SmartFinancial Announces Results for the Second Quarter 2021

KNOXVILLE, Tenn., July 20, 2021 (GLOBE NEWSWIRE) -- SmartFinancial, Inc. (“SmartFinancial” or the “Company”; NASDAQ: SMBK), today announced net income of $8.8 million, or $0.58 per diluted common share, for the second quarter of 2021, compared to net income of $6.2 million, or $0.41 per diluted common share, for the second quarter of 2020, and compared to net income of $9.8 million, or $0.65 per diluted common share, for the first quarter of 2021. Operating earnings (Non-GAAP), which excludes securities gains, merger related and restructuring expenses and non-operating items, totaled $9.1 million, or $0.60 per diluted common share, in the second quarter of 2021, compared to $7.3 million, or $0.48 per diluted common share, in the second quarter of 2020, and compared to $9.8 million, or $0.65 per diluted common share, in the first quarter of 2021.

Highlights for the Second Quarter of 2021

  • Net organic loan growth of over $87 million, a 16.3% annualized quarter-over-quarter increase
  • Operating earnings (non-GAAP) of $9.1 million, or $0.60 per diluted share
  • Tangible book value per share (Non-GAAP) of $18.69, a 6.5% annualized quarter-over-quarter increase
  • Announced the $38.1 million proposed acquisition of Sevier County Bancshares
  • Announced and completed the acquisition of Fountain Equipment Finance (“Fountain”)
  • Hired three seasoned commercial banking team members in Auburn, Alabama

Billy Carroll, President & CEO, stated: “Our team continues to execute at a very high level, as evidenced by another nice quarter. Growth has continued to be very strong, and our sales team are capitalizing on our outstanding markets. We are also extremely excited to open SmartBank Auburn and continue to organically build out our Alabama footprint.”

SmartFinancial’s Chairman, Miller Welborn, concluded: “Another incredibly solid quarter by our team. Our Board could not be more excited about the trajectory of our company. We continue to execute our growth strategy for loans, deposits and earnings and remain extremely bullish on our Company’s future.”

Net Interest Income and Net Interest Margin

Net interest income was $26.9 million for the second quarter of 2021, compared to $26.3 million for the first quarter of 2021. Average earning assets totaled $3.3 billion, an increase of $218.2 million. The growth was primarily driven by an increase in average cash and cash equivalents of $114.0 million, average securities of $26.9 million and average loans and leases of $79.9 million of which $35.7 million of the increase is related to the acquisition of Fountain during the second quarter. Average interest-bearing liabilities increased $157.3 million, directly related to continued core deposit growth.

The tax equivalent net interest margin was 3.29% for the second quarter of 2021, compared to 3.48% for the first quarter of 2021. The tax equivalent net interest margin was impacted by a 23 basis point decrease in the average yield on interest-earning assets and offset by a 5 basis point decline in the rate on interest-bearing liabilities over the prior quarter. The decrease in yield on interest-earning assets was primarily driven by a decreased level of loan discount accretion and Payroll Protection Program (“PPP”) fee accretion and additional excess liquidity from the significant deposit growth experienced during the first six months of 2021. We recognized $1.1 million less of loan discount accretion and PPP fee accretion during the second quarter of 2021 when compared to the first quarter of 2021. However, the interest-earning yield compression was partially offset by the acquisition of Fountain, resulting in a positive margin impact of 13 basis points.

The lower yields on interest-earning assets continue to be mitigated, in part, by a lower cost of funds. The yield on interest-bearing liabilities decreased to 0.49% for the second quarter of 2021 when compared to 0.54% for the first quarter of 2021. The cost of average interest-bearing deposits was 0.39% for the second quarter of 2021 compared to 0.44% for the first quarter of 2021, a decrease of 5 basis points. The lower cost of average deposits was attributable to the maturing and repricing of time deposits, which decreased 14 basis points during the period. The cost of total deposits for the second quarter of 2021 was 0.29% compared to 0.33% in the first quarter of 2021.

The following table presents selected interest rates and yields for the periods indicated:

       
  Three Months Ended  
  Jun Mar Increase
Selected Interest Rates and Yields 2021 2021 (Decrease)
Yield on loans and leases 4.52%4.67%(0.15)%
Yield on earning assets, FTE 3.65%3.88%(0.23)%
Cost of interest-bearing deposits 0.39%0.44%(0.05)%
Cost of total deposits 0.29%0.33%(0.04)%
Cost of interest-bearing liabilities 0.49%0.54%(0.05)%
Net interest margin, FTE 3.29%3.48%(0.19)%

Provision for Loan and Lease Losses and Credit Quality

At June 30, 2021, the allowance for loan and lease losses was $18.3 million. The allowance for loan and lease losses to total loans and leases was 0.74% as of June 30, 2021 and March 31, 2021, respectively. For the Company’s originated loans and leases, the allowance for loan and lease losses to originated loans and leases, less PPP loans, was 0.86% as of June 30, 2021, compared to 0.93% as of March 31, 2021. The remaining discounts on the acquired loan and lease portfolio totaled $13.0 million, or 3.61% of acquired loans and leases as of June 30, 2021.  

