Email page Email page PDF view PDF view Print view Print view Email Alert Email Alert

Press Release

SmartFinancial Announces Results for the Fourth Quarter 2019

Company Release - 1/21/2020 5:00 PM ET

KNOXVILLE, Tenn., Jan. 21, 2020 (GLOBE NEWSWIRE) -- SmartFinancial, Inc. ("SmartFinancial" or the "Company"; NASDAQ: SMBK), today announced net income of $6.7 million, or $0.48 per diluted common share, for the fourth quarter of 2019, compared to net income of $6.0 million, or $0.42 per diluted common share, for the third quarter of 2019.  Net operating earnings (Non-GAAP), which excludes securities gains, merger related and restructuring expenses and non-operating items, totaled $6.5 million, or $0.46 per diluted common share, in the fourth quarter of 2019, compared to $6.0 million, or $0.43 per diluted common share, in the third quarter of 2019.

For the year ending December 31, 2019, net income is $26.5 million, or $1.89 per diluted common share, compared to net income of $18.1 million, or $1.45 per diluted common share, for the year ending December 31, 2018.  Net operating earnings (Non-GAAP), which excludes securities gains, merger related and restructuring expenses and non-operating items, totaled $23.6 million, or $1.68 per diluted common share, for the year ending December 31, 2019 compared to $19.5 million, or $1.56 per diluted common share, for the year ending December 31, 2018.

Highlights for Fourth Quarter of 2019

  • Return on average assets of 1.12% and net operating annualized return on average assets (Non-GAAP) of 1.08%
  • Asset quality remains outstanding with nonperforming assets to total assets of 0.21%
  • Loan growth of $32.7 million, or 7.0% annualized
  • Tangible book value (Non-GAAP) per share of $16.82, a 14.9% year-over-year increase
  • Announced the planned acquisition of Progressive Financial Group, Inc. ("PFG")
  • Initiation of a quarterly dividend

Billy Carroll, President & CEO, stated: “We posted a solid quarter and closed the books on another successful year where we made a number of outstanding foundational strides.  Our team continues to focus on steady growth of our performance metrics and we remain bullish on our opportunities to move the company forward and continuing growth of shareholder value.”

SmartFinancial's Chairman, Miller Welborn, concluded:  “The consistency we are beginning to show in all areas of our company, especially our financial metrics, is very exciting to me. Our team continues to improve their execution of our strategy while maintaining a laser focus on growing long term shareholder value.”

Net Interest Income and Net Interest Margin

Net interest income was $21.1 million for each of the fourth and third quarters of 2019 and $21.4 million for the fourth quarter of 2018. The tax equivalent net interest margin was 3.84% for the fourth quarter of 2019 compared to 3.91% for the third quarter of 2019.  The tax equivalent average yield on interest-earning assets was 4.92% for the fourth quarter of 2019, a decrease from 5.05% for the third quarter of 2019. The yield on interest-bearing liabilities decreased to 1.39% for the fourth quarter of 2019 from 1.47% for the third quarter of 2019.

The yield on average loans was 5.36% for the fourth quarter of 2019 compared to 5.48% for the third quarter of 2019.  The decrease in yield on average loans from the third to fourth quarters of 2019 was primarily due to the impact of three Federal rate decreases over these two quarters which effected the repricing of variable rate loans and new loan production.  During the fourth quarter of 2019, increased discount accretion was recorded on acquired loans (29 basis points in the fourth quarter of 2019 versus 26 basis points in the third quarter of 2019) with loan fees remaining stable quarter over quarter.  For the fourth quarter of 2019, the yield on average loans, excluding accretion, was 5.07%, a decrease of 15 basis points from the 5.22% reported in the third quarter of 2019.  The impact of the acquired loan discount accretion on the tax equivalent net interest margin was 25 basis points for the fourth quarter of 2019 and 23 basis points for the third quarter of 2019.

