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CST: 20/07/2019 00:00:21   

SmartFinancial Announces First Quarter 2019 Net Income of $4.7 million, a 39% Year over Year Increase

86 Days ago

Net operating earnings (Non-GAAP) of $5.5 million for the quarter

Performance Highlights

  • Return on average assets of 0.84 percent and net operating return on average assets (non-GAAP) of 0.98 percent.
  • Yield on earning assets, taxable equivalent, of 5.25 percent, an increase of 0.24 percentage points from a year ago.
  • Quarterly loan growth of $63.3 million or 14.5 percent annualized.
  • Noninterest expense to average assets of 2.77 percent, a decrease of 0.32 percentage points from a year ago.

KNOXVILLE, Tenn., April 24, 2019 (GLOBE NEWSWIRE) -- SmartFinancial, Inc. ("SmartFinancial"; NASDAQ: SMBK), today announced net income of $4.7 million for the first quarter of 2019, compared to $3.4 million a year ago. Diluted net income per share was $0.34 for the first quarter of 2019, compared to $0.30 during the first quarter of 2018.

Billy Carroll, President & CEO, stated:  "This quarter we had very strong organic loan growth of over $60 million and had outstanding growth in earnings compared to the same quarter last year. Demand deposits increased significantly, while we were able to keep the costs of those deposits at very reasonable levels. As an organization we continue to improve on our efficiencies as we capture further economies of scale, highlighted by the further reduction in noninterest expense to average assets. Our team also did an outstanding job integrating the Foothills Bank acquisition during the quarter as we continue to build a great core bank."

SmartFinancial's Chairman, Miller Welborn, concluded: "We are looking forward to carrying the momentum from this strong start into the remainder of the year. Strong organic loan growth, supported by core demand deposit funding while maintaining stringent credit quality positions us well for the future. The opportunities we have for this company have never been greater. We are well on our way in creating one of the Southeast’s next great community banking franchises."

First Quarter 2019 compared to Fourth Quarter 2018

Net income was $4.7 million for the first quarter of 2019, a decrease from $6.4 million in the prior quarter primarily due to a change in tax expense. Diluted net income per share was $0.34 for the first quarter of 2019, compared to $0.47 during the fourth quarter of 2018. Net operating earnings (non-GAAP) totaled $5.5 million in the first quarter of 2019 compared to $5.9 million in the previous quarter. SmartFinancial completed the acquisition of Foothills Bancorp, Inc. and its wholly owned subsidiary Foothills Bank & Trust in November of 2018 and this quarter includes three full months of the results of the acquired company.

Net interest income to average assets of 3.73 percent for the quarter decreased from 3.89 percent in the fourth quarter of 2018, primarily due to lower accretion on acquired loans and higher deposit costs. Net interest income totaled $21.0 million in the first quarter of 2019, compared to $21.4 million in the fourth quarter of 2018. Net interest margin, taxable equivalent, decreased from 4.28 percent in the fourth quarter of 2018 to 4.10 percent in the first quarter of 2019 as earning asset yields decreased while the cost of interest-bearing liabilities increased.

Provision for loan losses was $797 thousand in the first quarter of 2019, compared to $1.3 million in the fourth quarter of 2018. The allowance for loan losses was $8.7 million, or 0.47 percent of total loans, as of March 31, 2019, compared to $8.3 million, or 0.46 percent of total loans, as of December 31, 2018.

Nonperforming loans as a percentage of total loans was 0.12 percent as of March 31, 2019, which was a decrease from 0.16 percent in the prior quarter due to a reduction in impaired loan balances.  Total nonperforming assets (which include nonaccrual loans, loans past due 90 days or more and still accruing, and foreclosed assets) as a percentage of total assets was 0.18 percent as of March 31, 2019, compared to 0.24 percent as of December 31, 2018.

Noninterest income to average assets of 0.30 percent for the current period decreased slightly from 0.31 percent in the fourth quarter of 2018 due to higher average asset balances. Noninterest income totaled $1.7 million in the first quarter of 2019, compared to $1.7 million in the fourth quarter of 2018.

