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Highlights for the First Quarter of 2022

  • Operating earnings[1] of $8.6 million, or $0.51 per diluted common share, for the first quarter of 2022
  • Net organic loan and lease growth of over $136.9 million – 21% annualized quarter-over-quarter increase
  • Non-time deposit growth of over $195.0 million – 23% annualized quarter-over-quarter increase
  • Credit quality remains solid with nonperforming assets to total assets of 0.11%

KNOXVILLE, TN – April 25, 2022 – SmartFinancial, Inc. (“SmartFinancial” or the “Company”; NASDAQ: SMBK), today announced net income of $8.3 million, or $0.49 per diluted common share, for the first quarter of 2022, compared to net income of $9.8 million, or $0.65 per diluted common share, for the first quarter of 2021, and compared to prior quarter net income of $6.7 million, or $0.40 per diluted common share.  Operating earnings1, which excludes securities gains, merger related and restructuring expenses and non-operating items, totaled $8.6 million, or $0.51 per diluted common share, in the first quarter of 2022, compared to $9.8 million, or $0.65 per diluted common share, in the first quarter of 2021, and compared to $8.7 million, or $0.52 per diluted common share, in the fourth quarter of 2021.

Billy Carroll, President & CEO, stated: “I am extremely pleased with our results for the first quarter.  Both loans and deposits grew at an outstanding pace, as our sales team executed our organic growth strategy.  Our wealth platform, insurance platform and equipment finance group all also had strong performance.  Earnings performance was on target and while keeping an eye on inflationary pressure in our economy, we remain bullish on the company’s 2022 outlook.”

SmartFinancial’s Chairman, Miller Welborn, concluded: “2022 has certainly started on a good note for us. Just as we projected and forecasted our plan is on track. The execution at all levels shows our commitment and discipline to be a top performing bank”.

Net Interest Income and Net Interest Margin

Net interest income was $30.1 million for the first quarter of 2022, compared to $29.9 million for the prior quarter.  Average earning assets totaled $4.22 billion, an increase of $139.1 million.  The growth in average earnings assets was primarily driven by an increase in average securities of $276.1 million and average loans and leases of $54.3 million, offset by a decrease in average interest-earning cash of $190.1 million, primarily from the purchase of securities.  Average interest-bearing liabilities increased $121.8 million, related to continued core deposit growth.

The tax equivalent net interest margin was 2.91% for the first quarter of 2022, compared to 2.92% for the prior quarter. The tax equivalent net interest margin was positively impacted by several factors, mainly the continued deployment of excess cash and cash equivalents into loans and securities.  However, the deployment of total cash and cash equivalents was partially offset by a quarter-over-quarter deposit increase of over $169.4 million.  Additionally, the yield on interest-earning assets was negatively impacted due to a decrease quarter-over-quarter in loan discount and Payroll Protection Program (“PPP”) fee accretion of $727 thousand.

The yield on interest-bearing liabilities decreased to 0.36% for the first quarter of 2022 compared to 0.39% for the prior quarter. The cost of average interest-bearing deposits was 0.27% for the first quarter of 2022 compared to 0.29% for the prior quarter, a decrease of 2 basis points. The lower cost of average deposits was attributable to the growth of non-time deposits and the continued maturation and repricing of time deposits. The cost of total deposits for the first quarter of 2022 was 0.20% compared to 0.22% in the prior quarter.

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

 

               
    Three Months Ended      
    Mar   Dec   Increase  
Selected Interest Rates and Yields   2022   2021   (Decrease)  
Yield on loans and leases    4.40 %  4.53 %  (0.13) %
Yield on earning assets, FTE    3.18 %  3.20 %  (0.02) %
Cost of interest-bearing deposits    0.27 %  0.29 %  (0.02) %
Cost of total deposits    0.20 %  0.22 %  (0.02) %
Cost of interest-bearing liabilities    0.36 %  0.39 %  (0.03) %
Net interest margin, FTE    2.91 %  2.92 %  (0.01) %

 

Provision for Loan and Lease Losses and Credit Quality

 

At March 31, 2022, the allowance for loan and lease losses was $20.1 million.  The allowance for loan and lease losses to total loans and leases was 0.72% as of March 31, 2022, and December 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 0.71% as of March 31, 2022, compared to 0.74% as of December 31, 2021.  The remaining discounts on the acquired loan and lease portfolio totaled $14.9 million, or 3.64% of acquired loans and leases as of March 31, 2022.