The cost of average interest-bearing deposits was 1.29% for the fourth quarter of 2019 compared to 1.37% for the third quarter of 2019.  The overall decrease of eight basis points in average interest-bearing deposits from the third to fourth quarter of 2019 was driven primarily by the three Federal rate decreases during the third and fourth quarters of 2019, creating a reduction of interest cost for all deposit classifications.

Provision for Loan Loss and Credit Quality

Provision for loan losses was $685 thousand in the fourth quarter of 2019, compared to $724 thousand in the third quarter of 2019 and $1.3 million in the fourth quarter of 2018. The allowance for loan losses was $10.2 million, or 0.54% of total loans, as of December 31, 2019, compared to $9.8 million, or 0.53% of total loans, as of September 30, 2019.  The increase in allowance for loan losses to total loans was due primarily to the increase in the loan originations and, to lesser extent, the reduction of acquired loan balances.

Nonperforming loans as a percentage of total loans was 0.18% as of December 31, 2019, an increase of one basis point from the 0.17% reported in the third 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 0.21% as of December 31, 2019 as compared to 0.20% as of September 30, 2019.

Noninterest Income

Noninterest income was $2.8 million for the fourth quarter of 2019 compared to $2.2 million for the third quarter of 2019.  The increase of $644 thousand from the third quarter 2019 to the fourth quarter 2019 was primarily because of funds received from the Alabama Department of Economic and Community Affairs ("ADECA").  ADECA was a program that guaranteed 50% of a loans obligation for loan's approved and originated through the program.  In September 2019, the ADECA program was dissolved and in October 2019 total proceeds of $1.2 million was received, of which $720 thousand was recorded as noninterest income, and the remainder of the proceeds were held in reserve for potential future losses on specific identified loans that were covered in the program.

Noninterest Expense

Noninterest expense was $16.1 million for the fourth quarter of 2019, an increase of $1.4 million, compared to $14.7 million for the third quarter of 2019.  During the fourth quarter of 2019, the primary components of the increase in noninterest expense were as follows:

  • Increase of $1.2 million in salaries and employees benefits, which consisted of a $603 thousand prior year adjustment,  acquired SERP adjustment, year-end employee incentive accrual adjustments, and from increased hiring of associates;
  • Increase of $219 thousand in FDIC insurance due to a credit reported during the third quarter of 2019, and no expense recorded during the fourth quarter of 2019;
  • Increase of $257 thousand in data processing expenses, primarily from core processor credits that were utilized during the third quarter of 2019;
  • Increase of $354 thousand in merger related and restructuring expenses relating to the Progressive Financial Group Inc. acquisition; and
  • Decrease of $644 thousand in other expenses, which consisted of a benefit of $312 thousand relating to a prior year adjustment to franchise taxes from the 2018 income tax return true-up, and a current period benefit of $468 thousand relating to excess tax credits applied to franchise taxes (See Income Tax Expense below).

Income Tax Expense

Income tax expense was $473 thousand for the fourth quarter of 2019, a decrease of $1.5 million, compared to $1.9 million for the third quarter of 2019.  During the fourth quarter of 2019, the primary components of the decrease in income tax expense were as follows:

  • Tax benefit of $304 thousand relating to a prior year (2017) amended Federal tax return;
  • Adjustments relating to the true-up of 2018 Federal Tax return; and
  • Tax benefit of $1.1 million income tax benefit associated with a program the State of Tennessee manages for Community Investment loans.  The Bank strategically originated loans in this program to reduce its 2019 tax liability.  The benefit received from the loans approved under this program was first applied to the current year Tennessee income tax liability, and the excess benefit over the current tax liability was applied directly to the Company’s Tennessee franchise tax liability.  The amount of the benefit received from this opportunity totaled $1.6 million, with a benefit of $1.1 million applied to income tax liability and the excess benefit of $468 thousand applied to franchise tax (as mentioned above in Noninterest Expense).

The overall effective tax rate was 6.6% for the fourth quarter of 2019 compared to 24.6% for the third quarter of 2019.