Noninterest expense to average assets of 2.77 percent for the quarter decreased from 2.85 percent in the fourth quarter of 2018. Noninterest expense totaled $15.6 million in the first quarter of 2019 compared to $15.7 million in the fourth quarter of 2018 and included $923 thousand in merger expenses compared to $1.3 million in the prior period. Income tax expense was $1.6 million in the first quarter of 2019 compared to a benefit of $307 thousand in the fourth quarter of 2018.  The company's effective tax rate was 25.1 percent in the first quarter of 2019 compared to a benefit in the fourth quarter of 2018. The benefit in 2018 resulted from director options previously exercised.

First Quarter 2019 compared to First Quarter 2018

Net income totaled $4.7 million in the first quarter of 2019, or $0.34 per diluted share, compared to $3.4 million, or $0.30 per diluted share, in the first quarter of 2018.  Net operating earnings (non-GAAP) totaled $5.5 million in the first quarter of 2019 compared to $3.8 million in the first quarter of 2018.

Net interest income to average assets of 3.73 percent for the quarter decreased from 3.93 percent in the first quarter of 2018. Net interest income totaled $21.0 million in the first quarter of 2019, compared to $16.8 million in the first quarter of 2018. Net interest income was positively impacted compared to the prior year due to increases in average loan and securities balances and increases in the yields of the loan and securities portfolios. Net interest margin, taxable equivalent, decreased from 4.35 percent in the first quarter of 2018 to 4.10 percent in the first quarter of 2019 as a result of increases in the cost of deposits and the subordinated debt issued in the third quarter of 2018.

Provision for loan losses was $797 thousand in the first quarter of 2019, compared to $689 thousand in the first quarter of 2018. The allowance for loan losses was $8.7 million, or 0.47 percent of total loans, as of March 31, 2019, compared to $6.5 million, or
0.47 percent of total loans, as of March 31, 2018.

Nonperforming loans as a percentage of total loans was 0.12 percent as of March 31, 2019, a decrease from 0.14 percent in the first quarter of 2018. Total nonperforming assets (which include nonaccrual loans, loans past due 90 days or more and still accruing, and foreclosed assets) as a percentage of total assets was 0.18 percent as of March 31, 2019, compared to 0.26 percent as of March 31, 2018.

Noninterest income to average assets of 0.30 percent for the quarter decreased from 0.34 percent in the first quarter of 2018 due to higher average asset balances. Noninterest income totaled $1.7 million in the first quarter of 2019, compared to $1.5 million in the first quarter of 2018.

Noninterest expense to average assets of 2.77 percent for the quarter decreased from 3.09 percent in the first quarter of 2018. Noninterest expense totaled $15.6 million in the first quarter of 2019, compared to $13.2 million in the first quarter of 2018 and included $923 thousand in merger expenses compared to $498 thousand a year ago.  The increases in noninterest expense over the prior year in salaries and employee benefits and occupancy expense were primarily due to the acquisitions of Tennessee Bancshares, Inc. in the second quarter of 2018 and Foothills Bancorp, Inc. in the fourth quarter of 2018. The company's effective tax rate was 25.1 percent in the first quarter of 2019 compared to 21.6 percent in the first quarter of 2018 where the rate was positively impacted due the benefits from options exercised.

Conference Call Information

SmartFinancial will host a conference call on Thursday, April 25, 2019 at 10:00 a.m. ET to discuss first quarter 2019 results and other matters. To access this interactive teleconference, dial (888) 317-6003 or (412) 317-6061 and enter the confirmation number, 2152022. A replay of the conference call will be available through April 25, 2020, by dialing (877) 344-7529 or (412) 317-0088 and entering the confirmation number, 10130759. Conference call materials (earnings release & conference call presentation will be published on the company’s webpage located at http://www.smartfinancialinc.com/CorporateProfile by 9:00 a.m. ET the morning of 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.

Sou r ce
SmartFinancial, Inc.
 