The following table presents detailed information related to the provision for loan and lease losses for the periods indicated (dollars in thousands):

           
   Three Months Ended   
    Jun  Mar   
 Provision for Loan and Lease Losses Rollforward  2021  2021  Change
 Beginning balance $18,370  $18,346  $24 
 Charge-offs  (153)  (120)  (33)
 Recoveries  98   77   21 
 Net charge-offs  (55)  (43)  (12)
 Provision  (5)  67   72 
 Ending balance $18,310  $18,370  $(60)
           
 Allowance for loan losses to total loans and leases, gross  0.74%  0.74%  -%

The Company is not required to implement the provisions of the Current Expected Credit Losses (“CECL”) accounting standard until January 1, 2023 and is continuing to account for the allowance for loan and lease losses under the incurred loss model.

Nonperforming loans and leases as a percentage of total loans and leases was 0.15% as of June 30, 2021, a decrease of 10 basis points from the 0.25% reported in the first quarter of 2021. Total nonperforming assets (which include nonaccrual loans and leases, loans and leases past due 90 days or more and still accruing, other real estate owned and other repossessed assets) as a percentage of total assets was 0.18% as of June 30, 2021, as compared to 0.29% as of March 31, 2021. 

The following table presents detailed information related to credit quality for the periods indicated (dollars in thousands):

           
   Three Months Ended   
    Jun  Mar  Increase
 Credit Quality  2021  2021  (Decrease)
 Nonaccrual loans and leases $3,694 $4,739 $(1,045)
 Loans and leases past due 90 days or more and still accruing  64  1,495  (1,431)
 Total nonperforming loans and leases  3,758  6,234  (2,476)
 Other real estate owned  2,499  3,946  (1,447)
 Other repossessed assets  199  -  199 
 Total nonperforming assets $6,456 $10,180 $(3,724)
           
 Nonperforming loans and leases to total loans and leases, gross  0.15% 0.25% (0.10)%
 Nonperforming assets to total assets  0.18% 0.29% (0.11)%

Noninterest Income

Noninterest income decreased $548 thousand to $5.1 million for the second quarter of 2021 compared to $5.7 million for the first quarter of 2021. During the second quarter of 2021, the primary components of the changes in noninterest income were as follows:

  • Decrease in insurance commissions of $909 thousand, primarily due from larger commissions recognized in the prior quarter from the placement of life insurance policies;
  • Increase in other of $237 thousand, is primarily attributable to $155 thousand of new fee income from the acquisition of Fountain and an increase in the cash surrender value of bank owned life insurance (“BOLI”) income of $57 thousand.

The following table presents detailed information related to noninterest income for the periods indicated (dollars in thousands):

          
  Three Months Ended   
   Jun  Mar  Increase
Noninterest Income  2021  2021  (Decrease)
Service charges on deposit accounts $1,048 $1,009 $39 
Mortgage banking income  1,105  1,139  (34)
Investment services  567  531  36 
Insurance commissions  557  1,466  (909)
Interchange and debit card transaction fees  922  839  83 
Other  944  707  237 
Total noninterest income $5,143 $5,691 $(548)

Noninterest Expense

Noninterest expense increased $1.3 million to $20.8 million for the second quarter of 2021 compared to $19.5 million for the first quarter of 2021. During the second quarter of 2021, the primary components of the changes in noninterest expense were as follows:

  • Salaries and employee benefits increased $1.3 million, primarily due to the additional headcount from both the Fountain acquisition and hiring of the Gulf Coast Team, and from a reduction in deferred salary cost that was recognized in the prior quarter relating to the PPP loan originations;
  • Data processing and technology increased $130 thousand, primarily from continued infrastructure build;
  • Professional services increased $208 thousand, primarily from additional services performed during the quarter;
  • Merger related and restructuring expense increased $269 thousand: and
  • Other decreased $502 thousand, primarily from an investment in a start-up fintech company recognized in the prior quarter.

The following table presents detailed information related to noninterest expense for the periods indicated (dollars in thousands):

          
  Three Months Ended   
   Jun  Mar  Increase
Noninterest Expense  2021  2021  (Decrease)
Salaries and employee benefits $12,203 $10,869 $1,334 
Occupancy and equipment  2,294  2,341  (47)
FDIC insurance  371  371  - 
Other real estate and loan related expenses  506  602  (96)
Advertising and marketing  230  190  40 
Data processing and technology  1,509  1,379  130 
Professional services  849  641  208 
Amortization of intangibles  441  444  (3)
Merger related and restructuring expenses  372  103  269 
Other  2,022  2,524  (502)
Total noninterest expense $20,797 $19,464 $1,333 

Income Tax Expense

Income tax expense was $2.5 million for the second quarter of 2021, a decrease of $194 thousand, compared to $2.7 million for the first quarter of 2021.

For the second quarter of 2021, the effective tax rate was 22.0% compared to 21.5% for the first quarter of 2021.

Balance Sheet Trends

Total assets at June 30, 2021 were $3.65 billion compared with $3.30 billion at December 31, 2020. The increase of $349.4 million is primarily attributable to increases in cash and cash equivalents of $191.8 million, securities available-for-sale of $35.2 million, loans and leases of $86.1 million and bank owned life insurance of $40.8 million. The increase in loans and leases consisted of organic loan growth of $143.1 million and leases acquired from Fountain of $53.7 million, offset by $110.0 million in net PPP loan activity of $138.4 in originations and $248.4 million in forgiveness.