Balance Sheet Trends

Total assets at December 31, 2019 were $2.45 billion compared with $2.27 billion at December 31, 2018.  The year-over-year increase of $174.7 million is primarily from continued loan growth of $122.1 million.

Total liabilities increased to $2.14 billion at December 31, 2019 from $2.00 billion at December 31, 2018.  The year-over-year increase of $145.0 million was primarily from the increase of total deposits of $125.3 million and FHLB and other borrowings of $14.2 million.

Shareholders' equity at December 31, 2019 totaled $312.7 million, an increase of $29.7 million, from December 31, 2018.  The increase in shareholders' equity was primarily from net income of $26.5 million for the year 2019.  Tangible book value per share (Non-GAAP) was $16.82 at December 31, 2019, an increase from $14.64 at December 31, 2018.  Tangible common equity (Non-GAAP) as a percentage of tangible assets (Non-GAAP) was 9.93% at December 31, 2019, compared with 9.29% at December 31, 2018.

Conference Call Information

SmartFinancial will issue its earnings release for the fourth quarter of 2019 on Tuesday, January 21, 2020, and will host a conference call on Wednesday, January 22, 2020 at 10:00 a.m. ET.  To access this interactive teleconference, dial (888) 317-6003 or (412) 317-6061 and enter the confirmation number, 1935532.  A replay of the conference call will be available through January 22, 2021, by dialing (877) 344-7529 or (412) 317-0088 and entering the confirmation number, 10138335.  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 Carroll Ron Gorczynski
President & CEO Executive 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 Measures

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; (viii) average tangible common equity; (ix) tangible book value; and ratios derived therefrom, in its analysis of the company's performance. Net operating earnings excludes the following from net income: securities gains and losses, merger termination fee of $6.4 million in the second quarter of 2019, 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.  Tangible book value excludes intangible assets and goodwill.  Management believes that Non-GAAP financial measures provide additional useful information that allows investors to evaluate the ongoing performance of the company and provide meaningful comparisons to its peers.  Management believes these non-GAAP financial measures also enhance investors' ability to compare period-to-period financial results and allow investors and company management to view our operating results excluding the impact of items that are not reflective of the underlying operating performance.  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 the Private Securities Litigation Reform Act.  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) risks related to the proposed acquisition of PFG, including the risk that the proposed acquisition does not close when expected or at all because conditions to closing are not satisfied on a timely basis or at all, or the terms of the proposed transaction need to be modified to satisfy such conditions; (8) the risk that the anticipated benefits from the proposed acquisition of PFG may not be realized in the time frame anticipated; (9) changes in management’s plans for the future; (10) prevailing, or changes in, economic or political conditions, particularly in our market areas; (11) credit risk associated with our lending activities; (12) changes in interest rates, loan demand, real estate values, or competition; (13) changes in accounting principles, policies, or guidelines; (14) changes in applicable laws, rules, or regulations; and (15) 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)        
(dollars in thousands except share and per share data)        
  As of and for The Three Months Ended Twelve Months Ended
  Dec Sep Jun Mar Dec Dec Dec
  2019 2019 2019 2019 2018 2019 2018
Selected Performance Ratios (Annualized):              
Return on average assets 1.12% 1.01% 1.56% 0.84% 1.17% 1.13% 0.92%
Return on average shareholders' equity 8.65% 7.80% 12.34% 6.71% 9.44% 8.89% 7.47%
Return on average tangible common equity (Non-GAAP)¹ 11.55% 10.52% 16.78% 9.26% 13.09% 12.04% 10.09%
Noninterest income / average assets 0.47% 0.37% 1.44% 0.30% 0.31% 0.65% 0.34%
Noninterest expense / average assets 2.68% 2.48% 2.88% 2.77% 2.84% 2.70% 3.00%
Efficiency ratio 67.04% 63.03% 57.53% 68.65% 67.71% 63.66% 70.84%
               
