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CST: 21/11/2019 15:47:32   

SmartFinancial Reports $0.47 Earnings per Diluted Share for the Fourth Quarter of 2018

301 Days ago

Net operating earnings per diluted common share (non-GAAP) was $0.43 for the fourth quarter of 2018

Performance Highlights

  • Net income available to common shareholders totaled $6.4 million in the quarter and ROAA increased to 1.17 percent.
  • Net operating earnings available to common shareholders (non-GAAP) totaled $5.9 million in the quarter and net operating ROAA (non-GAAP) increased to 1.07 percent.
  • Noninterest expense to average assets of 2.84 percent, a decrease of 0.51 percentage points from a year ago.
  • Loan growth, excluding loans acquired from Foothills, at 10 percent annualized.
  • A 26.8 percent increase in total revenue, to $23.1 million in the the fourth quarter of 2018, compared with total revenue of $16.9 million in the fourth quarter of 2017.
  • Asset quality was outstanding with nonperforming assets to total assets of just 0.24 percent.

KNOXVILLE, Tenn., Jan. 23, 2019 (GLOBE NEWSWIRE) -- SmartFinancial, Inc. ("SmartFinancial"; NASDAQ: SMBK), announced today net income available to common shareholders of $6.4 million in its fourth quarter of 2018, or $0.47 per diluted share, compared to $38 thousand, or $0.00 per diluted share a year ago, which included $2.4 million of tax charges related to changes in tax law.  On November 1, 2018, SmartFinancial completed the acquisition of Foothills Bancorp, Inc. and Foothills Bank & Trust, and this quarter includes two months of the results of the acquired companies.  This quarter also included $1.3 million in pre-tax merger related expenses and $1.6 million in tax benefit related adjustments from director options that were previously exercised.

Billy Carroll stated, "We are extremely proud of our accomplishments in the fourth quarter and for the year.  2018 was our company's busiest yet.  We converted two banks and closed on a third, but just as important was our continued strong organic growth that is building a great core bank. In addition, the announcement of our merger with Entegra Financial Corp. positions our company to take a transformative step in 2019.  We are very excited about what the future holds."

SmartFinancial Chairman Miller Welborn concluded, "I've been very pleased with what our team has accomplished this year and the fourth quarter showed our continued positive trends on our financial performance.  Closing the Foothills Bank deal during the quarter was a great addition to our Knoxville, TN market area, as well as the new talent we added to the team during the year, both of which will yield great upside in 2019. "

Fourth Quarter 2018 compared to Third Quarter 2018

Net income available to common shareholders totaled $6.4 million in the fourth quarter of 2018, or $0.47 per diluted share, compared to $4.3 million, or $0.34 per diluted share, in the third quarter of 2018.  Net operating earnings available to common shareholders (Non-GAAP), which excludes securities gains, merger expenses, and tax benefit related adjustments, totaled $5.9 million in the fourth quarter of 2018, or $0.43 per diluted share, compared to $5.0 million, or $0.39  per diluted share, in the previous quarter.

Net interest income to average assets of 3.90 percent for the quarter increased from 3.70 percent in the third quarter of 2018. Net interest income totaled $21.4 million in the fourth quarter of 2018 compared to $18.9 million in the third quarter of 2018. Net interest income was positively impacted during the quarter by increases in earning asset balances and higher earning asset yields.  Net interest margin, taxable equivalent, increased from 4.11 percent in the third quarter of 2018 to 4.29 percent in the fourth quarter of 2018 primarily due to higher average loan balances, higher loan yields (including purchased loan accounting adjustments), and higher security yields, which was partially offset by increases in funding costs.

Provision for loan losses was $1.3 million in the fourth quarter of 2018 compared to $302 thousand in the third quarter of 2018. The increase in provision for loan losses was primarily due to increases in net loan growth.  Annualized net charge-offs in the fourth quarter of 2018 remained at a very low level, just 0.04 percent of average loans compared to 0.06 percent in the third quarter of 2018.