   
Investor Contacts
Billy Carroll
President & CEO
(865) 868-0613  billy.carroll@smartbank.com
Ron Gorczynski
Executive Vice President, Chief Administrative Officer
(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 press release 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 available to common shareholders; (ii) net operating return on average assets, (iii) net operating return on average shareholder equity, (iv) return on average 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 available to common shareholders excludes the following from net income available to common shareholders: securities gains and losses, merger related 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 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

Certain of the statements made in this release 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 Securities Exchange Act of 1934, as amended. The words “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” and “estimate,” and similar expressions, are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking, including statements pertaining to the intent, belief, or current expectations of SmartFinancial’s management regarding the company’s strategic direction, plans, objectives, prospects, or future results or financial performance. All forward-looking statements are subject to risks, uncertainties, and other factors that may cause the actual results, performance, or achievements of SmartFinancial to differ materially from any results, performance, or achievements expressed or implied by such forward-looking statements. Such risks, uncertainties, and other factors include, among others, (1) the risk that the recent announcement of the termination of our agreement and plan of merger with Entegra Financial Corp. (the “Entegra Merger Agreement”) could have adverse effects on the market price of our common stock; (2) the risk that the termination of the Entegra Merger Agreement or the announcement of the same could have an adverse effect on our business generally, including our ability to retain customers, retain or hire key personnel, or maintain relationships with customers or suppliers; (3) reputational risk from the announcement of the termination of the Entegra Merger Agreement.; (4) the fact that we have incurred significant costs and expenses related to the Entegra Merger Agreement and the transactions that were contemplated by the Entegra Merger Agreement; (5) the risk of litigation related to the termination of the Entegra Merger Agreement or the abandonment of the transactions that were contemplated by the Entegra Merger Agreement; (6) 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; (7) the risk that cost savings and revenue synergies from recently completed acquisitions may not be realized or may take longer than anticipated to realize, (8) disruption from recently completed acquisitions with customer, supplier, employee, or other business relationships, (9) our ability to successfully integrate the businesses acquired as part of previous acquisitions with the business of SmartBank, (10) changes in management’s plans for the future, (11) prevailing, or changes in, economic or political conditions, particularly in our market areas, (12) credit risk associated with our lending activities, (13) changes in interest rates, loan demand, real estate values, or competition, (14) changes in accounting principles, policies, or guidelines, (15) changes in applicable laws, rules, or regulations, and (16) other general competitive, economic, political, and market factors, including those affecting our business, operations, pricing, products, or services. Certain additional factors which could affect the forward-looking statements can be found in SmartFinancial’s 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). 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 per share data)        
    As of and for the three months ending  
    March 31, 2019   December 31, 2018   September 30, 2018   June 30, 2018   March 31, 2018  
Selected Performance Ratios (Annualized)  
Return on average assets     0.84 %     1.17 %     0.85 %     0.81 %     0.80 %
Net operating return on average assets (Non-GAAP)     0.98 %     1.07 %     0.98 %     1.00 %     0.89 %
Return on average shareholder equity     6.71 %     9.42 %     6.86 %     6.76 %     6.25 %
Net operating return on average shareholder equity (Non-GAAP)     7.81 %     8.65 %     7.88 %     8.33 %     6.97 %
Return on average tangible common equity (Non-GAAP)     9.26 %     13.06 %     9.45 %     8.96 %     8.10 %
Net operating return on average tangible common  equity (Non-GAAP)   10.79 %     12.00 %     10.84 %     11.04 %     9.04 %
Net interest income / average assets     3.73 %     3.89 %     3.70 %     4.03 %     3.93 %
Yield on Earning Assets     5.23 %     5.34 %     5.02 %     5.34 %     5.00 %
Yield on earning assets, TE     5.25 %     5.35 %     5.03 %     5.34 %     5.01 %
Cost of interest-bearing liabilities     1.45 %     1.34 %     1.15 %     1.00 %     0.82 %
Net Interest margin     4.08 %     4.27 %     4.11 %     4.53 %     4.35 %
Net interest margin, TE     4.10 %     4.28 %     4.11 %     4.54 %     4.35 %
Noninterest income / average assets     0.30 %     0.31 %     0.36 %     0.33 %     0.34 %
Noninterest expense / average assets     2.77 %     2.85 %     2.90 %     3.15 %     3.09 %
Efficiency ratio     68.65 %     67.80 %     71.33 %     72.34 %     72.39 %
Operating efficiency ratio (Non-GAAP)     64.25 %     61.72 %     67.17 %     66.92 %     69.62 %
Pre-tax pre-provision income / average assets     1.23 %     1.35 %     1.16 %     1.21 %     1.18 %
 