 

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        
        Mar     Dec        
  Provision for Loan and Lease Losses Rollforward     2022     2021     Change  
  Beginning balance   $  19,352   $  19,295   $  57  
  Charge-offs      (488)      (499)      11  
  Recoveries      208      134      74  
  Net charge-offs      (280)      (365)      85  
  Provision      1,006      422      (584)  
  Ending balance   $  20,078   $  19,352   $  726  
                       
  Allowance for loan losses to total loans and leases, gross      0.72 %    0.72 %    – %

 

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 0.12% as of March 31, 2022, and December 31, 2021, respectively.  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 0.11% as of March 31, 2022, and December 31, 2021, respectively.

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

 

                       
      Three Months Ended        
        Mar     Dec     Increase  
  Credit Quality     2022     2021     (Decrease)  
  Nonaccrual loans and leases   $  3,342   $  3,124   $  218  
  Loans and leases past due 90 days or more and still accruing      –      64      (64)  
  Total nonperforming loans and leases      3,342      3,188      154  
  Other real estate owned      1,612      1,780      (168)  
  Other repossessed assets      27      90      (63)  
  Total nonperforming assets   $  4,981   $  5,058   $  (77)  
                       
  Nonperforming loans and leases to total loans and leases, gross      0.12 %    0.12 %    – %
  Nonperforming assets to total assets      0.11 %    0.11 %    – %

 

Noninterest Income

 

Noninterest income increased $305 thousand to $7.1 million for the first quarter of 2022 compared to $6.8 million for the prior quarter.  During the first quarter of 2022, the primary components of the changes in noninterest income were as follows:

 

  • Increase in investment services, income led by the new Gulf Coast advisory team’s continued client onboarding;
  • Increase in insurance commissions, driven by seasonality;
  • Decrease in interchange and debit card transaction fees, related to lower volume; and
  • Decrease in other, primarily from the gain on sale of credit card portfolio in prior quarter.

 

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

 

                   
    Three Months Ended      
      Mar     Dec     Increase
Noninterest Income     2022     2021     (Decrease)
Service charges on deposit accounts   $  1,319   $  1,372   $  (53)
Gain (loss) on sale of securities, net      –      –      –
Mortgage banking income      834      803      31
Investment services      1,070      621      449
Insurance commissions      901      517      384
Interchange and debit card transaction fees      1,284      1,445      (161)
Other      1,703      2,048      (345)
Total noninterest income   $  7,111   $  6,806   $  305

 

 

Noninterest Expense

 

Noninterest expense decreased $2.1 million to $25.7 million for the first quarter of 2022 compared to $27.8 million for the prior quarter. During the first quarter of 2022, the primary components of the changes in noninterest expense were as follows:

 

  • Increase in other real estate and loan related expenses, primarily attributable to increased activity in loan related production;
  • Increase in advertising and marketing, related to additional advertising and public relations across the Company;
  • Decrease in data processing and technology as a result of continued efficiency efforts;
  • Increase in professional services, related to additional services performed during the quarter; and
  • Decrease in other expense, related to year-end expenses in prior period and continued efficiency efforts.

 

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

 

                   
    Three Months Ended      
      Mar     Dec     Increase
Noninterest Expense     2022     2021     (Decrease)
Salaries and employee benefits   $  15,046   $  14,990   $  56
Occupancy and equipment      3,059      3,026      33
FDIC insurance      641      567      74
Other real estate and loan related expenses      729      583      146
Advertising and marketing      369      176      193
Data processing and technology      1,586      1,722      (136)
Professional services      1,242      847      395
Amortization of intangibles      637      660      (23)
Merger related and restructuring expenses      439      2,762      (2,323)
Other      1,970      2,490      (520)
Total noninterest expense   $  25,718   $  27,823   $  (2,105)

 

Income Tax Expense

 

Income tax expense was $2.2 million for the first quarter of 2022, an increase of $485 thousand, compared to $1.8 million for the prior quarter.