The allowance for loan losses was $8.3 million, or 0.46 percent of total loans, as of December 31, 2018 compared to $7.2 million, or 0.45 percent of total loans, as of September 30, 2018. There were $21.5 million net purchase discounts on $640.2 million of acquired loans as of December 31, 2018 compared to $19.5 million net purchase discounts on $558.0 million of acquired loans as of September 30, 2018.

Nonperforming loans as a percentage of total loans was 0.16 percent as of December 31, 2018, which remained unchanged from the prior quarter. 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 0.24 percent as of December 31, 2018 compared to 0.33 percent as of September 30, 2018.

Noninterest income to average assets of 0.31 percent for the quarter decreased slightly from 0.36 percent in the third quarter of 2018.  Noninterest income totaled $1.7 million in the fourth quarter of 2018, compared to $1.8 million in the third quarter of 2018.  The decrease in noninterest income was primarily due to lower gains on the sale of loans and other assets.

Noninterest expense to average assets of 2.84 percent for the quarter decreased from 2.90 percent in the third quarter of 2018. Noninterest expense totaled $15.7 million in the fourth quarter of 2018, which included $1.3 million in merger related charges, compared to $14.8 million in third quarter of 2018, which had $838 thousand in merger charges.

Income tax benefit was $0.3 million in the fourth quarter of 2018, which included $1.6 million in tax benefit related adjustments.  Income tax expense in the third quarter of 2018 was $1.3 million.  Excluding the tax benefit, the company's effective tax rate was 26.0 percent in the fourth quarter of 2018 compared to 23.2 percent in the third quarter of 2018.

Fourth Quarter 2018 compared to Fourth Quarter 2017

Net income available to common shareholders totaled $6.4 million in the fourth quarter of 2018, or $0.47 per diluted share, compared to $38 thousand, or $0.00 per diluted share, in the fourth quarter of 2017.  Net operating earnings available to common shareholders (Non-GAAP), which excludes securities gains, merger expenses, tax benefit related adjustments, and revaluation of deferred tax assets due to change in tax law, totaled $5.9 million in the fourth quarter of 2018 compared to $3.7 million in the fourth quarter of 2017.

Net interest income to average assets of 3.90 percent for the quarter decreased from 4.09 percent in the fourth quarter of 2017. Net interest income totaled $21.4 million in the fourth quarter of 2018 compared to $15.3 million in the fourth quarter of 2017. Net interest margin, taxable equivalent, decreased from 4.63 percent in the fourth quarter of 2017 to 4.29 percent in the fourth quarter of 2018 primarily due to higher cost of interest-bearing liabilities.

Provision for loan losses was $1.3 million in the fourth quarter of 2018 compared to $442 thousand in the fourth quarter of 2017. The increase in provision was primarily due to increases in originated loan balances.  Annualized net charge-offs in the fourth quarter of 2018 remained at a very low level, just 0.04 percent of average loans compared to net recoveries of 0.01 percent in the fourth quarter of 2017.

Nonperforming loans as a percentage of total loans was 0.16 percent as of December 31, 2018, which increased slightly from 0.13 percent in the prior year. 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 0.24 percent as of December 31, 2018 compared to 0.29 percent as of December 31, 2017.

Noninterest income to average assets of 0.31 percent for the quarter decreased from 0.42 percent in the fourth quarter of 2017.  Noninterest income totaled $1.7 million in the fourth quarter of 2018 compared to $1.6 million in the fourth quarter of 2017.

Noninterest expense to average assets of 2.84 percent for the quarter decreased from 3.35 percent in the fourth quarter of 2017.  Noninterest expense totaled $15.7 million in the fourth quarter of 2018, which included $1.3 million in merger related charges, compared to $12.6 million in the fourth quarter of 2017, which had $1.7 million in merger charges.  The primary drivers of the increase in expense compared to the prior year were as a result of the Capstone, TN Bancshares, and Foothills mergers, which materially increased salaries and employee benefits, occupancy expense, amortization of intangibles, and other noninterest expense.