Operating Selected Performance Ratios (Annualized):              
Net operating return on average assets (Non-GAAP)¹ 1.08% 1.02% 0.96% 0.98% 1.07% 1.01% 0.99%
Net operating return on average shareholders' equity (Non-GAAP)¹ 8.34% 7.87% 7.58% 7.81% 8.65% 7.91% 8.05%
Net operating return on average tangible common equity (Non-GAAP)¹ 11.12% 10.61% 10.31% 10.79% 12.00% 10.71% 10.88%
Operating efficiency ratio (Non-GAAP)¹ 64.95% 62.42% 65.56% 64.25% 61.72% 64.29% 66.15%
Operating noninterest income / average assets (Non-GAAP) 0.35% 0.37% 0.34% 0.33% 0.32% 0.35% 0.36%
Operating noninterest expense / average assets (Non-GAAP) 2.56% 2.47% 2.57% 2.60% 2.76% 2.55% 2.84%
               
Selected Interest Rates and Yields:              
Yield on loans 5.36% 5.48% 5.53% 5.62% 5.81% 5.49% 5.72%
Yield on earning assets, FTE 4.92% 5.05% 5.17% 5.25% 5.36% 5.10% 5.32%
Cost of interest-bearing deposits 1.29% 1.37% 1.42% 1.32% 1.21% 1.35% 1.04%
Cost of total deposits 1.06% 1.13% 1.18% 1.10% 1.00% 1.12% 0.86%
Cost of interest-bearing liabilities 1.39% 1.47% 1.54% 1.45% 1.33% 1.46% 1.10%
Net interest margin, FTE 3.84% 3.91% 3.94% 4.10% 4.28% 3.95% 4.43%
               
Per Common Share:              
Net income, basic $0.48  $0.43  $0.65  $0.34  $0.48  $1.90  $1.46 
Net income, diluted 0.48  0.42  0.65  0.34  0.47  1.89  1.45 
Net operating earnings, basic (Non-GAAP)¹ 0.46  0.43  0.40  0.40  0.44  1.69  1.57 
Net operating earnings, diluted (Non-GAAP)¹ 0.46  0.43  0.40  0.39  0.43  1.68  1.56 
Book value 22.33  21.93  21.47  20.82  20.31  22.33  20.31 
Tangible book value (Non-GAAP)¹ 16.82  16.37  15.86  15.18  14.64  16.82  14.64 
Common shares outstanding 14,008,233  13,957,973  13,953,209  13,951,590  13,933,504  14,008,233  13,933,504 
               
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
  Dec Sep Jun Mar Dec
  2019 2019 2019 2019 2018
Composition of Loans:          
Commercial real estate          
owner occupied $429,269  $422,363  $415,502  $416,152  $372,030 
non-owner occupied 476,038  468,099  464,160  472,790  487,997 
Commercial real estate, total 905,307  890,462  879,662  888,942  860,027 
Commercial & industrial 337,075  341,207  334,258  341,471  308,254 
Construction & land development 227,626  219,751  204,731  187,009  187,895 
Consumer real estate 423,337  405,531  406,357  410,981  407,254 
Consumer and other 9,903  10,796  11,981  12,166  13,809 
Total loans $1,903,248  $1,867,747  $1,836,989  $1,840,569  $1,777,239 
           
Asset Quality and Additional Loan Data:          
Nonperforming loans $3,350  $3,166  $2,838  $2,282  $3,280 
Other real estate owned 1,757  1,561  1,814  2,066  2,495 
Total nonperforming assets $5,107  $4,727  $4,652  $4,348  $5,775 
Restructured loans not included in nonperforming loans $61  $61  $62  $62  $116 
Net charge-offs (recoveries) to average loans (annualized) 0.01% 0.01% % 0.08% 0.04%
Allowance for loan losses to loans 0.54% 0.53% 0.50% 0.47% 0.47%
Nonperforming loans to total loans, gross 0.18% 0.17% 0.15% 0.12% 0.18%
Nonperforming assets to total assets 0.21% 0.20% 0.19% 0.18% 0.25%
Purchase accounting discount balance $15,348  $16,784  $18,571  $19,954  $21,528 
Accretion income on acquired loans 1,375  1,246  1,374  1,717  2,343 
           