The effective tax rate was 21.38% for the first quarter of 2022 and 20.93% for the prior quarter.

 

Balance Sheet Trends

 

Total assets at March 31, 2022 were $4.72 billion compared with $4.61 billion at December 31, 2021.  The increase of $107.0 million is primarily attributable to increases in securities of $270.6 million, loans and leases of $112.6 million, and other assets of $6.3 million, offset by a decrease in cash and cash equivalents of $281.1 million, primarily from the purchase of securities.

 

Total liabilities increased to $4.30 billion at March 31, 2022 from $4.18 billion at December 31, 2021.  The increase of $116.4 million was primarily from organic deposit growth of $169.4 million, offset by a decrease in borrowings of $50.9 million.

 

Shareholders’ equity at March 31, 2022 totaled $420.0 million, a decrease of $9.4 million, from December 31, 2021.  The decrease in shareholders’ equity was primarily from the change in accumulated other comprehensive income (loss) of $17.0 million and dividends paid of $1.2 million, offset by net income of $8.3 million for the three months ended March 31, 2022.  Tangible book value per share[2] was $18.64 at March 31, 2022, compared to $19.26 at December 31, 2021.  Tangible common equity1 as a percentage of tangible assets1  was 6.82% at March 31, 2022, compared with 7.18% at December 31, 2021.

 

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

 

                     
    Mar   Dec   Increase  
Selected Balance Sheet Information   2022   2021   (Decrease)  
Total assets   $  4,718,579   $  4,611,579   $  107,000  
Total liabilities      4,298,537      4,182,149      116,388  
Total equity      420,042      429,430      (9,388)  
Securities      830,015      559,422      270,593  
Loans and leases      2,806,026      2,693,397      112,629  
Deposits      4,191,353      4,021,938      169,415  
Borrowings      36,713      87,585      (50,872)  

 

Conference Call Information

 

SmartFinancial issued this earnings release for the first quarter of 2022 on Monday, April 25, 2022, and will host a conference call on Tuesday, April 26, 2022, at 10:00 a.m. ET.  To access this interactive teleconference, dial (844) 200-6205 or (646) 904-5544 and entering the access code, 293033.  A replay of the conference call will be available through June 28, 2022, by dialing (866) 813-9403 or (929) 458-6194 and entering the access code, 552729.  Conference call materials will be published on the Company’s webpage located at http://www.smartfinancialinc.com/CorporateProfile, at 9:00 a.m. 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 branches across Tennessee, Alabama, and the Florida Panhandle.  Recruiting the best people, delivering exceptional client service, strategic branching, and a disciplined approach to lending have contributed to SmartBank’s success. More information about SmartFinancial can be found on its website: www.smartfinancialinc.com.

 

   
Source  
SmartFinancial, Inc.  
   