Income tax benefit was $0.3 million in the fourth quarter of 2018, which included $1.6 million in tax benefit related adjustments.  Income tax expense in the fourth quarter of 2017 was $3.9 million, which included a $2.4 million revaluation of deferred tax assets due to change in tax law.

Conference Call Information
SmartFinancial plans to issue its earnings release for the fourth quarter of 2018 on Wednesday, January 23, 2019, and will host a conference call on Thursday, January 24, 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, 6152900.  A replay of the conference call will be available through January 24, 2020, by dialing (877) 344-7529 or (412) 317-0088 and entering the confirmation number, 10127945.

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 am ET the morning of the conference call.

About SmartFinancial, Inc.
SmartFinancial, Inc., headquartered in Knoxville, Tennessee, is the bank holding company for SmartBank, a full-service commercial bank founded in 2007 and domiciled in Pigeon Forge, Tennessee. SmartFinancial’s common stock is traded on the Nasdaq Capital Market under the ticker symbol SMBK. SmartBank has 29 branch offices across Tennessee, Alabama, and the Florida Panhandle. Recruiting the best people, delivering exceptional client service, strategic branching and acquisitions, and a disciplined approach to lending have all contributed to SmartFinancial’s and 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 Administrative 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 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) operating efficiency ratio; (iii) tangible common equity; and (iv) net operating return on average assets, 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, and the income tax effect of adjustments. The operating efficiency ratio excludes securities gains and losses and merger related expenses from the efficiency ratio. Tangible common equity excludes goodwill and other intangible assets. Net operating return on average assets is annualized net operating income divided by GAAP total average 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 press 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 about the benefits to SmartFinancial of its previously announced merger with Entegra Financial Corp. (“Entegra”), SmartFinancial’s future financial and operating results, and SmartFinancial’s plans, objectives, and intentions. 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 cost savings and any revenue synergies from the proposed merger with Entegra may not be realized or take longer than anticipated to be realized, (2) the risk that the cost savings and any revenue synergies from recently completed mergers may not be realized or may take longer than anticipated to realize, (3) disruption from the proposed merger with Entegra, or recently completed mergers, with customer, supplier, or employee relationships, (4) the occurrence of any event, change, or other circumstances that could give rise to the termination of the agreement and plan of merger among SmartFinancial, CT Merger Sub, Inc., and Entegra providing for the proposed merger with Entegra, (5) the failure to obtain necessary shareholder or regulatory approvals for the merger with Entegra, (6) the possibility that the amount of the costs, fees, expenses, and charges related to the merger with Entegra may be greater than anticipated, including as a result of unexpected or unknown factors, events, or liabilities, (7) the failure of the conditions to the merger with Entegra to be satisfied, (8) the risk of successful integration of the two companies’ businesses, including the risk that the integration of Entegra’s operations with those of SmartFinancial will be materially delayed or will be more costly or difficult than expected, (9) the risk of expansion into new geographic or product markets, (10) reputational risk and the reaction of SmartFinancial’s and Entegra’s customers to the merger, (11) the risk of potential litigation or regulatory action related to the merger with Entegra, (12) the dilution caused by SmartFinancial’s issuance of additional shares of its common stock in the merger with Entegra, and (13) general competitive, economic, political, and market conditions. 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 filed with the Securities and Exchange Commission (the “SEC”) and available on the SEC’s website at http://www.sec.gov. SmartFinancial disclaims any obligation to update or revise any forward-looking statements contained in this press release, which speak only as of the date hereof, whether as a result of new information, future events, or otherwise.