Capital Ratios:          
Equity to Assets 12.77% 12.80% 12.53% 12.34% 12.44%
Tangible common equity to tangible assets (Non-GAAP)3 9.93% 9.88% 9.57% 9.31% 9.29%
           
SmartFinancial, Inc.1          
Tier 1 leverage 10.34% 10.02% 9.92% 9.29% 9.47%
Common equity Tier 1 11.61% 11.54% 11.21% 10.61% 10.81%
Tier 1 capital 11.61% 11.54% 11.21% 10.61% 10.81%
Total capital 14.02% 13.98% 13.65% 13.01% 13.29%
           
SmartBank Estimated2        
Tier 1 leverage 11.41% 11.22% 10.92% 10.96% 11.17%
Common equity Tier 1 12.81% 12.71% 12.37% 12.18% 12.31%
Tier 1 risk-based capital 12.81% 12.71% 12.37% 12.18% 12.31%
Total risk-based capital 13.31% 13.19% 12.82% 12.62% 12.74%

1 All periods presented are estimated.
2 Current period capital ratios are estimated as of the date of this earnings release.
3 Total common equity less intangibles divided by total assets less intangibles.


         
SmartFinancial, Inc. and Subsidiary        
Condensed Consolidated Financial Information - (unaudited)      
(dollars in thousands)          
  Ending Balances
  Dec Sep Jun Mar Dec
  2019 2019 2019 2019 2018
           
Assets:          
Cash and cash equivalents $183,971  $170,934  $199,534  $132,994  $115,822 
Securities available-for-sale, at fair value 178,348  171,507  174,114  198,273  201,688 
Other investments 12,913  12,913  12,905  12,398  11,499 
Loans held for sale 5,856  3,068  4,087  2,103  1,979 
Loans 1,897,392  1,864,679  1,832,902  1,838,466  1,775,260 
 Less: Allowance for loan losses (10,243) (9,792) (9,097) (8,704) (8,275)
 Loans, net 1,887,149  1,854,887  1,823,805  1,829,762  1,766,985 
Premises and equipment, net 59,433  58,386  56,589  56,583  56,012 
Other real estate owned 1,757  1,561  1,814  2,066  2,495 
Goodwill and core deposit intangibles, net 77,193  77,534  78,348  78,690  79,034 
Bank owned life insurance 24,949  24,796  24,695  24,540  24,381 
Other assets 17,554  14,899  15,366  16,572  14,514 
Total assets $2,449,123  $2,390,485  $2,391,257  $2,353,981  $2,274,409 
           
Liabilities:          
Deposits:          
  Noninterest-bearing demand $364,155  $365,024  $357,220  $329,095  $319,861 
  Interest-bearing demand 380,234  351,474  333,705  331,629  311,482 
  Money market and savings 623,284  634,934  648,132  698,431  641,945 
  Time deposits 679,541  646,641  673,243  635,175  648,676 
  Total deposits 2,047,214  1,998,073  2,012,300  1,994,330  1,921,964 
Securities sold under agreements to repurchase 6,184  4,368  8,219  7,070  11,756 
FHLB & other borrowings 25,439  25,460  15,460  8,605  11,243 
Subordinated debt 39,261  39,240  39,219  39,198  39,177 
Other liabilities 18,278  17,304  16,448  14,297  7,258 
Total liabilities 2,136,376  2,084,445  2,091,646  2,063,500  1,991,398 
Shareholders' Equity:          
Common stock 14,008  13,958  13,953  13,952  13,933 
Additional paid-in capital 232,732  232,573  232,386  232,241  231,852 
Retained earnings 65,839  59,806  53,843  44,722  39,991 
Accumulated other comprehensive income (loss) 168  (297) (571) (434) (2,765)
Total shareholders' equity 312,747  306,040  299,611  290,481  283,011 
Total liabilities & shareholders' equity $2,449,123  $2,390,485  $2,391,257  $2,353,981  $2,274,409 
                     