Total liabilities increased to $3.28 billion at June 30, 2021 from $2.95 billion at December 31, 2020. The increase of $333.1 million was primarily from organic deposit growth of $334.3 million.

Shareholders’ equity at June 30, 2021 totaled $373.4 million, an increase of $16.2 million, from December 31, 2020. The increase in shareholders’ equity was primarily from net income of $18.5 million for the six months ended June 30, 2021 and a net change in accumulated other comprehensive income of $155 thousand, which was offset by repurchase of the Company’s common stock of $1.2 million and $1.8 million of dividends paid. Tangible book value per share (Non-GAAP) was $18.69 at June 30, 2021, an increase from $18.39 at March 31, 2021. Tangible common equity (Non-GAAP) as a percentage of tangible assets (Non-GAAP) was 7.93% at June 30, 2021, compared with 8.41% at December 31, 2020.

The following table presents selected balance sheet information for the periods indicated (dollars in thousands):

          
  Jun Dec Increase
Selected Balance Sheet Information 2021 2020 (Decrease)
Total assets $3,654,356 $3,304,949 $349,407 
Total liabilities  3,280,963  2,947,781  333,182 
Total equity  373,393  357,168  16,225 
Securities available-for-sale, at fair value  250,817  215,634  35,183 
Loans and leases  2,468,318  2,382,243  86,075 
Deposits  3,139,472  2,805,215  334,257 
Borrowings  78,834  81,199  (2,365)

Conference Call Information

SmartFinancial issued this earnings release for the second quarter of 2021 on Tuesday, July 20, 2021, and will host a conference call on Wednesday, July 21, 2021, at 10:00 a.m. ET. To access this interactive teleconference, dial (888) 317-6003 or (412) 317-6061 and enter the confirmation number, 5194560. A replay of the conference call will be available through July 21, 2022, by dialing (877) 344-7529 or (412) 317-0088 and entering the confirmation number, 10158581. Conference call materials 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 35 branches across East and Middle 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 
President & CEO 
(865) 868-0613   billy.carroll@smartbank.com 
  
Ron Gorczynski 
Executive Vice President, Chief Financial 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 Measures

Statements included in this earnings release include measures not recognized under U.S. generally accepted accounting principles (“GAAP”) and therefore are considered 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) operating earnings, (ii) operating return on average assets, (iii) operating pre-tax pre-provision return on average assets, (iv) operating return on average shareholder’ equity, (v) return on average tangible common equity, (vi) operating return on average tangible common equity, (vii) operating efficiency ratio, (viii) operating noninterest income, (ix) operating pre-tax pre-provision earnings (x) operating noninterest expense, (xi) tangible common equity, (xii) average tangible common equity, (xiii) tangible book value; (xiv) tangible assets; and ratios derived therefrom, in its analysis of the company’s performance. Operating earnings excludes the following from net income: securities gains and losses, proceeds related to the termination of an Alabama Department of Economic and Community Affairs (“ADECA”) loan program, merger related and restructuring expenses. Operating return on average assets is the annualized operating earnings divided by average assets. Operating pre-tax pre-provision return on average assets is the annualized operating pre-tax pre-provision income earnings by average assets. Operating return on average shareholders’ equity is the annualized operating earnings divided by average equity. Return on average tangible common equity is the annualized net income divided by average tangible common equity. Operating return on average tangible common equity is the annualized 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. Operating noninterest income excludes the following from noninterest income: securities gains and losses, proceeds related to the termination of the ADECA loan program. Operating pre-tax pre-provision earnings is net interest income plus operating noninterest income less operating noninterest expense. Operating noninterest expense excludes the following from noninterest expense: prior year adjustments to salaries, merger related and restructuring expenses and certain franchise tax true-up expenses. Tangible common equity and average tangible common equity excludes goodwill and other intangible assets from shareholders’ equity and average shareholders’ equity, respectively. Tangible book value is tangible common equity divided by common shares outstanding. Tangible assets excludes goodwill and other intangibles from total assets. 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 of 1995. These statements, including statements regarding the effects of the COVID-19 pandemic on the Company’s business and financial results and conditions, 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) risks associated with our growth strategy, including a failure to implement our growth plans or an inability to manage our growth effectively; (2) claims and litigation arising from our business activities and from the companies we acquire, which may relate to contractual issues, environmental laws, fiduciary responsibility, and other matters; (3) the risk that cost savings and revenue synergies from recently completed acquisitions may not be realized or may take longer than anticipated to realize; (4) disruption from recently completed acquisitions with customer, supplier, employee, or other business relationships; (5) our ability to successfully integrate the businesses acquired as part of previous acquisitions with the business of SmartBank; (6) risks related to the proposed acquisition of Sevier County Bancshares, Inc. (“SCB”); (7) the risk that the anticipated benefits from the proposed acquisition of SCB may not be realized in the time frame anticipated; (8) changes in management’s plans for the future; (9) prevailing, or changes in, economic or political conditions, particularly in our market areas; (10) credit risk associated with our lending activities; (11) changes in interest rates, loan demand, real estate values, or competition; (12) changes in accounting principles, policies, or guidelines; (13) changes in applicable laws, rules, or regulations, including changes to statutes, regulations or regulatory policies or practices as a result of, or in response to COVID-19; (14) adverse results from current or future litigation, regulatory examinations or other legal and/or regulatory actions, including as a result of the Company’s participation in and execution of government programs related to the COVID-19 pandemic; (15) the impact of the COVID-19 pandemic on the Company’s assets, business, cash flows, financial condition, liquidity, prospects and results of operations; (16) potential increases in the provision for loan losses resulting from the COVID-19 pandemic; and (17) 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)