IMPORTANT INFORMATION FOR SHAREHOLDERS AND INVESTORS
This press release shall not constitute an offer to sell, the solicitation of an offer to sell, or the solicitation of an offer to buy any securities or the solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. In connection with SmartFinancial’s proposed merger with Entegra, SmartFinancial will file a registration statement on Form S-4 with the SEC, which will contain the joint proxy statement of SmartFinancial and Entegra and a prospectus of SmartFinancial. Shareholders are encouraged to read the registration statement, including the joint proxy statement/prospectus that will be part of the registration statement, because it will contain important information about the proposed transaction, SmartFinancial, and Entegra. After the registration statement is filed with the SEC, the joint proxy statement/prospectus and other relevant documents will be mailed to SmartFinancial and Entegra shareholders and will be available for free on the SEC’s website (www.sec.gov). The joint proxy statement/prospectus will also be made available for free by contacting Ron Gorczynski, SmartFinancial’s Chief Administrative Officer, at (865) 437-5724 or David Bright, the Chief Financial Officer and Treasurer of Entegra, at (828) 524-7000. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

PARTICIPANTS IN THE SOLICITATION
SmartFinancial, Entegra, and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from SmartFinancial and Entegra shareholders in connection with the previously announced proposed merger of SmartFinancial and Entegra under the rules of the SEC. Information about the directors and executive officers of SmartFinancial may be found in the definitive proxy statement for SmartFinancial’s 2018 annual meeting of shareholders, filed with the SEC by SmartFinancial on April 2, 2018, and other documents subsequently filed by SmartFinancial with the SEC. Information about the directors and executive officers of Entegra may be found in the definitive proxy statement for Entegra’s 2018 annual meeting of shareholders, filed by Entegra with the SEC on April 2, 2018. Additional information regarding the interests of these participants will also be included in the joint proxy statement/prospectus regarding the proposed transaction when it becomes available. Free copies of these documents maybe obtained as described in the paragraph above.

 
SmartFinancial, Inc. and Subsidiaries  
Condensed Consolidated Financial Information (unaudited)  
(In thousands, except per share data)  
    As of and for the three months ended
    December 31,
2018
  September 30,
2018
  June 30,
2018
  March 31,
2018
  December 31,
2017
Selected Performance Ratios (Annualized)                                        
Return on average assets     1.17 %     0.85 %     0.81 %     0.80 %     0.01 %
Net operating return on average assets (Non-GAAP)     1.07 %     0.98 %     1.00 %     0.89 %     0.99 %
Return on average shareholder equity     9.44 %     6.86 %     6.76 %     6.25 %     0.08 %
Return on average tangible common equity (Non-GAAP)     13.09 %     9.44 %     8.96 %     8.10 %     0.10 %
Net operating return on average shareholder equity (Non-GAAP)     8.65 %     7.88 %     8.33 %     6.97 %     7.98 %
Net operating return on average tangible common  equity (Non-GAAP)     12.00 %     10.84 %     11.04 %     9.04 %     9.94 %
Net interest income / average assets     3.90 %     3.70 %     4.03 %     3.93 %     4.09 %
Yield on earning assets     5.34 %     5.02 %     5.34 %     5.02 %     5.20 %
Yield on earning assets, TE     5.36 %     5.03 %     5.34 %     5.03 %     5.20 %
Cost of interest-bearing liabilities     1.33 %     1.15 %     1.00 %     0.82 %     0.70 %
Net interest margin     4.28 %     4.11 %     4.53 %     4.36 %     4.62 %
Net interest margin, TE     4.29 %     4.11 %     4.54 %     4.36 %     4.63 %
Noninterest income / average assets     0.31 %     0.36 %     0.33 %     0.34 %     0.42 %
Noninterest expense / average assets     2.84 %     2.90 %     3.15 %     3.09 %     3.35 %
Efficiency ratio     67.71 %     71.34 %     72.34 %     72.39 %     74.26 %
Operating efficiency ratio (Non-GAAP)     62.00 %     67.17 %     64.82 %     69.12 %     60.64 %
Pre-tax pre-provision income / average assets     1.36 %     1.23 %     1.21 %     1.18 %     1.16 %
 
Per Common Share  
Net income, basic   $ 0.48     $ 0.34     $ 0.32     $ 0.30     $ -  
Net income, diluted     0.47       0.34       0.32       0.30       -  
Net operating earnings, basic (Non-GAAP)     0.44       0.39       0.40       0.34       0.35  
Net operating earnings, diluted (Non-GAAP)     0.43       0.39       0.39       0.34       0.34  
Book value     20.31       19.74       19.48       18.6       18.46  
Tangible book value (Non-GAAP)     14.64       14.38       14.09       14.09       13.9  
 