 

         
SmartFinancial, Inc. and Subsidiary        
Condensed Consolidated Financial Information - (unaudited)        
(dollars in thousands, except share and per share data)        
  Three Months Ended Twelve Months Ended
  Dec Sep Jun Mar Dec Dec Dec
  2019 2019 2019 2019 2018 2019 2018
Interest income:              
Loans, including fees $25,398  $25,515  $25,278  $24,975  $25,018  $101,002  $86,469 
Securities available-for-sale:              
 Taxable 698  748  871  971  900  3,289  3,512 
 Tax-exempt 345  338  411  424  347  1,518  587 
Federal funds sold and other earning assets 587  743  743  573  506  2,646  1,642 
Total interest income 27,028  27,344  27,303  26,943  26,771  108,455  92,210 
               
Interest expense:              
Deposits 5,271  5,605  5,788  5,251  4,680  21,915  14,288 
Securities sold under agreements to repurchase 5  5  6  8  9  23  45 
FHLB advances and other borrowings 65  10  117  103  51  296  630 
Subordinated debt 584  584  590  584  584  2,341  603 
Total interest expense 5,924  6,204  6,501  5,946  5,324  24,575  15,566 
Net interest income 21,104  21,140  20,802  20,997  21,447  83,880  76,644 
Provision for loan losses 685  724  393  797  1,329  2,599  2,936 
Net interest income after provision for loan losses 20,419  20,416  20,409  20,200  20,118  81,281  73,708 
               
Noninterest income:              
Service charges on deposit accounts 773  767  707  654  663  2,902  2,416 
Gain on sale of securities, net   1  33    2  34  1 
Mortgage banking 374  518  392  282  251  1,566  1,433 
Interchange and debit card transaction fees 163  148  143  175  162  628  573 
Merger termination fee     6,400      6,400   
Other 1,530  762  741  587  602  3,785  2,161 
Total noninterest income 2,840  2,196  8,416  1,698  1,680  15,315  6,584 
               
Noninterest expense:              
Salaries and employee benefits 10,278  9,072  8,984  8,398  7,871  36,635  30,630 
Occupancy and equipment 1,749  1,635  1,658  1,640  1,610  6,716  6,303 
FDIC insurance (credit)   (219) 180  179  209  140  786 
Other real estate and loan related expense 253  335  242  490  738  1,320  2,913 
Advertising and marketing 166  263  259  295  246  983  873 
Data processing 530  273  577  615  372  1,995  1,906 
Professional services 652  573  489  662  707  2,375  2,694 
Amortization of intangibles 340  341  342  344  312  1,368  976 
Software as service contracts 500  560  568  567  577  2,195  2,054 
Merger related and restructuring expenses 427  73  1,796  923  1,322  3,219  3,781 
Other 1,157  1,802  1,714  1,466  1,697  6,205  6,041 
Total noninterest expense 16,052  14,708  16,809  15,579  15,661  63,151  58,957 
Income before income taxes 7,206  7,904  12,016  6,319  6,137  33,445  21,335 
Income tax expense 473  1,941  2,895  1,588  (307) 6,897  3,233 
Net income $6,733  $5,963  $9,121  $4,731  $6,444  $26,548  $18,102 
               
Earnings Per Common Share:              
Basic $0.48  $0.43  $0.65  $0.34  $0.48  $1.9  $1.46 
Diluted $0.48  $0.42  $0.65  $0.34  $0.47  $1.89  $1.45 
Weighted average common shares outstanding:              
Basic 13,965,877  13,955,859  13,951,643  13,942,016  13,534,806  13,953,497  12,423,618 
Diluted 14,066,269  14,053,432  14,046,500  14,018,163  13,616,616  14,046,366  12,517,640 

 