Investor Contacts  
Billy Carroll  
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 shareholders’ 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 and merger related and restructuring expenses.  Operating return on average assets is the annualized operating earnings (Non-GAAP) divided by average assets.  Operating pre-tax pre-provision return on average assets is the annualized operating pre-tax pre-provision income earnings (Non-GAAP) by average assets. Operating return on average shareholders’ equity is the annualized operating earnings (Non-GAAP) divided by average equity. Return on average tangible common equity is the annualized net income divided by average tangible common equity (Non-GAAP). Operating return on average tangible common equity is the annualized operating earnings (Non-GAAP) 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.  Operating pre-tax pre-provision earnings is net interest income plus operating noninterest income (Non-GAAP) less operating noninterest expense (Non-GAAP).  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 (Non-GAAP) and average tangible common equity (Non-GAAP) excludes goodwill and other intangible assets from shareholders’ equity and average shareholders’ equity, respectively.  Tangible book value (Non-GAAP) is tangible common equity (Non-GAAP) divided by common shares outstanding.  Tangible assets (Non-GAAP) 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 and related variants 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 acquisition of Sevier County Bancshares, Inc. (“SCB”); (7) the risk that the anticipated benefits from the 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; (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 and related variants; (15) the impact of the COVID-19 pandemic and related variants on the Company’s assets, business, cash flows, financial condition, liquidity, prospects and results of operations; (16) higher inflation and its impacts; (17) the effects of war or other conflicts including the impacts related to or resulting from Russia’s military action in Ukraine; and (18) 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
    Mar   Dec   Sep   Jun   Mar
    2022   2021   2021   2021   2021
Assets:                              
Cash and cash equivalents   $  763,968   $  1,045,077   $  1,091,160   $  673,515   $  556,701
Securities available-for-sale, at fair value      540,483      482,453      339,343      250,817      250,937
Securities held-to-maturity, at amortized cost      289,532      76,969      —      —      —
Other investments      16,499      16,494      14,972      14,584      14,728
Loans held for sale      5,894      5,103      3,418      4,334      7,870
Loans and leases      2,806,026      2,693,397      2,652,663      2,468,318      2,487,129
Less: Allowance for loan and lease losses      (20,078)      (19,352)      (19,295)      (18,310)      (18,370)
Loans and leases, net      2,785,948      2,674,045      2,633,368      2,450,008      2,468,759
Premises and equipment, net      84,793      85,958      85,346      72,314      72,697
Other real estate owned      1,612      1,780      2,415      2,499      3,946
Goodwill and other intangibles, net      105,215      105,852      104,930      90,966      86,350
Bank owned life insurance      80,074      79,619      79,145      72,013      71,586
Other assets      44,561      38,229      29,934      23,306      23,629
Total assets   $  4,718,579   $  4,611,579   $  4,384,031   $  3,654,356   $  3,557,203
Liabilities:                              
Deposits:                              
Noninterest-bearing demand   $  1,093,933   $  1,055,125   $  977,180   $  807,560   $  777,968
Interest-bearing demand      975,272      899,158      847,007      702,470      683,887
Money market and savings      1,573,101      1,493,007      1,389,393      1,140,029      1,073,941
Time deposits      549,047      574,648      585,692      489,413      512,417
Total deposits      4,191,353      4,021,938      3,799,272      3,139,472      3,048,213
Borrowings      36,713      87,585      88,748      78,834      82,642
Subordinated debt      41,952      41,930      41,909      39,388      39,367
Other liabilities      28,519      30,696      29,382      23,269      22,923
Total liabilities      4,298,537      4,182,149      3,959,311      3,280,963      3,193,145
Shareholders’ Equity:                              
Common stock      16,893      16,803      16,801      15,110      15,105
Additional paid-in capital      293,376      292,937      292,760      252,039      251,836
Retained earnings      125,329      118,247      112,600      103,906      96,034
Accumulated other comprehensive income (loss)      (15,556)      1,443      2,559      2,338      1,083
Total shareholders’ equity      420,042      429,430      424,720      373,393      364,058
Total liabilities & shareholders’ equity   $  4,718,579   $  4,611,579   $  4,384,031   $  3,654,356   $  3,557,203

 

 

 

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information – (unaudited)

(dollars in thousands except share and per share data)

 

