Smartfinancial, Inc. · NYSE:SMBK
Smartfinancial — Q1 2021 Earnings Presentation
27 slides from Smartfinancial's earnings presentation, Apr 21, 2021
Slide 1: Investor Call 1Q 2021
INVESTOR CALL 1Q 2021 April 21, 2021, 10:00am Webcast: www.smartbank.com (Investor Relations) Audio Only: 888-317-6003 Confirmation #: 6293687 Miller Welborn Chairman of the Board Billy Carroll President & CEO
Slide 2: Legal Disclaimer
Legal Disclaimer Forward-Looking Statements Non-GAAP Financial Measures This presentation may contain statements that are based on management’s current estimates or Statements included in this presentation include Non-GAAP financial measures and should be read along with expectations of future event
Slide 3: Overview of SmartFinancial
Overview of SmartFinancial SmartFinancial, Inc. (Nasdaq: SMBK) is a $3.6 billion asset bank holding company headquartered in Knoxville, Tennessee ▪ Operates one subsidiary bank, SmartBank, which was founded in January 2007 ▪ Located primarily in attractive, high-growth markets throughout East/Mid Te
Slide 4: Culture
Culture We are building a culture where Associates thrive and are empowered to be leaders. The core values that we have established as a company help us operate in unison and have become a critical part of our culture. Our Associates are key to SmartBank’s success. POSITIONING STATEMENT At SmartBank
Slide 5: Sevier County Bank: A Multi-Generational Legacy
Sevier County Bank: A Multi-Generational Legacy Company Overview TN / VA Branch Footprint ▲ Founded in 1909, Sevier County Bank is a historic community bank with a legacy of long-term client relationships ▲ 2019 recapitalization accompanied by complimentary management additions and organizational im
Slide 6: Key Transaction Terms
Key Transaction Terms ▲ SVRH to merge into SMBK, followed by the merger of Sevier County Bank into SmartBank Structure ▲ 100% stock consideration; cash election for shareholders with <20,000 shares (~10% of shares)1 ▲ Tax-free reorganization at the corporate level Exchange ▲ Fixed exchange ratio Rat
Slide 7: Building Strength in the Gulf Coast
Building Strength in the Gulf Coast New Regional President and Commercial Banking Lift-Out Adds Top-Tier Talent to the Gulf Coast Attractive Gulf Coast Market Area Robust Talent Expansion 100,000 16.0 ▲ Nate Sommer has joined SmartBank as the new Coastal Market Av erage Household Income (HHI) ($) 20
Slide 8: First Quarter Financial Highlights
First Quarter Financial Highlights
Slide 9: Quarterly Highlights
Quarterly Highlights ($ in thousands, except per share data) 1Q21 4Q20 Change Net interest income $ 26,260 $ 26,506 $ (246) Provision for loan losses 67 - 67 Noninterest income 5,691 4,976 715 Noninterest expense 19,464 19,953 (489) Income tax expense 2,664 2,499 165 Net income 9,756 9,030 726 Non-G
Slide 10: Performance Trends: Total Assets, Loans, and Deposits
Performance Trends Total Assets, Loans, and Deposits ($ in millions) $4,000 $3,557 $3,500 $3,388 $3,266 $3,305 $3,000 $2,874 $2,391 $2,390 $2,449 $2,500 $2,000 $1,500 $1,000 $500 $- 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 Assets Loans Deposits 10
Slide 11: Performance Trends: ROAA and ROATCE
Performance Trends ROAA (%): Reported, Operating, Operating PTPP ROAA 1.80% 1.60% 1.53% 1.52% 1.45% 1.37% 1.35% 1.40% 1.14% 1.19% 1.20% 1.00% 0.93% 0.79% 0.80% 0.67% 0.60% 0.40% 0.20% 0.00% 1Q20 2Q20 3Q20 4Q20 1Q21 ROAA Operating ROAA ⁽¹⁾ Operating PTPP ROAA ⁽¹⁾ ROATCE (%) 16.0% 14.5% 13.7% 14.0% 11
Slide 12: Performance Trends: Book Value and Efficiency Ratio
Performance Trends Book Value per Share $25.00 $24.10 $23.64 $22.96 $23.00 $22.57 $22.09 $21.00 $19.00 $18.39 $17.92 $17.27 $16.90 $17.00 $16.40 $15.00 1Q20 2Q20 3Q20 4Q20 1Q21 Book Value Tangible Book Value ⁽¹⁾ Efficiency Ratio (%) 80.0% 75.0% 74.0% 70.0% 64.3% 63.5% 63.4% 65.0% 60.9% 60.0% 55.0% 5
Slide 13: Net Interest Income