Common shares outstanding     13,934       12,750       12,705       11,234       11,153  
 
 
SmartFinancial, Inc. and Subsidiaries  
Condensed Consolidated Financial Information (unaudited)  
(In thousands, except per share data)  
    As of and for the three months ended
    December 31,
2018
  September 30,
2018
  June 30,
2018
  March 31,
2018
  December 31,
2017
Composition of Loans                                        
Real estate commercial  
owner occupied   $ 372,030     $ 364,164     $ 360,294     $ 288,666     $ 281,297  
non-owner occupied     487,551       400,275       385,536       375,028       361,691  
Real estate commercial, total     859,581       764,439       745,830       663,694       642,988  
Commercial & industrial     307,886       289,732       279,341       256,333       238,087  
Real estate construction & development     187,868       166,089       179,361       142,702       135,409  
Real estate residential     408,164       351,948       355,755       299,148       293,457  
Other loans     13,728       12,986       15,148       12,380       13,317  
Total loans   $ 1,777,227     $ 1,585,194     $ 1,575,434     $ 1,374,257     $ 1,323,258  
                                         
Asset Quality and Additional Loan Data  
Nonperforming loans   $ 2,856     $ 2,604     $ 1,730     $ 1,931     $ 1,764  
Foreclosed assets     2,495       4,230       3,524       2,665       3,254  
Total nonperforming assets   $ 5,351     $ 6,834     $ 5,254     $ 4,595     $ 5,018  
Restructured loans not included in nonperforming loans   $ 116     $ 369     $ 660     $ 40     $ 41  
Net charge-offs (recoveries) to average loans (annualized)     0.04 %     0.06 %     0.02 %     0.02 %     (0.01 )%
Allowance for loan losses to loans     0.46 %     0.45 %     0.45 %     0.47 %     0.44 %
Nonperforming loans to total loans, gross     0.16 %     0.16 %     0.11 %     0.14 %     0.13 %
Nonperforming assets to total assets     0.24 %     0.33 %     0.25 %     0.26 %     0.29 %
Acquisition accounting discounts on acquired loans   $ 21,528     $ 19,500     $ 20,748     $ 16,323     $ 17,862  
Accretion income on acquired loans     2,755       1,208       2,583       1,274       2,411  
 
Capital Ratios  
Equity to Assets     12.44 %     12.27 %     12.00 %     11.87 %     11.96 %
Tangible equity to tangible assets (Non-GAAP)     9.29 %     9.25 %     8.98 %     9.26 %     9.28 %
Tangible common equity to tangible assets (Non-GAAP)     9.29 %     9.25 %     8.98 %     9.26 %     9.28 %
SmartFinancial, Inc.:   Estimated 1   Estimated 1  
Tier 1 leverage     9.47 %     9.26 %     9.82 %     9.59 %     10.48 %
Common equity Tier 1     10.66 %     10.70 %     10.83 %     10.84 %     10.59 %
Tier 1 capital     10.66 %     10.70 %     10.83 %     10.84 %     10.59 %
Total capital     13.10 %     13.34 %     11.25 %     11.27 %     10.98 %
SmartBank:   Estimated 2  
Tier 1 leverage     10.23 %     10.55 %     10.43 %     10.17 %     11.26 %
Common equity Tier 1     11.52 %     11.99 %     11.41 %     11.12 %     10.90 %
Tier 1 risk-based capital     11.52 %     11.99 %     11.41 %     11.12 %     10.90 %
Total risk-based capital     11.95 %     12.40 %     11.83 %     11.56 %     11.30 %
 