Per Common Share  
Net income, basic   $ 0.34     $ 0.48     $ 0.34     $ 0.32     $ 0.30  
Net income, diluted     0.34       0.47       0.34       0.32       0.30  
Net operating earnings, basic (Non-GAAP)     0.40       0.44       0.39       0.40       0.34  
Net operating earnings, diluted (Non-GAAP)     0.39       0.43       0.39       0.39       0.34  
Book value     20.82       20.31       19.74       19.48       18.6  
Tangible book value (Non-GAAP)     15.18       14.64       14.38       14.09       14.09  
 
Common shares outstanding     13,952       13,934       12,750       12,705       11,234  
 
    As of and for the three months ending  
    March 31, 2019     December 31, 2018     September 30, 2018     June 30, 2018     March 31, 2018   
Composition of Loans  
Real estate commercial  
owner occupied   $ 416,152     $ 372,030     $ 364,164     $ 360,294     $ 288,666  
non-owner occupied     476,234       487,997       400,275       385,536       375,028  
Total real estate commercial     892,386       860,027       764,439       745,830       663,694  
Commercial & financial     341,015       308,254       289,732       279,341       256,333  
Real estate construction & development     186,427       187,895       166,089       179,361       142,702  
Real estate residential     408,661       407,254       351,948       355,755       299,148  
Other loans     12,080       13,809       12,986       15,148       12,380  
Total loans   $ 1,840,569     $ 1,777,239     $ 1,585,194     $ 1,575,434     $ 1,374,257  
 
Asset Quality Data and Ratios  
Nonperforming loans   $ 2,158     $ 2,856     $ 2,604     $ 1,730     $ 1,930  
Foreclosed assets     2,066       2,495       4,230       3,524       2,665  
Total nonperforming assets   $ 4,224     $ 5,351     $ 6,834     $ 5,254     $ 4,595  
Restructured loans not included in nonperforming loans   $ 32     $ 116     $ 369     $ 660     $ 40  
Net charge-offs to average loans (annualized)     0.08 %     0.04 %     0.06 %     0.02 %     0.02 %
Allowance for loan losses to loans     0.47 %     0.46 %     0.45 %     0.45 %     0.47 %
Nonperforming loans to total loans, gross     0.12 %     0.16 %     0.16 %     0.11 %     0.14 %
Nonperforming assets to total assets     0.18 %     0.24 %     0.33 %     0.25 %     0.26 %
Acquisition accounting discounts on loans   $ 19,954     $ 21,528     $ 19,500     $ 20,748     $ 16,323  
Accretion income on all acquired loans     1,881       2,755       1,208       2,583       1,274  
 
Capital Ratios  
Equity to Assets     12.34 %     12.44 %     12.27 %     12.00 %     11.87 %
Tangible equity to tangible assets (Non-GAAP)     9.31 %     9.29 %     9.25 %     8.98 %     9.26 %
Tangible common equity to tangible assets (Non-GAAP)     9.31 %     9.29 %     9.25 %     8.98 %     9.26 %
SmartFinancial, Inc.:   Estimated(1)   Estimated(1)   Estimated(1)    
Tier 1 leverage     9.29 %     9.47 %     9.26 %     9.82 %     9.59 %
Common equity Tier 1     10.72 %     10.81 %     10.88 %     10.83 %     10.84 %
Tier 1 capital     10.72 %     10.81 %     10.88 %     10.83 %     10.84 %
Total capital     13.14 %     13.29 %     13.57 %     11.25 %     11.27 %
SmartBank:   Estimated(2)  
Tier 1 leverage     10.60 %     11.17 %     10.55 %     10.43 %     10.17 %
Common equity Tier 1     12.23 %     12.31 %     11.99 %     11.41 %     11.12 %
Tier 1 risk-based capital     12.23 %     12.31 %     11.99 %     11.41 %     11.12 %
Total risk-based capital     12.67 %     12.75 %     12.40 %     11.83 %     11.56 %
 
(1) Effective 9/30/18 the company files the FRY-9SP which does not include capital ratios.  
(2) Ratios will be finalized with the filing of the Quarterly Call Report.  

