $0.34  $0.32 
Net income, diluted  0.65   0.34   0.47   0.34   0.32 
Net operating earnings, basic (Non-GAAP)¹  0.4   0.4   0.44   0.39   0.4 
Net operating earnings, diluted (Non-GAAP)¹  0.4   0.39   0.43   0.39   0.39 
Book value  21.47   20.82   20.31   19.74   19.48 
Tangible book value (Non-GAAP)¹  15.86   15.18   14.64   14.38   14.09 
Common shares outstanding  13,953   13,952   13,934   12,750   12,705 
 
¹See reconciliation of Non-GAAP measures 

 

           
SmartFinancial, Inc. and Subsidiary          
Condensed Consolidated Financial Information (unaudited)    
(In thousands)    
  As of and for The Three Months Ended
  June 30, March 31, December 31, September 30, June 30,
  2019   2019   2018   2018   2018 
Composition of Loans 
Commercial real estate 
owner occupied $415,502  $416,152  $372,030  $364,164  $360,294 
non-owner occupied  464,160   472,790   487,997   401,922   385,570 
Commercial real estate, total  879,662   888,942   860,027   766,086   745,864 
Commercial & industrial  334,258   341,471   308,254   289,784   279,771 
Construction & land development  204,731   187,009   187,895   165,906   179,431 
Consumer real estate  406,357   410,981   407,254   350,422   355,876 
Consumer and other  11,981   12,166   13,809   12,996   14,493 
Total loans $1,836,989  $1,840,569  $1,777,239  $1,585,194  $1,575,435 
 
Asset Quality and Additional Loan Data 
Nonperforming loans $2,148  $2,282  $3,280  $2,686  $2,205 
Other real estate owned  1,814   2,066   2,495   4,230   3,524 
Total nonperforming assets $3,962  $4,348  $5,775  $6,916  $5,729 
Restructured loans not included in nonperforming loans $62  $62  $116  $693  $660 
Net charge-offs (recoveries) to average loans (annualized)  0.00%  0.08%  0.04%  0.06%  0.02%
Allowance for loan losses to loans  0.50%  0.47%  0.47%  0.45%  0.45%
Nonperforming loans to total loans, gross  0.12%  0.12%  0.18%  0.17%  0.14%
Nonperforming assets to total assets  0.17%  0.18%  0.25%  0.34%  0.28%
Acquisition accounting discounts on loans  18,571   19,954   21,528   19,500   20,748 
Accretion income on acquired loans  1,374   1,881   2,755   1,208   2,583 
 
Capital Ratios 
Equity to Assets  12.53%  12.34%  12.44%  12.27%  12.00%
Tangible equity to tangible assets (Non-GAAP)  9.57%  9.31%  9.29%  9.25%  8.98%
Tangible common equity to tangible assets (Non-GAAP)  9.57%  9.31%  9.29%  9.25%  8.98%
SmartFinancial, Inc.: Estimated1  
Tier 1 leverage  9.92%  9.29%  9.47%  9.26%  9.82%
Common equity Tier 1  11.21%  10.61%  10.81%  10.88%  10.83%
Tier 1 capital  11.21%  10.61%  10.81%  10.88%  10.83%
Total capital  13.62%  13.01%  13.29%  13.57%  11.25%
SmartBank: Estimated1  
Tier 1 leverage  10.92%  10.96%  11.17%  10.55%  10.43%
Common equity Tier 1  12.34%  12.18%  12.31%  11.99%  11.41%
Tier 1 risk-based capital  12.34%  12.18%  12.31%  11.99%  11.41%
Total risk-based capital  12.80%  12.62%  12.74%  12.40%  11.83%
 
1 Current period capital ratios are estimated as of the date of this earnings release. 

 