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 Subsidiaries
Condensed Consolidated Financial Information (unaudited)
(In thousands)
BALANCE SHEET
    Ending Balances
    December 31,
2018
  September 30,
2018
  June 30,
2018
  March 31,
2018
  December 31,
2017
Assets                                        
Cash & cash equivalents   $ 115,822     $ 130,104     $ 170,235     $ 96,710     $ 113,027  
Securities available for sale     201,688       173,039       156,577       156,210       151,945  
Other investments     11,499       10,736       8,273       7,808       6,431  
Total loans     1,777,227       1,585,194       1,575,434       1,374,257       1,323,258  
Allowance for loan losses     (8,263 )     (7,156 )     (7,074 )     (6,477 )     (5,860 )
Loans, net     1,768,964       1,578,038       1,568,361       1,367,780       1,317,398  
Premises and equipment     56,012       51,138       52,203       44,202       43,000  
Foreclosed assets     2,495       4,230       3,524       2,665       3,254  
Goodwill and other intangibles     79,034       68,254       68,449       50,660       50,837  
Cash surrender value of life insurance     24,381       22,088       21,944       21,797       21,647  
Other assets     14,514       13,320       12,666       12,593       13,232  
Total assets   $ 2,274,409     $ 2,050,946     $ 2,062,232     $ 1,760,425     $ 1,720,771  
 
Liabilities                    
Noninterest demand   $ 319,861     $ 301,197     $ 301,318     $ 276,249     $ 220,520  
Interest-bearing demand     311,482       267,146       246,942       278,965       231,644  
Money market and savings     641,945       570,172       632,518       491,243       543,645  
                                         
                                         
                                         
                                         
                                         
                                         
Time deposits     648,676       568,796       535,879       453,276       442,774  
                                         
                                         
                                         
                                         
                                         
                                         
Total deposits     1,921,964       1,707,311       1,716,658       1,499,733       1,438,583  
                                         
                                         
                                         
                                         
                                         
                                         
Repurchase agreements     11,756       16,786       18,635       15,968       24,055  
                                         
                                         
                                         
                                         
                                         
                                         
FHLB & other borrowings     11,243       25,324       72,040       30,000       43,600  
                                         
                                         
                                         
                                         
                                         
                                         
Subordinated debt     39,177       39,158                    
                                         
                                         
                                         
                                         
                                         
                                         
Other liabilities     7,258       10,724       7,413       5,775       8,681  
Total liabilities     1,991,398       1,799,304       1,814,745       1,551,476       1,514,919  
Shareholders' Equity  
Common stock     13,934       12,750       12,705       11,234       11,152  
Additional paid-in capital     231,851       208,999       208,513       174,981       174,009  
Retained earnings     39,991       33,559       29,235       25,303       21,889  
Accumulated other comprehensive loss     (2,765 )     (3,666 )     (2,966 )     (2,569 )     (1,198 )
Total shareholders' equity     283,011       251,642       247,487       208,949       205,852  
Total liabilities & shareholders' equity   $ 2,274,409     $ 2,050,946     $ 2,062,232     $ 1,760,425     $ 1,720,771  
 

 

 
SmartFinancial, Inc. and Subsidiaries
Condensed Consolidated Financial Information (unaudited)
(In thousands, except per share data)
INCOME STATEMENT
 