 

                     
SmartFinancial, Inc. and Subsidiary        
Condensed Consolidated Financial Information (unaudited)    
(In thousands)        
BALANCE SHEET                    
    Ending Balances
    March 31, 2019     December 31, 2018     September 30, 2018     June 30, 2018     March 31, 2018  
Assets  
Cash & cash equivalents   $ 132,994     $ 115,822     $ 130,104     $ 170,235     $ 96,710  
Securities available-for-sale     198,273       201,688       173,039       156,577       156,210  
Restricted investments, at cost     12,398       11,499       10,736       8,273       7,808  
Total loans     1,840,569       1,777,239       1,585,194       1,575,434       1,374,257  
Allowance for loan losses     (8,704 )     (8,275 )     (7,156 )     (7,074 )     (6,477 )
Loans, net     1,831,865       1,768,964       1,578,038       1,568,361       1,367,780  
Bank premises and equipment, net     56,583       56,012       51,138       52,203       44,202  
Foreclosed assets     2,066       2,495       4,230       3,524       2,665  
Goodwill and core deposit intangible, net     78,690       79,034       68,254       68,449       50,660  
Cash surrender value of life insurance     24,539       24,381       22,088       21,944       21,797  
Other assets     16,909       14,514       13,320       12,666       12,593  
Total assets   $ 2,354,317     $ 2,274,409     $ 2,050,946     $ 2,062,232     $ 1,760,425  
 
Liabilities                    
Noninterest-bearing demand deposits   $ 329,095     $ 319,861     $ 301,197     $ 301,318     $ 276,249  
Interest-bearing demand deposits     331,629       311,482       267,146       246,942       278,965  
Money market and savings deposits     698,431       641,945       570,172       632,518       491,243  
Time deposits     635,175       648,675       568,796       535,879       453,276  
Total deposits     1,994,330       1,921,964       1,707,311       1,716,658       1,499,733  
Securities sold under agreement to repurchase     7,070       11,756       16,786       18,635       15,968  
Federal funds purchased and other borrowings     8,605       11,243       25,324       72,040       30,000  
Subordinated debt     39,198       39,177       39,158              
Accrued expenses and other liabilities     14,633       7,258       10,724       7,413       5,775  
Total liabilities     2,063,836       1,991,398       1,799,304       1,814,745       1,551,476  
Stockholders' equity:  
Common stock     13,952       13,934       12,750       12,705       11,234  
Additional paid-in capital     232,241       231,852       208,999       208,513       174,981  
Retained earnings     44,722       39,991       33,559       29,235       25,303  
Accumulated other comprehensive loss     (434 )     (2,765 )     (3,666 )     (2,966 )     (2,569 )
Total stockholders' equity     290,481       283,011       251,642       247,487       208,949  
Total liabilities and stockholders' equity   $ 2,354,317     $ 2,274,409     $ 2,050,946     $ 2,062,232     $ 1,760,425  
 

 