                
  Ending Balances
  Jun Mar Dec Sep Jun
  2021 2021 2020 2020 2020
Assets:               
Cash and cash equivalents $673,515  $556,701  $481,719  $541,815  $399,467 
Securities available-for-sale, at fair value  250,817   250,937   215,634   214,634   219,631 
Other investments  14,584   14,728   14,794   14,829   14,829 
Loans held for sale  4,334   7,870   11,721   11,292   6,330 
Loans and leases  2,468,318   2,487,129   2,382,243   2,404,057   2,408,284 
Less: Allowance for loan losses  (18,310)  (18,370)  (18,346)  (18,817)  (16,254)
Loans and leases, net  2,450,008   2,468,759   2,363,897   2,385,240   2,392,030 
Premises and equipment, net  72,314   72,697   72,682   73,934   73,868 
Other real estate owned  2,499   3,946   4,619   3,932   5,524 
Goodwill and core deposit intangibles, net  90,966   86,350   86,471   86,710   86,327 
Bank owned life insurance  72,013   71,586   31,215   31,034   30,853 
Other assets  23,306   23,629   22,197   24,168   37,126 
Total assets $3,654,356  $3,557,203  $3,304,949  $3,387,588  $3,265,985 
Liabilities:               
Deposits:               
Noninterest-bearing demand $807,560  $777,968  $685,957  $669,733  $645,650 
Interest-bearing demand  702,470   683,887   649,129   534,128   479,212 
Money market and savings  1,140,029   1,073,941   919,631   871,098   762,246 
Time deposits  489,413   512,417   550,498   577,064   652,581 
Total deposits  3,139,472   3,048,213   2,805,215   2,652,023   2,539,689 
Borrowings  78,834   82,642   81,199   319,391   318,855 
Subordinated debt  39,388   39,367   39,346   39,325   39,304 
Other liabilities  23,269   22,923   22,021   27,060   24,649 
Total liabilities  3,280,963   3,193,145   2,947,781   3,037,799   2,922,497 
Shareholders’ Equity:               
Common stock  15,110   15,105   15,107   15,233   15,217 
Additional paid-in capital  252,039   251,836   252,693   254,626   254,396 
Retained earnings  103,906   96,034   87,185   78,918   73,283 
Accumulated other comprehensive income  2,338   1,083   2,183   1,012   592 
Total shareholders’ equity  373,393   364,058   357,168   349,789   343,488 
Total liabilities & shareholders’ equity $3,654,356  $3,557,203  $3,304,949  $3,387,588  $3,265,985 



SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information - (unaudited)
(dollars in thousands except share and per share data)

                     
 Three Months Ended  Six Months Ended
 Jun Mar Dec Sep Jun Jun Jun
 2021 2021 2020 2020 2020 2021 2020
Interest income:                    
Loans and leases, including fees$28,323  $28,018 $28,594 $28,621  $28,663 $56,341 $55,097
Securities available-for-sale:                    
Taxable 916   724  609  546   589  1,640  1,268
Tax-exempt 304   259  306  364   416  563  699
Federal funds sold and other earning assets 309   291  303  327   277  600  879
Total interest income 29,852   29,292  29,812  29,858   29,945  59,144  57,943
Interest expense:                    
Deposits 2,248   2,331  2,580  2,897   3,366  4,579  8,120
Borrowings 123   117  142  334   249  241  339
Subordinated debt 584   584  584  584   584  1,167  1,167
Total interest expense 2,955   3,032  3,306  3,815   4,199  5,987  9,626
Net interest income 26,897   26,260  26,506  26,043   25,746  53,157  48,317
Provision for loan and lease losses (5)  67    2,634   2,850  62  6,049
Net interest income after provision for loan and lease losses 26,902   26,193  26,506  23,409   22,896  53,095  42,268
Noninterest income:                    
Service charges on deposit accounts 1,048   1,009  1,032  892   709  2,057  1,479
Gain (loss) on sale of securities, net        (9)  16    16
Mortgage banking 1,105   1,139  1,331  1,029   931  2,244  1,515
Investment services 567   531  407  359   363  1,098  801
Insurance commissions 557   1,466  548  560   473  2,023  742
Interchange and debit card transaction fees 922   839  760  868   508  1,761  784
Other 944   707  898  422   511  1,652  993
Total noninterest income 5,143   5,691  4,976  4,121   3,511  10,835  6,330
Noninterest expense:                    
Salaries and employee benefits 12,203   10,869  11,516  11,032   10,357  23,072  20,363
Occupancy and equipment 2,294   2,341  2,256  2,186   1,996  4,635  3,906
FDIC insurance 371   371  297  534   180  741  360
Other real estate and loan related expense 506   602  516  643   346  1,108  892
Advertising and marketing 230   190  181  253   202  419  400
Data processing and technology 1,509   1,379  1,182  1,131   1,155  2,889  2,163
Professional services 849   641  786  594   868  1,490  1,578
Amortization of intangibles 441   444  571  402   405  886  767
Merger related and restructuring expenses 372   103  702  290   1,477  475  3,573
Other 2,022   2,524  1,946  2,102   1,820  4,547  3,598
Total noninterest expense 20,797   19,464  19,953  19,167   18,806  40,262  37,600
Income before income taxes 11,248   12,420  11,529  8,363   7,601  23,668  10,998
Income tax expense 2,470   2,664  2,499  1,968   1,427  5,134  2,091
Net income$8,778  $9,756 $9,030 $6,395  $6,174 $18,534 $8,907
Earnings per common share:                    
Basic$0.59  $0.65 $0.60 $0.42  $0.41 $1.24 $0.60
Diluted$0.58  $0.65 $0.59 $0.42  $0.41 $1.23 $0.60
Weighted average common shares outstanding:                    
Basic 15,003,657   15,011,573  15,109,298  15,160,579   15,152,768  15,007,593  14,773,935
Diluted 15,126,184   15,111,947  15,182,796  15,210,611   15,202,335  15,118,924  14,842,486



SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information - (unaudited)
(dollars in thousands)
YIELD ANALYSIS

                          
  Three Months Ended  
  June 30, 2021 March 31, 2021 June 30, 2020 
  Average    Yield/ Average    Yield/ Average    Yield/ 
  Balance Interest1 Cost1 Balance Interest1 Cost1 Balance Interest1 Cost1 
Assets:                         
Loans and leases, including fees2 $2,508,388 $28,256 4.52%$2,428,499 $27,943 4.67%$2,359,101 $28,590 4.87%
Loans held for sale  5,315  67 5.03% 7,913  75 3.82% 6,868  73 4.28%
Taxable securities  164,935  916 2.23% 136,492  724 2.15% 122,135  589 1.94%
Tax-exempt securities  89,296  453 2.04% 90,849  409 1.82% 86,227  570 2.66%
Federal funds sold and other earning assets  531,125  309 0.23% 417,144  291 0.28% 297,696  277 0.37%
Total interest-earning assets  3,299,059  30,001 3.65% 3,080,897  29,442 3.88% 2,872,027  30,099 4.22%
Noninterest-earning assets  286,211       275,272       260,089      
Total assets $3,585,270      $3,356,169      $3,132,116      
                          
Liabilities and Stockholders’ Equity:                         
Interest-bearing demand deposits $688,756  304 0.18%$641,214  256 0.16%$453,795  148 0.13%
Money market and savings deposits  1,117,290  905 0.32% 983,893  821 0.34% 748,673  614 0.33%
Time deposits  502,755  1,039 0.83% 526,062  1,254 0.97% 701,390  2,604 1.49%
Total interest-bearing deposits  2,308,801  2,248 0.39% 2,151,169  2,331 0.44% 1,903,858  3,366 0.71%
Borrowings3  81,525  123 0.61% 81,837  117 0.58% 237,143  249 0.42%
Subordinated debt  39,375  584 5.95% 39,354  584 6.01% 39,290  584 5.98%
Total interest-bearing liabilities  2,429,701  2,955 0.49% 2,272,360  3,032 0.54% 2,180,291  4,199 0.77%
Noninterest-bearing deposits  768,399       700,962       587,322      
Other liabilities  17,845       21,928       24,642      
Total liabilities  3,215,945       2,995,250       2,792,255      
Shareholders’ equity  369,325       360,919       339,861      
Total liabilities and shareholders’ equity $3,585,270      $3,356,169      $3,132,116      
                          
Net interest income, taxable equivalent    $27,046      $26,410      $25,900   
Interest rate spread       3.16%      3.33%      3.44%
Tax equivalent net interest margin       3.29%      3.48%      3.63%
                          
Percentage of average interest-earning assets to average interest-bearing liabilities       135.78%      135.58%      131.73%
Percentage of average equity to average assets       10.30%      10.75%      10.85%

1 Taxable equivalent
2 Includes average balance of $266,114, $312,582 and $208,814 in PPP loans for the quarters ended June 30, 2021, March 31, 2021, and June 30, 2020, respectively.  
3 Includes average balance of $108,082 in Paycheck Protection Program Liquidity Facility (“PPPLF”) funding for the quarter ended June 30, 2020. No PPPLF funding was used for the quarters ended June 30, 2021 and March 31, 2021.



SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information - (unaudited)
(dollars in thousands)
YIELD ANALYSIS

                   
  Six Months Ended
  June 30, 2021 June 30, 2020 
  Average    Yield/ Average    Yield/ 
  Balance Interest1 Cost1 Balance Interest1 Cost1 
Assets:                  
Loans and leases, including fees2 $2,468,665 $56,200  4.59%$2,172,158 $54,979 5.09%
Loans held for sale  6,607  141  4.31% 5,581  118 4.26%
Taxable securities  150,792  1,640  2.19% 119,474  1,268 2.13%
Tax-exempt securities  90,068  862  1.93% 78,306  970 2.49%
Federal funds sold and other earning assets  474,449  600  0.26% 226,726  879 0.78%
Total interest-earning assets  3,190,581  59,443  3.76% 2,602,245  58,214 4.50%
Noninterest-earning assets  280,772        238,749      
Total assets $3,471,353       $2,840,994      
                   
Liabilities and Stockholders’ Equity:                  
Interest-bearing demand deposits $665,116  560  0.17%$421,288  583 0.28%
Money market and savings deposits  1,050,961  1,726  0.33% 707,003  2,003 0.57%
Time deposits  514,344  2,293  0.90% 693,382  5,534 1.61%
Total interest-bearing deposits  2,230,421  4,579  0.41% 1,821,673  8,120 0.90%
Borrowings3  81,680  241  0.59% 144,532  339 0.47%
Subordinated debt  39,364  1,167  5.98% 39,279  1,167 5.97%
Total interest-bearing liabilities  2,351,465  5,987  0.51% 2,005,484  9,626 0.97%
Noninterest-bearing deposits  734,867        481,432      
Other liabilities  19,876        22,812      
Total liabilities  3,106,208        2,509,728      
Shareholders’ equity  365,145        331,266      
Total liabilities and shareholders’ equity $3,471,353       $2,840,994      
                   
Net interest income, taxable equivalent    $53,456       $48,588   
Interest rate spread        3.25%      3.53%
Tax equivalent net interest margin        3.38%      3.75%
                   
Percentage of average interest-earning assets to average interest-bearing liabilities        135.68%      129.76%
Percentage of average equity to average assets        10.52%      11.66%

1 Taxable equivalent
2 Includes average balance of $289,220 and $106,213 in PPP loans for the six months ended June 30, 2021 and 2020, respectively.  
3 Includes average balance of $54,041 in Paycheck Protection Program Liquidity Facility (“PPPLF”) funding for the six months ended June 30, 2020. No PPPLF funding was used for the six months ended June 30, 2021.



SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information - (unaudited)
(dollars in thousands)

                 
  As of and for The Three Months Ended  
  Jun Mar Dec Sep Jun 
  2021 2021 2020 2020 2020 
Composition of Loans and Leases:                
Commercial real estate:                
owner occupied $492,750 $477,293 $463,771 $467,569 $464,073 
non-owner occupied  669,741  593,348  549,205  563,082  552,958 
Commercial real estate, total  1,162,491  1,070,641  1,012,976  1,030,651  1,017,031 
Commercial & industrial  496,114  686,010  634,446  644,498  637,450 
Construction & land development  300,704  285,973  278,075  275,172  279,216 
Consumer real estate  444,640  432,486  443,930  440,310  459,861 
Leases  53,038         
Consumer and other  11,331  12,019  12,816  13,426  14,726 
Total loans and leases $2,468,318 $2,487,129 $2,382,243 $2,404,057 $2,408,284 
                 
Asset Quality and Additional Loan Data:                
Nonperforming loans and leases $3,758 $6,234 $5,782 $2,248 $3,776 
Other real estate owned  2,499  3,946  4,619  3,932  5,524 
Other repossessed assets  199         
Total nonperforming assets $6,456 $10,180 $10,401 $6,180 $9,300 
Restructured loans and leases not included in nonperforming loans and leases $219 $250 $257 $8 $9 
Net charge-offs to average loans and leases (annualized)  0.01% 0.01% 0.08% 0.01% %
Allowance for loan and leases losses to loans and leases  0.74% 0.74% 0.77% 0.78% 0.67%
Nonperforming loans and leases to total loans and leases, gross  0.15% 0.25% 0.24% 0.09% 0.16%
Nonperforming assets to total assets  0.18% 0.29% 0.31% 0.18% 0.28%
Acquired loan and lease fair value discount balance $12,982 $12,951 $14,467 $15,141 $16,187 
Accretion income on acquired loans and leases  761  1,636  768  960  888 
PPP net fees deferred balance  6,651  7,351  4,190  6,348  8,582 
PPP net fees recognized  2,132  2,398  2,157  1,812  1,909 
                 
Capital Ratios:                
Equity to Assets  10.22% 10.23% 10.81% 10.33% 10.52%
Tangible common equity to tangible assets (Non-GAAP)1  7.93% 8.00% 8.41% 7.97% 8.09%
                 
SmartFinancial, Inc.2                
Tier 1 leverage  8.10% 8.55% 8.69% 8.78% 8.83%
Common equity Tier 1  10.66% 11.29% 11.61% 11.33% 10.92%
Tier 1 capital  10.66% 11.29% 11.61% 11.33% 10.92%
Total capital  12.83% 13.62% 14.07% 13.81% 13.25%
                 
SmartBank  Estimated3             
Tier 1 leverage  8.76% 9.33% 9.58% 9.74% 9.82%
Common equity Tier 1  11.53% 12.31% 12.79% 12.57% 12.14%
Tier 1 capital  11.53% 12.31% 12.79% 12.57% 12.14%
Total capital  12.22% 13.05% 13.57% 13.37% 12.82%

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



SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information - (unaudited)
(dollars in thousands except share and per share data)