Net Interest Income Average Yields and Rates Net Interest Margin 1Q21 4Q20 Change 6.00% 5.35% Loans, less accretion & PPP fees 4.00% 4.23% (0.23%) 4.87% 5.00% 4.71% 4.72% 4.67% Accretion 0.27% 0.13% 0.14% PPP Fees 0.40% 0.36% 0.04% 3.90% 4.00% 3.63% 3.57% 3.48% Loans including fees 4.67% 4.72% (0.05
Slide 14: Noninterest Income
Noninterest Income Operating Noninterest Income (Non-GAAP) ($ in millions) $6,000 $5,691 $5,500 $4,511 $5,000 $4,500 $4,130 $4,000 $3,495 $3,500 $3,000 $2,818 $2,500 $2,000 $1,500 $1,000 $500 $- 1Q20 2Q20 3Q20 4Q20 1Q21 Service charges on deposit accounts Mortgage banking income Insurance commission
Slide 15: Noninterest Income Strategic Goals
Noninterest Income Strategic Goals Enhanced CRM and synergy initiatives for increased revenues Increased efficiency across all units Digital innovation to enhance customer experience 15
Slide 16: Noninterest Expense
Noninterest Expense Operating Noninterest Expense (Non-GAAP) ($ in millions) $22,000 $20,000 $19,251 $19,361 $18,877 $18,000 $17,329 $16,697 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $- 1Q20 2Q20 3Q20 4Q20 1Q21 Salaries & benefits Occupancy & equipment Data processing & technology
Slide 17: Attractive Deposit Mix
Attractive Deposit Mix Deposit Composition (3/31/21) Historical Deposit Composition ($ in millions) $3,500 Time Deposits 17% Noninterest Demand 26% $3,048 $3,000 $2,805 $2,652 Money Market and $2,540 Savings 35% Interest-Bearing Demand $2,500 22% $2,342 $2,000 $1,500 Historical Cost of Deposits $1,0
Slide 18: Overview of Loan Portfolio
Overview of Loan Portfolio Loan Composition (3/31/21) Historical Loan Composition ($ in millions) $3,000 Consumer RE 17% C&I 28% $2,487 CRE, Non Owner $2,500 $2,408 $2,404 $2,382 Occupied 24% C&D 12% $2,139 $2,000 CRE, Owner Occupied 19% $1,500 CRE Ratios $1,000 400% 300% 274.6% $500 200% 89.5% 100%
Slide 19: Asset Quality
Asset Quality Nonperforming Assets Delinquent and Nonaccruals / Total Loans ($ in thousands) ($ in thousands) $20,000 1.50% $20,000 1.80% $15,821 1.60% $15,000 $15,000 1.40% 1.00% $11,756 1.20% $10,401 $10,180 $8,963 $9,300 $9,005 $9,606 $10,000 $10,000 1.00% $6,180 0.74% 0.50% $6,089 0.80% $5,000 $
Slide 20: Paycheck Protection Program
Paycheck Protection Program 2020 PPP Vintage 2021 PPP Vintage ($ in thousands) ($ in thousands) Originated O/S Balance Forgiven Originated # of Loans 2,957 2,479 478 # of Loans 1,231 Total Loan Balance $ 300,789 $ 218,767 $ 82,022 Total Loan Balance $ 119,526 Total Fees $ 10,068 $ 1,908 Total Fees $
Slide 21: Reserve Reconciliation
Reserve Reconciliation ($ in thousands) 1Q20 2Q20 3Q20 4Q20 1Q21 Allowance for Loan Losses - Originated $ 12,412 $ 14,590 $ 16,704 $ 16,464 $ 16,412 Allowance for Loan Losses - Acquired 1,019 1,664 2,113 1,882 1,958 Acquired Loan Fair Value Discounts 17,237 16,187 15,141 14,467 12,951 Total Reserves
Slide 22: Current Capital Position
Current Capital Position TCE / TA (%) Leverage Ratio (%) 16.0% 16.0% 12.0% 12.0% 10.28% 8.96% 8.83% 8.78% 8.69% 8.09% 7.97% 8.41% 8.00% 8.55% 8.0% 8.0% Well Cap. 5% 4.0% 4.0% 0.0% 0.0% 1Q20 2Q20 3Q20 4Q20 1Q21 1Q20 2Q20 3Q20 4Q20 1Q21 CET1 Ratio (%) Total Risk-Based Capital Ratio (%) 16.0% 16.0% 13.
Slide 23: Appendix
My SmartFinancial Appendix
Slide 24: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in thousands, except per share data) 1Q21 4Q20 3Q20 2Q20 1Q20 Operating Earnings Net income (GAAP) $ 9,756 $ 9,030 $ 6,395 $ 6,174 $ 2,732 Noninterest income: Securities (gains) losses - - 9 (16) - ADECA termination proceeds - (465) - - - Noninterest expenses: Merger relat
Slide 25: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in thousands, except per share data) 1Q21 4Q20 3Q20 2Q20 1Q20 Tangible Common Equity: Shareholders' equity (GAAP) $ 364,058 $ 357,168 $ 349,789 $ 343,488 $ 336,200 Less goodwill and other intangible assets 86,350 86,471 86,710 86,327 86,503 Tangible Common Equity (Non-GAAP
Slide 26: Investor Contact
Investor Contact Billy Carroll Miller Welborn President & CEO Chairman 865.868.0613 423.385.3067 [email protected] [email protected] 5401 Kingston Pike, Suite 600 Knoxville, TN 37919 26
Slide 27: SmartFinancial
SmartFinancial