                     
SmartFinancial, Inc. and Subsidiary        
Condensed Consolidated Financial Information (unaudited)    
(In thousands, except per share data)        
INCOME STATEMENT                    
    Three months ending
    March 31, 2019   December 31, 2018     September 30, 2018   June 30, 2018     March 31, 2018
Interest Income  
Loans, including fees   $ 24,975   $ 25,017     $ 21,572   $ 21,652     $ 18,228
Securities     1,395     1,248       969     974       908
Federal funds sold and other earning assets     573     506       527     367       242
Total interest income     26,943     26,771       23,068     22,993       19,378
Interest Expense  
Deposits     5,251     4,680       3,969     3,238       2,401
Repurchase agreements     8     9       11     11       13
Subordinated debt     584     584       19          
FHLB and other borrowings     103     62       209     207       153
Total interest expense     5,946     5,335       4,208     3,455       2,567
Net interest income     20,997     21,436       18,860     19,538       16,811
Provision for loan losses     797     1,329       302     617       689
Net interest income after provision for loan losses   20,200     20,105       18,559     18,921       16,122
Noninterest income  
Service charges on deposit accounts     654     657       624     557       578
Gain (loss) on securities         2           (1 )    
Gain on sale of loans and other assets     282     288       493     327       325
Interchange and debit card transaction fees     175     162       144     121       146
Other noninterest income     587     606       570     579       406
Total noninterest income     1,698     1,715       1,831     1,583       1,455
Noninterest expense  
Salaries and employee benefits     8,398     7,871       7,934     7,649       7,176
Occupancy expense     1,640     1,610       1,638     1,522       1,533
FDIC premiums     179     209       158     317       102
Foreclosed asset expense     62     262       79     245       189
Marketing     295     245       228     215       185
Data processing     615     372       407     600       526
Professional expenses     797     908       922     918       898
Amortization of other intangibles     344     312       248     229       188
Service contracts     567     577       507     492       479
Merger expense     923     1,322       838     1,123       498
Other noninterest expense     1,760     2,008       1,800     1,968       1,448
Total noninterest expense     15,579     15,696       14,759     15,278       13,222
Earnings before income taxes     6,319     6,124       5,630     5,226       4,355
Income tax expense (benefit)     1,588     (307 )     1,305     1,295       940
Net income   $ 4,731   $ 6,431     $ 4,325   $ 3,931     $ 3,415
 
NET INCOME PER COMMON SHARE  
Basic   $ 0.34   $ 0.48     $ 0.34   $ 0.32     $ 0.30
Diluted     0.34     0.47       0.34     0.32       0.30
 
Weighted average common shares outstanding  
Basic     13,942     13,535       12,719     12,201       11,211
Diluted     14,018     13,617       12,818     12,320       11,324

 

                                     
SmartFinancial, Inc. and Subsidiary                    
Condensed Consolidated Financial Information (unaudited)                
(In thousands)                        
YIELD ANALYSIS                        
    Three Months Ended March 31, 2019   Three Months Ended December 31, 2018   Three Months Ended March 31, 2018
  Average       Yield/   Average       Yield/   Average       Yield/
    Balance   Interest(1)   Cost(1)   Balance   Interest(1)   Cost(1)   Balance   Interest(1)   Cost(1)
Assets                        
Loans   $ 1,802,014   $ 24,977   5.62 %   $ 1,708,450   $ 25,019   5.81 %   $ 1,352,319   $ 18,230   5.47 %
Taxable securities     147,346     971   2.67 %     145,950     901   2.45 %     151,573     872   2.33 %
Tax-exempt securities     53,492     537   4.07 %     43,177     439   4.03 %     6,366     55   3.50 %
Federal funds sold and other earning assets     86,688     573   2.68 %     96,356     506   2.08 %     58,869     242   1.67 %
Total interest-earning assets     2,089,540     27,058   5.25 %     1,993,933     26,865   5.35 %     1,569,127     19,399   5.01 %
Noninterest-earning assets     193,698     183,333     166,035  
Total assets   $ 2,283,238   $ 2,177,266   $ 1,735,162  
 
Liabilities and Stockholders’ Equity  
Interest-bearing demand deposits   $ 306,164   $ 474   0.63 %   $ 266,311   $ 422   0.63 %   $ 249,846   $ 320   0.52 %
Money market and savings deposits     665,018     1,978   1.21 %     646,750     1,697   1.04 %     526,093     870   0.67 %
Time deposits     637,767     2,799   1.78 %     616,008     2,561   1.65 %     454,660     1,211   1.08 %
Total interest-bearing deposits     1,608,949     5,251   1.32 %     1,529,069     4,680   1.21 %     1,230,599     2,401   0.79 %
Securities sold under agreement to repurchase   7,971     8   0.41 %     10,661     9   0.33 %     16,186     12   0.31 %
Federal funds purchased and other borrowings   10,217     103   4.09 %     4,001     62   6.15 %     26,655     153   2.32 %
Subordinated debt     39,184     584   6.04 %     39,177     584   5.91 %            
Total interest-bearing liabilities     1,666,321     5,946   1.45 %     1,582,908     5,335   1.34 %     1,273,440     2,566   0.82 %
Noninterest-bearing deposits     320,134     320,311     231,355  
Other liabilities     10,707     17,900     8,656  
Total liabilities     1,997,162     1,921,119     1,513,451  
Stockholders’ equity     286,076     256,147     221,711  
Total liabilities and stockholders’ equity   $ 2,283,238   $ 2,177,266   $ 1,735,162  
 