                               
  Three Months Ended  
  Mar   Dec   Sep   Jun   Mar  
  2022   2021   2021   2021   2021  
Interest income:                              
Loans and leases, including fees $  29,643   $  30,567   $  31,674   $  28,323   $  28,018  
Investment securities:                              
Taxable    2,418      1,341      832      916      724  
Tax-exempt    368      322      331      304      259  
Federal funds sold and other earning assets    486      547      474      309      291  
Total interest income    32,915      32,777      33,311      29,852      29,292  
Interest expense:                              
Deposits    2,014      2,116      2,153      2,248      2,331  
Borrowings    157      180      121      123      117  
Subordinated debt    626      626      655      584      584  
Total interest expense    2,797      2,922      2,929      2,955      3,032  
Net interest income    30,118      29,855      30,382      26,897      26,260  
Provision for loan and lease losses    1,006      422      1,149      (5)      67  
Net interest income after provision for loan and lease losses    29,112      29,433      29,233      26,902      26,193  
Noninterest income:                              
Service charges on deposit accounts    1,319      1,372      1,220      1,048      1,009  
Gain (loss) on sale of securities, net    —      —      45      —      —  
Mortgage banking    834      803      994      1,105      1,139  
Investment services    1,070      621      448      567      531  
Insurance commissions    901      517      745      557      1,466  
Interchange and debit card transaction fees    1,284      1,445      1,078      922      839  
Other    1,703      2,048      1,779      944      707  
Total noninterest income    7,111      6,806      6,309      5,143      5,691  
Noninterest expense:                              
Salaries and employee benefits    15,046      14,990      13,594      12,203      10,869  
Occupancy and equipment    3,059      3,026      2,536      2,294      2,341  
FDIC insurance    641      567      525      371      371  
Other real estate and loan related expense    729      583      407      506      602  
Advertising and marketing    369      176      235      230      190  
Data processing and technology    1,586      1,722      1,753      1,509      1,379  
Professional services    1,242      847      810      849      641  
Amortization of intangibles    637      660      711      441      444  
Merger related and restructuring expenses    439      2,762      464      372      103  
Other    1,970      2,490      2,274      2,022      2,524  
Total noninterest expense    25,718      27,823      23,309      20,797      19,464  
Income before income taxes    10,505      8,416      12,233      11,248      12,420  
Income tax expense    2,246      1,761      2,633      2,470      2,664  
Net income $  8,259   $  6,655   $  9,600   $  8,778   $  9,756  
Earnings per common share:                              
Basic $  0.49   $  0.40   $  0.62   $  0.59   $  0.65  
Diluted $  0.49   $  0.40   $  0.61   $  0.58   $  0.65  
Weighted average common shares outstanding:                              
Basic    16,718,371      16,699,010      15,557,528      15,003,657      15,011,573  
Diluted    16,858,288      16,846,315      15,691,126      15,126,184      15,111,947  

 

 

 

 

 

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information – (unaudited)

(dollars in thousands)

YIELD ANALYSIS

 

                                                   
    Three Months Ended  
    March 31, 2022   December 31, 2021   March 31, 2021  
    Average         Yield/   Average         Yield/   Average         Yield/  
    Balance   Interest1   Cost1   Balance   Interest1   Cost1   Balance   Interest1   Cost1  
Assets:                                                  
Loans and leases, including fees2   $  2,724,206   $  29,570    4.40 % $  2,669,943   $  30,510    4.53 % $  2,428,499   $  27,943    4.67 %
Loans held for sale      3,890      73    7.62 %    5,116      57    4.44 %    7,913      75    3.82 %
Taxable securities      612,980      2,418    1.60 %    339,371      1,341    1.58 %    136,492      724    2.15 %
Tax-exempt securities      105,516      533    2.05 %    102,989      479    1.85 %    90,849      409    1.82 %
Federal funds sold and other earning assets      775,834      486    0.25 %    965,899      547    0.22 %    417,144      291    0.28 %
Total interest-earning assets      4,222,426      33,080    3.18 %    4,083,318      32,934    3.20 %    3,080,897      29,442    3.88 %
Noninterest-earning assets      381,807                383,783                275,272            
Total assets   $  4,604,233             $  4,467,101             $  3,356,169            
                                                   
Liabilities and Stockholders’ Equity:                                                  
Interest-bearing demand deposits   $  921,835      446    0.20 % $  853,763      403    0.18 % $  641,214      256    0.16 %
Money market and savings deposits      1,523,188      859    0.23 %    1,428,472      920    0.26 %    983,893      821    0.34 %
Time deposits      561,207      709    0.51 %    583,165      793    0.54 %    526,062      1,254    0.97 %
Total interest-bearing deposits      3,006,230      2,014    0.27 %    2,865,400      2,116    0.29 %    2,151,169      2,331    0.44 %
Borrowings      69,769      157    0.91 %    88,828      180    0.80 %    81,837      117    0.58 %
Subordinated debt      41,938      626    6.05 %    41,917      625    5.93 %    39,354      584    6.01 %
Total interest-bearing liabilities      3,117,937      2,797    0.36 %    2,996,145      2,921    0.39 %    2,272,360      3,032    0.54 %
Noninterest-bearing deposits      1,028,298                1,016,438                700,962            
Other liabilities      30,053                27,710                21,928            
Total liabilities      4,176,288                4,040,293                2,995,250            
Shareholders’ equity      427,945                426,808                360,919            
Total liabilities and shareholders’ equity   $  4,604,233             $  4,467,101             $  3,356,169            
                                                   