                       
 As of and for The  As of and for The 
 Three Months Ended   Six Months Ended  
 Jun Mar Dec Sep Jun  Jun Jun 
 2021 2021 2020 2020 2020  2021 2020 
Selected Performance Ratios (Annualized):                      
Return on average assets 0.98% 1.18% 1.11% 0.76% 0.79%  1.08% 0.63%
Return on average shareholders’ equity 9.53% 10.96% 10.15% 7.31% 7.31%  10.24% 5.41%
Return on average tangible common equity¹ 12.54% 14.41% 13.43% 9.72% 9.80%  13.46% 7.23%
Noninterest income / average assets 0.58% 0.69% 0.61% 0.49% 0.45%  0.63% 0.45%
Noninterest expense / average assets 2.33% 2.35% 2.46% 2.28% 2.41%  2.34% 2.66%
Efficiency ratio 64.91% 60.92% 63.38% 63.54% 64.28%  62.92% 68.81%
                       
Operating Selected Performance Ratios (Annualized):                      
Operating return on average assets1 1.01% 1.19% 1.14% 0.79% 0.93%  1.10% 0.82%
Operating PTPP return on average assets1 1.30% 1.52% 1.45% 1.35% 1.53%  1.41% 1.46%
Operating return on average shareholders’ equity1 9.83% 11.05% 10.34% 7.57% 8.58%  10.43% 7.00%
Operating return on average tangible common equity1 12.93% 14.53% 13.69% 10.06% 11.51%  13.72% 9.36%
Operating efficiency ratio1 63.46% 60.32% 60.86% 62.25% 58.95%  61.89% 61.98%
Operating noninterest income / average assets1 0.58% 0.69% 0.56% 0.49% 0.45%  0.63% 0.45%
Operating noninterest expense / average assets1 2.29% 2.34% 2.37% 2.25% 2.23%  2.31% 2.41%
                       
Selected Interest Rates and Yields:                      
Yield on loans and leases 4.52% 4.67% 4.72% 4.71% 4.87%  4.59% 5.09%
Yield on earning assets, FTE 3.65% 3.88% 4.01% 3.88% 4.22%  3.76% 4.50%
Cost of interest-bearing deposits 0.39% 0.44% 0.50% 0.59% 0.71%  0.41% 0.90%
Cost of total deposits 0.29% 0.33% 0.38% 0.44% 0.54%  0.31% 0.71%
Cost of interest-bearing liabilities 0.49% 0.54% 0.60% 0.65% 0.77%  0.51% 0.97%
Net interest margin, FTE 3.29% 3.48% 3.57% 3.39% 3.63%  3.38% 3.75%
                       
Per Common Share:                      
Net income, basic$0.59 $0.65 $0.60 $0.42 $0.41  $1.24 $0.60 
Net income, diluted 0.58  0.65  0.59  0.42  0.41   1.23  0.60 
Operating earnings, basic¹ 0.60  0.65  0.61  0.44  0.48   1.25  0.78 
Operating earnings, diluted¹ 0.60  0.65  0.61  0.44  0.48   1.25  0.78 
Book value 24.71  24.10  23.64  22.96  22.57   24.71  22.57 
Tangible book value¹ 18.69  18.39  17.92  17.27  16.90   18.69  16.90 
Common shares outstanding 15,109,736  15,104,536  15,107,214  15,233,227  15,216,932   15,109,736  15,216,932 

1See reconciliation of Non-GAAP measures



SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information - (unaudited)
(dollars in thousands)
NON-GAAP RECONCILIATIONS

                       
  Three Months Ended   Six Months Ended
  Jun Mar Dec Sep Jun  Jun Jun
  2021 2021 2020 2020 2020  2021 2020
Operating Earnings:                      
Net income (GAAP) $8,778  $9,756  $9,030  $6,395  $6,174   $18,534  $8,907 
Noninterest income:                      
Securities gains (losses), net           9   (16)      (16)
ADECA termination proceeds        (465)             
Noninterest expenses:                      
Merger related and restructuring expenses  372   103   702   290   1,477    475   3,573 
Income taxes:                      
Income tax effect of adjustments  (96)  (27)  (62)  (77)  (382)   (123)  (931)
Operating earnings (Non-GAAP) $9,054  $9,832  $9,205  $6,617  $7,253   $18,886  $11,533 
Operating earnings per common share (Non-GAAP):                      
Basic $0.60  $0.65  $0.61  $0.44  $0.48   $1.25  $0.78 
Diluted  0.60   0.65   0.61   0.44   0.48    1.25   0.78 
                       
Operating Noninterest Income:                      
Noninterest income (GAAP) $5,143  $5,691  $4,976  $4,121  $3,511   $10,835  $6,330 
Securities gains (losses), net           9   (16)      (16)
ADECA termination proceeds        (465)             
Operating noninterest income (Non-GAAP) $5,143  $5,691  $4,511  $4,130  $3,495   $10,835  $6,314 
Operating noninterest income (Non-GAAP)/average assets1  0.58%  0.69%  0.56%  0.49%  0.45%   0.63%  0.45%
                       
Operating Noninterest Expense:                      
Noninterest expense (GAAP) $20,797  $19,464  $19,953  $19,167  $18,806   $40,262  $37,600 
Merger related and restructuring expenses  (372)  (103)  (702)  (290)  (1,477)   (475)  (3,573)
Operating noninterest expense (Non-GAAP) $20,425  $19,361  $19,251  $18,877  $17,329   $39,787  $34,027 
Operating noninterest expense (Non-GAAP)/average assets2  2.29%  2.34%  2.37%  2.25%  2.23%   2.31%  2.41%
                       