           
SmartFinancial, Inc. and Subsidiary          
Condensed Consolidated Financial Information - (unaudited)          
(In thousands)            
YIELD ANALYSIS            
  Three Months Ended
  December 31, 2019 September 30, 2019 December 31, 2018
  Average   Yield/ Average   Yield/ Average   Yield/
  Balance Interest1 Cost1 Balance Interest1 Cost1 Balance Interest1 Cost1
Assets:                  
Loans, including fees $1,881,501  $25,398  5.36% $1,846,196  $25,515  5.48% $1,708,916  $25,019  5.81%
Taxable securities 116,278  698  2.38% 118,955  748  2.49% 171,133  900  2.09%
Tax-exempt securities 59,048  461  3.09% 56,598  448  3.14% 43,177  440  4.04%
Federal funds sold and other earning assets 133,681  587  1.74% 135,444  743  2.18% 67,036  506  2.99%
Total interest-earning assets 2,190,508  27,144  4.92% 2,157,193  27,454  5.05% 1,990,262  26,865  5.36%
Noninterest-earning assets 190,083      191,940      193,952     
Total assets $2,380,591      $2,349,133      $2,184,214     
                   
Liabilities and Stockholders’ Equity:                  
Interest-bearing demand deposits $351,901  486  0.55% $343,827  511  0.59% $289,207  562  0.77%
Money market and savings deposits 632,555  1,695  1.06% 637,290  1,829  1.14% 624,231  1,696  1.08%
Time deposits 633,867  3,090  1.93% 640,679  3,265  2.02% 616,296  2,422  1.56%
Total interest-bearing deposits 1,618,323  5,271  1.29% 1,621,796  5,605  1.37% 1,529,734  4,680  1.21%
Securities sold under agreement to repurchase 5,321  5  0.35% 6,490  5  0.31% 10,661  9  0.33%
Federal funds purchased and other borrowings 25,549  65  1.00% 6,820  10  0.58% 4,070  51  4.97%
Subordinated debt 39,248  584  5.90% 39,226  584  5.91% 39,178  584  5.91%
Total interest-bearing liabilities 1,688,441  5,924  1.39% 1,674,332  6,204  1.47% 1,583,643  5,324  1.33%
Noninterest-bearing deposits 363,542      353,315      320,412     
Other liabilities 19,836      18,286      9,275     
Total liabilities 2,071,819      2,045,933      1,913,330     
Stockholders’ equity 308,772      303,200      270,884     
Total liabilities and stockholders’ equity $2,380,591      $2,349,133      $2,184,214     
                   
Net interest income, taxable equivalent   $21,220      $21,250      $21,541   
Interest rate spread     3.52%     3.58%     4.03%
Tax equivalent net interest margin     3.84%     3.91%     4.28%
                   
Percentage of average interest-earning assets to average interest-bearing liabilities     129.74%     128.84%     125.68%
Percentage of average equity to average assets     12.97%     12.91%     12.40%
                   

 1 Taxable equivalent

     
SmartFinancial, Inc. and Subsidiary    
Condensed Consolidated Financial Information - (unaudited)    
(In thousands)    
YIELD ANALYSIS    
  Twelve Months Ended
  December 31, 2019 December 31, 2018
  Average   Yield/ Average   Yield/
  Balance Interest1 Cost1 Balance Interest1 Cost1
Assets:            
Loans, including fees $1,840,821  $101,002  5.49% $1,511,724  $86,479  5.72%
Taxable securities 129,705  3,289  2.54% 143,281  3,512  2.46%
Tax-exempt securities 56,458  1,972  3.49% 19,734  767  3.90%
Federal funds sold and other earning assets 110,380  2,646  2.40% 65,244  1,642  2.52%
Total interest-earning assets 2,137,364  108,909  5.10% 1,739,983  92,400  5.32%
Noninterest-earning assets 201,976      222,734     
Total assets $2,339,340      $1,962,717     
             