           
SmartFinancial, Inc. and Subsidiary          
Condensed Consolidated Financial Information (unaudited)  
(In thousands)    
BALANCE SHEET          
  Ending Balances
 June 30, March 31, December 31, September 30, June 30,
   2019   2019   2018   2018   2018 
Assets          
Cash and cash equivalents $199,534  $132,994  $115,822  $130,104  $170,235 
Securities available-for-sale, at fair value  174,114   198,273   201,688   173,039   156,577 
Other investments  12,905   12,398   11,499   10,736   8,273 
Loans held for sale  4,087   2,103   1,979   4,038   4,948 
Loans  1,832,902   1,838,466   1,775,260   1,581,155   1,570,487 
Less: Allowance for loan losses  (9,097)  (8,704)  (8,275)  (7,156)  (7,074)
Loans, net  1,823,805   1,829,762   1,766,985   1,573,999   1,563,413 
Premises and equipment, net  56,589   56,583   56,012   51,138   52,203 
Other real estate owned  1,814   2,066   2,495   4,230   3,524 
Goodwill and core deposit intangibles, net  78,348   78,690   79,034   68,254   68,449 
Bank owned life insurance  24,695   24,540   24,381   22,088   21,944 
Other assets  15,366   16,572   14,514   13,320   12,666 
Total assets $2,391,257  $2,353,981  $2,274,409  $2,050,946  $2,062,232 
 
Liabilities          
Deposits: 
Noninterest-bearing demand $357,220  $329,095  $319,861  $301,197  $301,318 
Interest-bearing demand  333,705   331,629   311,482   267,146   246,942 
Money market and savings  648,132   698,431   641,945   570,172   632,518 
Time deposits  673,243   635,175   648,675   568,796   535,879 
Total deposits  2,012,300   1,994,330   1,921,964   1,707,311   1,716,658 
Securities sold under agreements to repurchase  8,219   7,070   11,756   16,786   18,635 
FHLB & other borrowings  15,460   8,605   11,243   25,324   72,040 
Subordinated debt  39,219   39,198   39,177   39,158    
Other liabilities  16,447   14,297   7,258   10,724   7,413 
Total liabilities  2,091,645   2,063,500   1,991,398   1,799,304   1,814,745 
Shareholders' Equity 
Common stock  13,953   13,952   13,934   12,750   12,705 
Additional paid-in capital  232,386   232,241   231,852   208,999   208,513 
Retained earnings  53,843   44,722   39,991   33,559   29,235 
Accumulated other comprehensive loss  (571)  (434)  (2,765)  (3,666)  (2,966)
Total shareholders' equity  299,611   290,481   283,011   251,642   247,487 
Total liabilities & shareholders' equity $2,391,257  $2,353,981  $2,274,409  $2,050,946  $2,062,232 
 

 