    Three months ended
    December 31,
2018
  September 30,
2018
  June 30,
2018
  March 31,
2018
  December 31,
2017
Interest Income                                  
Loans, including fees   $ 25,017     $ 21,572   $ 21,652     $ 18,228   $ 16,357
Investment securities and interest bearing due froms     1,574       1,326     1,198       1,049     770
Other interest income     180       170     144       101     117
Total interest income     26,771       23,068     22,993       19,378     17,244
Interest Expense                                  
Deposits     4,680       3,969     3,238       2,401     1,806
Repurchase agreements     9       11     11       13     15
FHLB and other borrowings     51       209     207       153     81
Subordinated Debt     584       19              
Total interest expense     5,324       4,208     3,455       2,567     1,902
Net interest income     21,447       18,861     19,538       16,811     15,342
Provision for loan losses     1,329       302     617       689     442
Net interest income after provision for loan losses     20,118       18,559     18,921       16,122     14,899
Noninterest income                                  
Service charges on deposit accounts     663       624     557       578     524
(Loss) gain on securities     2           (1 )        
Gain on sale of loans and other assets     251       493     327       325     366
Interchange and debit card transaction fees     162       144     121       146     304
Other noninterest income     601       570     579       406     387
Total noninterest income     1,679       1,831     1,583       1,455     1,581
Noninterest expense                                  
Salaries and employee benefits     7,871       7,934     7,649       7,176     6,272
Occupancy expense     1,610       1,638     1,522       1,533     1,217
FDIC premiums     209       158     317       102     150
Foreclosed asset expense     267       79     245       189     59
Marketing     246       228     215       185     167
Data processing     372       407     600       526     583
Professional expenses     908       922     918       898     602
Amortization of other intangibles     312       248     229       188     155
Service contracts     577       507     492       479     426
Merger expense     1,322       838     1,123       498     1,694
Other noninterest expense     1,966       1,800     1,968       1,448     1,242
Total noninterest expense     15,660       14,759     15,278       13,222     12,566
Earnings before income taxes     6,137       5,631     5,226       4,355     3,913
Income tax expense (benefit)     (307 )     1,305     1,295       940     3,875
Net income   $ 6,444     $ 4,325   $ 3,931     $ 3,415   $ 38
 
NET INCOME PER COMMON SHARE  
Basic   $ 0.48     $ 0.34   $ 0.32     $ 0.30   $ -
Diluted     0.47       0.34     0.32       0.30     -
 
Weighted average common shares outstanding  
Basic     13,535       12,719     12,201       11,211     10,552
Diluted     13,617       12,818     12,320       11,324     10,709

 

 
SmartFinancial, Inc. and Subsidiaries
Condensed Consolidated Financial Information (unaudited)
(In thousands)
YIELD ANALYSIS
    Three Months Ended December 31,
2018
  Three Months Ended September 30,
2018
  Three Months Ended December 31,
2017
  Average       Yield/   Average       Yield/   Average       Yield/
    Balance   Interest1   Cost1   Balance   Interest1   Cost1   Balance   Interest1   Cost1
Assets                                    
Loans   $ 1,708,916   $ 25,019   5.81 %   $ 1,577,222   $ 21,573   5.43 %   $ 1,159,161   $ 16,362   5.60 %
Investment securities and interest bearing due froms     214,310     1,666   3.08 %     232,041     1,361   2.33 %     131,215     781   2.36 %
Federal funds and other     67,036     180   1.07 %     13,033     170   5.17 %     25,905     117   1.79 %
Total interest-earning assets     1,990,262     26,865   5.36 %     1,822,296     23,104   5.03 %     1,316,281     17,260   5.20 %
Non-interest-earning assets     193,952     198,215     171,879  
Total assets   $ 2,184,214   $ 2,020,511   $ 1,488,160  
 
Liabilities and Stockholders’ Equity  
Interest-bearing demand deposits   $ 289,207   $ 562   0.77 %   $ 239,220   $ 283   0.47 %   $ 195,783   $ 213   0.43 %
Money market and savings deposits     624,231     1,696   1.08 %     615,334     1,595   1.03 %     462,674     488   0.42 %
Time deposits     616,296     2,422   1.56 %     564,945     2,091   1.47 %     398,142     1,105   1.10 %
Total interest-bearing deposits     1,529,734     4,680   1.21 %     1,419,499     3,969   1.11 %     1,056,599     1,806   0.68 %
Securities sold under agreement to repurchase     10,661     9   0.33 %     17,694     11   0.27 %     20,226     15   0.29 %
Subordinated debt     39,178     584   5.91 %     1,277     19   5.90 %           %
Federal Home Loan Bank advances and other borrowings   4,070     51   4.97 %     16,442     209   5.11 %     8,281     81   3.88 %
Total interest-bearing liabilities     1,583,643     5,324   1.33 %     1,454,912     4,208   1.15 %     1,085,106     1,902   0.70 %
Noninterest-bearing deposits     320,412     307,007     203,457  
Other liabilities     9,275     8,529     15,302  
Total liabilities     1,913,330     1,770,448     1,303,865  
Shareholders’ equity     270,884     250,063     184,295  
Total liabilities and stockholders’ equity   $ 2,184,214   $ 2,020,511   $ 1,488,160  
 