Liabilities and Stockholders’ Equity:            
Interest-bearing demand deposits $333,100  1,883  0.57% $242,859  1,290  0.53%
Money market and savings deposits 651,855  7,827  1.20% 601,808  5,579  0.93%
Time deposits 635,451  12,205  1.92% 536,964  7,419  1.39%
Total interest-bearing deposits 1,620,406  21,915  1.35% 1,381,631  14,288  1.04%
Securities sold under agreement to repurchase 6,750  23  0.34% 15,046  45  0.30%
Federal funds purchased and other borrowings 14,776  296  2.00% 17,806  630  3.55%
Subordinated debt 39,216  2,341  5.97% 9,882  603  6.12%
Total interest-bearing liabilities 1,681,148  24,575  1.46% 1,424,365  15,566  1.10%
Noninterest-bearing deposits 343,611      285,729     
Other liabilities 15,852      10,172     
Total liabilities 2,040,611      1,720,266     
Stockholders’ equity 298,729      242,451     
Total liabilities and stockholders’ equity $2,339,340      $1,962,717     
             
Net interest income, taxable equivalent   $84,334      $76,834   
Interest rate spread     3.63%     4.22%
Tax equivalent net interest margin     3.95%     4.43%
             
Percentage of average interest-earning assets to average interest-bearing liabilities     127.14%     122.16%
Percentage of average equity to average assets     12.77%     12.35%
             

 1 Taxable equivalent

         
SmartFinancial, Inc. and Subsidiary        
Condensed Consolidated Financial Information - (unaudited)          
(In thousands)        
NON-GAAP RECONCILIATIONS      
  Three Months Ended Twelve Months Ended
  Dec Sep Jun Mar Dec Dec Dec
  2019 2019 2019 2019 2018 2019 2018
Operating Earnings:              
Net income (GAAP) $6,733  $5,963  $9,121  $4,731  $6,444  $26,548  $18,102 
  Noninterest income:              
  Securities gains   (1) (33)   (2) (34) (1)
  ADECA termination proceeds (720)         (720)  
  Merger termination fee     (6,400)     (6,400)  
  Noninterest expenses:              
  Salaries - prior year adjustment 603          603   
  Merger related and restructuring expenses 427  73  1,796  923  1,322  3,219  3,781 
  Other - prior year franchise tax true-up (312)         (312)  
  Income taxes:              
  Tax benefit - prior year amended return (304)         (304)  
  Tax benefit from director options         (1,600)   (1,600)
Income tax effect of adjustments 60  (19) 1,119  (145) (257) 1,015  (766)
Net operating earnings (Non-GAAP) $6,487  $6,016  $5,603  $5,509  $5,907  $23,615  $19,516 
Net operating earnings per common share (Non-GAAP):              
Basic $0.46  $0.43  $0.4  $0.4  $0.44  $1.69  $1.57 
Diluted 0.46  0.43  0.4  0.39  0.43  1.68  1.56 
               
Operating Noninterest Income:              
  Noninterest income (GAAP) $2,840  $2,196  $8,416  $1,698  $1,680  $15,315  $6,584 
  Securities (gains) losses   (1) (33)   (2) (34) (1)
  ADECA termination proceeds (720)         (726)  
  Merger termination fee     (6,400)     (6,400)  
 Operating noninterest income (Non-GAAP) $2,120  $2,195  $1,983  $1,698  $1,678  $8,155  $6,583 
               
Operating Noninterest Expense:              
  Noninterest expense (GAAP) $16,052  $14,708  $16,809  $15,579  $15,661  $63,151  $58,957 
  Salaries - prior year adjustment (603)         (603)  
  Merger related and restructuring expenses (427) (73) (1,796) (923) (1,322) (3,219) (3,781)
  Other - prior year franchise tax true-up 312          312   
Operating noninterest expense (Non-GAAP) $15,334  $14,635  $15,013  $14,656  $14,339  $59,641  $55,176 
               
Non-GAAP Return Ratios:              
Net operating return on average assets (Non-GAAP)1 1.08% 1.02% 0.96% 0.98% 1.07% 1.01% 0.99%
Return on average tangible common equity (Non-GAAP)2 11.55% 10.52% 16.78% 9.26% 13.09% 12.04% 10.09%
Net operating return on average shareholder equity (Non-GAAP)3 8.34% 7.87