SmartFinancial, Inc. and Subsidiary          
Condensed Consolidated Financial Information (unaudited)  
(In thousands, except per share data)    
INCOME STATEMENT          
  Three Months Ended
  June 30, March 31, December 31, September 30, June 30,
  2019  2019  2018   2018  2018 
Interest income 
Loans, including fees $25,278 $24,975 $25,018  $21,572 $21,652 
Securities available-for-sale: 
Taxable  871  971  900   839  897 
Tax-exempt  411  424  347   129  76 
Federal funds sold and other earning assets  743  573  506   527  367 
Total interest income  27,303  26,943  26,771   23,068  22,993 
Interest expense 
Deposits  5,788  5,251  4,680   3,969  3,238 
Securities sold under agreements to repurchase  6  8  9   11  11 
FHLB advances and other borrowings  117  103  51   209  207 
Subordinated debt  590  584  584   19   
Total interest expense  6,501  5,945  5,324   4,208  3,455 
Net interest income  20,802  20,997  21,447   18,860  19,538 
Provision for loan losses  393  797  1,329   302  617 
Net interest income after provision for loan losses  20,409  20,200  20,117   18,558  18,921 
Noninterest income 
Service charges on deposit accounts  707  654  663   624  557 
Gain (loss) on sale of securities, net  33    2     (1)
Mortgage banking  392  282  251   493  322 
Interchange and debit card transaction fees  143  175  162   144  121 
Other  7,140  587  601   570  579 
Total noninterest income  8,415  1,698  1,680   1,831  1,577 
Noninterest expense 
Salaries and employee benefits  8,984  8,398  7,871   7,934  7,649 
Occupancy and equipment  1,658  1,640  1,610   1,638  1,522 
FDIC insurance  180  179  209   158  317 
Other real estate and loan related expense  242  490  738   578  926 
Advertising and marketing  259  295  246   228  215 
Data processing  577  615  372   407  600 
Professional services  489  662  707   727  587 
Amortization of intangibles  342  344  312   248  229 
Software as service contracts  568  567  577   507  492 
Merger related and restructuring expenses  1,796  923  1,322   838  1,123 
Other  1,714  1,467  1,696   1,496  1,613 
Total noninterest expense  16,808  15,579  15,661   14,759  15,272 
Income before income taxes  12,016  6,319  6,137   5,630  5,226 
Income tax expense  2,895  1,588  (307)  1,305  1,295 
Net income $9,121 $4,731 $6,444  $4,325 $3,932 
Earnings Per Common Share 
Basic $0.65 $0.34 $0.48  $0.34 $0.32 
Diluted  0.65  0.34  0.47   0.34  0.32 
Weighted average common shares outstanding 
Basic  13,952  13,942  13,535   12,719  12,201 
Diluted  14,047  14,018  13,617   12,818  12,320 

 

                   
SmartFinancial, Inc. and Subsidiary                  
Condensed Consolidated Financial Information (unaudited)        
(In thousands)            
YIELD ANALYSIS            
 Three Months Ended
  June 30, 2019 March 31, 2019 June 30, 2018
 Average   Yield/ Average   Yield/ Average   Yield/
  Balance Interest1 Cost1 Balance Interest1 Cost1 Balance Interest1 Cost1
Assets                  
Loans $1,832,639 $25,278 5.53% $1,802,014 $24,977 5.62% $1,501,008 $21,654 5.79%
Taxable securities  136,859  871 2.55%  147,346  971 2.67%  149,169  898 2.41%
Tax-exempt securities  56,475  527 3.75%  53,492  537 4.07%  11,698  96 3.29%
Federal funds sold and other earning assets  102,253  743 2.91%  86,688  573 2.68%  56,287  368 2.62%
Total interest-earning assets  2,128,226  27,419 5.17%  2,089,540  27,058 5.25%  1,718,162  23,016 5.37%
Noninterest-earning assets  215,010      193,698  205,909    
Total assets $2,343,236     $2,283,238 $1,924,071    
 
Liabilities and Stockholders’ Equity            
Interest-bearing demand deposits $329,556 $464 0.57% $306,164 $474 0.63% $244,208 $265 0.44%
Money market and savings deposits  673,502  2,272 1.35%  665,018  1,978 1.21%  597,353  1,418 0.95%
Time deposits  629,480  3,052 1.94%  637,767  2,799 1.78%  510,445  1,555 1.22%
Total interest-bearing deposits  1,632,538  5,788 1.42%  1,608,949  5,251 1.32%  1,352,006  3,238 0.96%
Securities sold under agreement to repurchase  7,249  6 0.33%  7,971  8 0.41%  15,643  11 0.28%
Federal funds purchased and other borrowings  16,436  117 2.87%  10,217  103 4.09%  22,780  206 3.63%
Subordinated debt  39,205  590 6.03%  39,184  584 6.04%      
Total interest-bearing liabilities  1,695,428  6,501 1.54%  1,666,321  5,946 1.45%  1,390,429  3,455 1.00%
Noninterest-bearing deposits  336,871      320,134  283,413    
Other liabilities  14,367      10,707  16,944    
Total liabilities  2,046,666      1,997,162  1,690,786    
Stockholders’ equity  296,570      286,076  233,285    
Total liabilities and stockholders’ equity $2,343,236     $2,283,238 $1,924,071    
 