Operating Pre-tax Pre-provision (“PTPP”) Earnings:                      
Net interest income (GAAP) $26,897  $26,260  $26,506  $26,043  $25,746   $53,157  $48,317 
Operating noninterest income  5,143   5,691   4,511   4,130   3,495    10,835   6,314 
Operating noninterest expense  (20,425)  (19,361)  (19,251)  (18,877)  (17,329)   (39,787)  (34,027)
Operating PTPP earnings (Non-GAAP) $11,615  $12,590  $11,766  $11,296  $11,912   $24,205  $20,604 
                       
Non-GAAP Return Ratios:                      
Operating return on average assets (Non-GAAP)3  1.01%  1.19%  1.14%  0.79%  0.93%   1.10%  0.82%
Operating PTPP return on average assets (Non-GAAP)4  1.30%  1.52%  1.45%  1.35%  1.53%   1.41%  1.46%
Return on average tangible common equity (Non-GAAP)5  12.54%  14.41%  13.43%  9.72%  9.80%   13.46%  7.23%
Operating return on average shareholders’ equity (Non-GAAP)6  9.83%  11.05%  10.34%  7.57%  8.58%   10.43%  7.00%
Operating return on average tangible common equity (Non-GAAP)7  12.93%  14.53%  13.69%  10.06%  11.51%   13.72%  9.36%
                       
Operating Efficiency Ratio:                      
Efficiency ratio (GAAP)  64.91%  60.92%  63.38%  63.54%  64.28%   62.92%  68.81%
Adjustment for taxable equivalent yields  (0.30)%  (0.28)%  (0.30)%  (0.32)%  (0.34)%   (0.31)%  (0.34)%
Adjustment for securities gains (losses)  %  %  %  0.02%  (0.04)%      (0.02)%
Adjustment for merger related income and costs  (1.15)%  (0.32)%  (2.22)%  (0.99)%  (4.95)%   (0.72)%  (6.46)%
Operating efficiency ratio (Non-GAAP)  63.46%  60.32%  60.86%  62.25%  58.95%   61.89%  61.98%

1Operating noninterest income (Non-GAAP) is annualized and divided by average assets.
2Operating noninterest expense (Non-GAAP) is annualized and divided by average assets.
3Operating return on average assets (Non-GAAP) is the annualized operating earnings (Non-GAAP) divided by average assets.
4Operating PTPP return on average assets (Non-GAAP) is the annualized operating PTPP earnings (Non-GAAP) divided by average assets.
5Return on average tangible common equity (Non-GAAP) is the annualized net income divided by average tangible common equity (Non-GAAP).
6Operating return on average shareholders’ equity (Non-GAAP) is the annualized operating earnings (Non-GAAP) divided by average equity.
7Operating return on average tangible common equity (Non-GAAP) is the annualized operating earnings (Non-GAAP) divided by average tangible common equity (Non-GAAP).



SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information - (unaudited)
(dollars in thousands)
NON-GAAP RECONCILIATIONS

                      
  Three Months Ended  Six Months Ended
  Jun Mar Dec Sep Jun Jun Jun
  2021 2021 2020 2020 2020 2021 2020
Tangible Common Equity:                     
Shareholders’ equity (GAAP) $373,393  $364,058  $357,168  $349,789  $343,488  $373,393  $343,488 
Less goodwill and other intangible assets  90,966   86,350   86,471   86,710   86,327   90,966   86,327 
Tangible common equity (Non-GAAP) $282,427  $277,708  $270,697  $263,079  $257,161  $282,427  $257,161 
                      
Average Tangible Common Equity:                     
Average shareholders’ equity (GAAP) $369,325  $360,919  $354,026  $347,907  $339,861  $365,145  $331,266 
Less average goodwill and other intangible assets  88,551   86,424   86,561   86,206   86,484   87,494   83,427 
Average tangible common equity (Non-GAAP) $280,774  $274,495  $267,465  $261,701  $253,377  $277,651  $247,839 
                      
Tangible Book Value per Common Share:                     
Book value per common share (GAAP) $24.71  $24.10  $23.64  $22.96  $22.57  $24.71  $22.57 
Adjustment due to goodwill and other intangible assets  (6.02)  (5.71)  (5.72)  (5.69)  (5.67)  (6.02)  (5.67)
Tangible book value per common share (Non-GAAP)1 $18.69  $18.39  $17.92  $17.27  $16.90  $18.69  $16.90 
                      
Tangible Common Equity to Tangible Assets:                     
Total Assets $3,654,356  $3,557,203  $3,304,949  $3,387,588  $3,265,985  $3,654,356  $3,265,985 
Less goodwill and other intangibles  90,966   86,350   86,471   86,710   86,327   90,966   86,327 
Tangible Assets (Non-GAAP): $3,563,390  $3,470,853  $3,218,478  $3,300,878  $3,179,658  $3,563,390  $3,179,658 
Tangible common equity to tangible assets (Non-GAAP)  7.93%  8.00%  8.41%  7.97%  8.09%  7.93%  8.09%

1Tangible book value per share is computed by dividing total stockholder’s equity, less goodwill and other intangible assets by common shares outstanding.


Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.