Net interest income, taxable equivalent   $ 21,112   $ 21,530   $ 16,823  
Interest rate spread   3.80 %   4.01 %   4.19 %
Tax equivalent net interest margin   4.10 %   4.28 %   4.35 %
 
Percentage of average interest-earning assets to average interest-bearing liabilities   125.40 %   125.97 %   123.22 %
Percentage of average equity to average assets   12.53 %   11.76 %   12.78 %
                       
(1) Taxable equivalent  

 

                           
SmartFinancial, Inc. and Subsidiary          
Condensed Consolidated Financial Information (unaudited)          
(In thousands)          
NON-GAAP RECONCILIATIONS   Three months ending  
    March 31, 2019   December 31, 2018   September 30, 2018   June 30, 2018   March 31, 2018  
Operating Earnings  
Net income (GAAP)   $ 4,731     $ 6,444     $ 4,324     $ 3,931     $ 3,415    
Securities (gains) losses           (2 )           1          
Merger expenses     923       1,322       838       1,123       498    
Tax benefit from director options previously exercised           (1,600 )                    
Income tax effect of adjustments     (145 )     (256 )     (196 )     (211 )     (103 )  
Net operating earnings (Non-GAAP)   $ 5,509     $ 5,908     $ 4,966     $ 4,844     $ 3,810    
Net operating earnings per common share (Non-GAAP):  
Basic   $ 0.40     $ 0.44     $ 0.39     $ 0.40     $ 0.34    
Diluted     0.39       0.43       0.39       0.39       0.34    
 
Non-GAAP Return Ratios  
Net operating return on average assets (Non-GAAP)(1)     0.98 %     1.07 %     0.98 %     1.00 %     0.89 %  
Net operating return on average shareholder equity (Non-GAAP)(2)     7.81 %     8.65 %     7.88 %     8.33 %     6.97 %  
Return on average tangible common equity (Non-GAAP)(3)     9.26 %     13.06 %     9.45 %     8.96 %     8.10 %  
Net operating return on average tangible common equity (Non-GAAP)(4)   10.79 %     12.00 %     10.84 %     11.04 %     9.04 %  
 
Operating Efficiency Ratio  
Efficiency ratio (GAAP)     68.65 %     67.71 %     71.34 %     72.31 %     72.39 %  
Adjustment for taxable equivalent yields     (0.49 )%     (0.45 )%     (0.18 )%     (0.11 )%     (0.06 )%  
Adjustment for securities gains (losses)     %     0.01 %     %     (0.01 )%     %  
Adjustment for merger expenses     (3.91 )%     (5.55 )%     (3.99) %     (5.28 )%     (2.71 )%  
Operating efficiency ratio (Non-GAAP)     64.25 %     61.72 %     67.17 %     66.92 %     69.62 %  
 
Tangible Common Equity  
Stockholders' equity (GAAP)   $ 290,481     $ 283,011     $ 251,642     $ 247,487     $ 208,949    
Less goodwill and other intangible assets     78,690       79,034       68,254       68,449       50,660    
Tangible common equity (Non-GAAP)   $ 211,791     $ 203,977     $ 183,388     $ 179,036     $ 158,289    
 
Average Tangible Common Equity  
Average stockholders' equity (GAAP)   $ 286,076     $ 270,884     $ 250,063     $ 233,285     $ 221,711    
Less average goodwill and other intangible assets     78,913       75,547       68,389       57,251       50,780    
Average tangible common equity (Non-GAAP)   $ 207,163     $ 195,337     $ 181,674     $ 176,034     $ 170,931    
 
 
(1) Net operating return on average assets (non-GAAP) is the annualized net operating earnings (non-GAAP) divided by average assets.  
(2) Net operating return on average equity (non-GAAP) is the annualized net operating earnings (non-GAAP) divided by average equity.  
(3) Return on average tangible common equity (non-GAAP) is the annualized net income divided by average tangible common equity (non-GAAP).  
(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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