Net interest income, taxable equivalent   $20,918   $21,112   $19,561  
Interest rate spread     3.63% 3.80%     4.38%
Tax equivalent net interest margin     3.94% 4.10%     4.57%
 
Percentage of average interest-earning assets to average interest-bearing liabilities     125.53% 125.40%     123.53%
Percentage of average equity to average assets     12.66% 12.53%     12.00%
            
1 Taxable equivalent 

 

              
SmartFinancial, Inc. and Subsidiary             
Condensed Consolidated Financial Information (unaudited)     
(In thousands)     
NON-GAAP RECONCILIATIONS Three Months Ended 
 June 30, March 31, December 31, September 30, June 30, 
   2019   2019   2018   2018   2018  
Operating Earnings 
Net income (GAAP) $9,121  $4,731  $6,444  $4,324  $3,931  
Securities (gains) losses  (33)     (2)     1  
Merger termination fee  (6,400)             
Merger related and restructuring expenses  1,796   923   1,322   838   1,123  
Revaluation of deferred tax assets due to change in tax law        (1,600)       
Income tax effect of adjustments  1,120   (145)  (256)  (196)  (211) 
Net operating earnings (Non-GAAP) $5,603  $5,509  $5,908  $4,966  $4,844  
Net operating earnings per common share (Non-GAAP): 
Basic $0.40  $0.40  $0.44  $0.39  $0.40  
Diluted  0.40   0.39   0.43   0.39   0.39  
 
Non-GAAP Return Ratios 
Net operating return on average assets (Non-GAAP)1  0.96%  0.98%  1.07%  0.98%  1.00% 
Return on average tangible common equity (Non-GAAP)2  16.78%  9.26%  13.09%  9.45%  8.96% 
Net operating return on average shareholder equity (Non-GAAP)3  7.58%  7.81%  8.65%  7.88%  8.33% 
Net operating return on average tangible common  equity (Non-GAAP)4  10.31%  10.79%  12.00%  10.84%  11.04% 
 
Operating Efficiency Ratio 
Efficiency ratio (GAAP)  57.53%  68.65%  67.71%  71.34%  72.31% 
Adjustment for taxable equivalent yields  (0.50)%  (0.49)%  (0.45)%  (0.18)%  (0.11)% 
Adjustment for securities gains (losses)  0.14%  %  0.01%  %  (0.01)% 
Adjustment for merger related income and costs  8.39%  (3.91)%  (5.55)%  (3.99)%  (5.28)% 
Operating efficiency ratio (Non-GAAP)  65.56%  64.25%  61.72%  67.17%  66.92% 
 
Tangible Common Equity 
Shareholders' equity (GAAP) $299,611  $290,481  $283,011  $251,642  $247,487  
Less goodwill and other intangible assets  78,348   78,690   79,034   68,254   68,449  
Tangible common equity (Non-GAAP) $221,264  $211,791  $203,977  $183,388  $179,036  
 
Average Tangible Common Equity 
Average shareholders' equity (GAAP) $296,570  $286,076  $270,884  $250,063  $233,285  
Less average goodwill and other intangible assets  78,564   78,913   75,547   68,389   57,251  
Average tangible common equity (Non-GAAP) $218,006  $207,163  $195,337  $181,674  $176,034  
 
1 Net operating return on average assets (Non-GAAP) is the annualized net operating earnings (Non-GAAP) divided by average assets. 
2 Return on average tangible common equity (Non-GAAP) is the annualized net income divided by average tangible common equity (Non-GAAP). 
3 Net operating return on average equity (Non-GAAP) is the annualized net operating earnings (Non-GAAP) divided by average equity. 
4 Net operating return on average tangible common equity (Non-GAAP) is the annualized net operating earnings (Non-GAAP) divided by  average tangible common equity (Non-GAAP).

 

 

 

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Source: SmartFinancial, Inc.