Net interest income, taxable equivalent         $  30,283             $  30,013             $  26,410      
Interest rate spread                2.82 %              2.81 %              3.33 %
Tax equivalent net interest margin                2.91 %              2.92 %              3.48 %
                                                   
Percentage of average interest-earning assets to average interest-bearing liabilities                135.42 %              136.29 %              135.58 %
Percentage of average equity to average assets                9.29 %              9.55 %              10.75 %

 

1 Taxable equivalent

2 Includes average balance of $53,966, $80,501 and $312,582 in PPP loans for the quarters ended March 31, 2022, December 31, 2021, and March 31, 2021, respectively.

 

 

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information – (unaudited)

(dollars in thousands)

YIELD ANALYSIS

 

                                     
    Year Ended
    December 31, 2020   December 31, 2019  
    Average         Yield/   Average         Yield/  
    Balance   Interest1   Cost1   Balance   Interest1   Cost1  
Assets:                                    
Loans, including fees2   $  2,289,612   $  111,992      4.89 % $  1,836,963   $  100,831    5.49 %
Loans held for sale      7,360      320      4.34 %    3,858      171    4.43 %
Taxable securities      122,900      2,423      1.97 %    129,705      3,289    2.54 %
Tax-exempt securities      83,765      1,941      2.32 %    56,458      1,972    3.49 %
Federal funds sold and other earning assets      308,843      1,509      0.49 %    110,380      2,646    2.40 %
Total interest-earning assets      2,812,480      118,185      4.20 %    2,137,364      108,909    5.10 %
Noninterest-earning assets      250,955                  201,976            
Total assets   $  3,063,435               $  2,339,340            
                                     
Liabilities and Stockholders’ Equity:                                    
Interest-bearing demand deposits   $  481,050      1,013      0.21 % $  333,100      1,883    0.57 %
Money market and savings deposits      788,006      3,482      0.44 %    651,855      7,827    1.20 %
Time deposits      641,647      9,102      1.42 %    635,451      12,205    1.92 %
Total interest-bearing deposits      1,910,703      13,597      0.71 %    1,620,406      21,915    1.35 %
Borrowings3      177,204      816      0.46 %    21,526      319    1.48 %
Subordinated debt      39,301      2,334      5.94 %    39,216      2,341    5.97 %
Total interest-bearing liabilities      2,127,208      16,747      0.79 %    1,681,148      24,575    1.46 %
Noninterest-bearing deposits      571,282                  343,611            
Other liabilities      23,775                  15,852            
Total liabilities      2,722,265                  2,040,611            
Shareholders’ equity      341,170                  298,729            
Total liabilities and shareholders’ equity   $  3,063,435               $  2,339,340            
                                     
Net interest income, taxable equivalent         $  101,438               $  84,334      
Interest rate spread                  3.41 %              3.64 %
Tax equivalent net interest margin                  3.61 %              3.95 %
                                     
Percentage of average interest-earning assets to average interest-bearing liabilities                  132.21 %              127.14 %
Percentage of average equity to average assets                  11.14 %              12.77 %

 

1 Taxable equivalent

2 Includes average balance of $201,470 in PPP loans for the twelve months ended December 31, 2020.

3 Includes average balance of $91,190 in PPPLF funding for the twelve months ended December 31, 2020.

 

 

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information – (unaudited)

(dollars in thousands)

 