Net interest income, taxable equivalent   $ 21,541   $ 18,896   $ 15,358  
Interest rate spread   4.03 %   3.88 %   4.50 %
Tax equivalent net interest margin   4.29 %   4.11 %   4.63 %
 
Percentage of average interest-earning assets to average interest-bearing liabilities   125.68 %   125.25 %   121.30 %
Percentage of average equity to average assets   12.40 %   12.38 %   12.38 %
 
 
1 Taxable equivalent basis  

 

 
SmartFinancial, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Condensed Consolidated Financial Information (unaudited)
(In thousands, except for per share data)
    Three months ended
    December 31,
2018
  September 30,
2018
  June 30,
2018
  March 31,
2018
  December 31,
2017
Operating Earnings                                        
Net income (GAAP)   $ 6,444     $ 4,324     $ 3,931     $ 3,415     $ 38  
Securities (gains) losses     (2 )           1              
Merger expenses     1,322       838       1,123       498       1,694  
Tax charge related to change in tax law and tax benefit from director options previously exercised     (1,600 )                       2,440  
Income tax effect of adjustments     (256 )     (196 )     (211 )     (103 )     (506 )
Net operating earnings (Non-GAAP)   $ 5,908     $ 4,966     $ 4,845     $ 3,810     $ 3,666  
Net operating earnings per common share (Non-GAAP):  
Basic   $ 0.44     $ 0.39     $ 0.40     $ 0.34     $ 0.35  
Diluted     0.43       0.39       0.39       0.34       0.34  
 
Non-GAAP Return Ratios  
Net operating return on average assets (Non-GAAP)1     1.07 %     0.98 %     1.00 %     0.89 %     0.99 %
Return on average tangible common equity (Non-GAAP)2     13.09 %     9.44 %     8.96 %     8.10 %     0.10 %
Net operating return on average shareholder equity (Non-GAAP)3     8.65 %     7.88 %     8.33 %     6.97 %     7.98 %
Net operating return on average tangible common  equity (Non-GAAP)4     12.00 %     10.84 %     11.04 %     9.04 %     9.94 %
 
Operating Efficiency Ratio  
Efficiency ratio (GAAP)     67.71 %     71.34 %     72.31 %     72.39 %     74.22 %
Adjustment for taxable equivalent yields     %     (0.18 )%     (0.11 )%     (0.06 )%     (0.09 )%
Adjustment for securities gains (losses)     0.01 %     %     (0.01 )%     %     %
Adjustment for merger related costs     (5.72 )%     (3.99 )%     (5.28 )%     (2.71 )%     (9.97 )%
Operating efficiency ratio (Non-GAAP)     62.00 %     67.17 %     66.92 %     69.62 %     64.16 %
 
Tangible Common Equity  
Shareholders' equity (GAAP)   $ 283,011     $ 251,642     $ 247,487     $ 208,949     $ 205,852  
Less goodwill and other intangible assets     79,034       68,254       68,449       50,660       50,837  
Tangible common equity (Non-GAAP)   $ 203,977     $ 183,388     $ 179,036     $ 158,289     $ 155,015  
 
Average Tangible Common Equity  
Average shareholders' equity (GAAP)   $ 270,884     $ 250,063     $ 233,285     $ 221,711     $ 184,295  
Less average goodwill and other intangible assets     75,547       68,389       57,251       50,780       36,267  
Average tangible common equity (Non-GAAP)   $ 195,337     $ 181,674     $ 176,034     $ 170,931     $ 148,028  
 
 
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 shareholder equity (non-GAAP) is the annualized net operating earnings (non-GAAP) divided by average shareholder 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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