                                 
    As of and for The Three Months Ended  
    Mar   Dec   Sep   Jun   Mar  
    2022   2021   2021   2021   2021  
Composition of Loans and Leases:                                
Commercial real estate:                                
owner occupied   $  612,675   $  590,064   $  560,671   $  492,750   $  477,293  
non-owner occupied      863,181      794,092      752,576      669,741      593,348  
Commercial real estate, total      1,475,856      1,384,156      1,313,247      1,162,491      1,070,641  
Commercial & industrial      461,153      488,024      469,739      496,114      686,010  
Construction & land development      314,654      278,386      326,374      300,704      285,973  
Consumer real estate      483,229      477,272      478,161      444,640      432,486  
Leases      59,892      53,708      53,396      53,038      —  
Consumer and other      11,242      11,851      11,746      11,331      12,019  
Total loans and leases   $  2,806,026   $  2,693,397   $  2,652,663   $  2,468,318   $  2,487,129  
                                 
Asset Quality and Additional Loan Data:                                
Nonperforming loans and leases   $  3,342   $  3,188   $  3,567   $  3,758   $  6,234  
Other real estate owned      1,612      1,780      2,415      2,499      3,946  
Other repossessed assets      27      90      77      199      —  
Total nonperforming assets   $  4,981   $  5,058   $  6,059   $  6,456   $  10,180  
Restructured loans and leases not included in nonperforming loans and leases   $  625   $  206   $  212   $  219   $  250  
Net charge-offs to average loans and leases (annualized)      0.04 %    0.05 %    0.03 %    0.01 %    0.01 %
Allowance for loan and leases losses to loans and leases      0.72 %    0.72 %    0.73 %    0.74 %    0.74 %
Nonperforming loans and leases to total loans and leases, gross      0.12 %    0.12 %    0.13 %    0.15 %    0.25 %
Nonperforming assets to total assets      0.11 %    0.11 %    0.14 %    0.18 %    0.29 %
Acquired loan and lease fair value discount balance   $  14,913   $  15,483   $  13,001   $  12,982   $  12,951  
Accretion income on acquired loans and leases      389      457      1,760      761      1,636  
PPP net fees deferred balance      1,112      2,038      3,783      6,651      7,351  
PPP net fees recognized      1,066      1,725      2,873      2,132      2,398  
                                 
Capital Ratios:                                
Equity to Assets      8.90 %    9.31 %    9.69 %    10.22 %    10.23 %
Tangible common equity to tangible assets (Non-GAAP)1      6.82 %    7.18 %    7.47 %    7.93 %    8.00 %
                                 
SmartFinancial, Inc.2                                
Tier 1 leverage      7.41 %    7.45 %    8.36 %    8.10 %    8.55 %
Common equity Tier 1      10.30 %    10.56 %    10.85 %    10.63 %    11.29 %
Tier 1 capital      10.30 %    10.56 %    10.85 %    10.63 %    11.29 %
Total capital      12.22 %    12.55 %    12.92 %    12.80 %    13.62 %
                                 
SmartBank     Estimated3                          
Tier 1 leverage      8.24 %    8.23 %    9.20 %    8.75 %    9.33 %
Common equity Tier 1      11.46 %    11.66 %    11.94 %    11.50 %    12.31 %
Tier 1 capital      11.46 %    11.66 %    11.94 %    11.50 %    12.31 %
Total capital      12.08 %    12.29 %    12.59 %    12.19 %    13.05 %

 

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  
  Three Months Ended  
  Mar   Dec   Sep   Jun   Mar  
  2022   2021   2021   2021   2021  
Selected Performance Ratios (Annualized):                              
Return on average assets    0.73 %    0.59 %    0.97 %    0.98 %    1.18 %
Return on average shareholders’ equity    7.83 %    6.19 %    9.70 %    9.53 %    10.96 %
Return on average tangible common equity¹    10.39 %    8.18 %    12.84 %    12.54 %    14.41 %
Noninterest income / average assets    0.63 %    0.60 %    0.64 %    0.58 %    0.69 %
Noninterest expense / average assets    2.27 %    2.47 %    2.35 %    2.33 %    2.35 %
Efficiency ratio    69.08 %    75.89 %    63.53 %    64.91 %    60.92 %
                               
Operating Selected Performance Ratios (Annualized):                              
Operating return on average assets1    0.76 %    0.77 %    1.00 %    1.01 %    1.19 %
Operating PTPP return on average assets1    1.05 %    1.03 %    1.39 %    1.30 %    1.52 %
Operating return on average shareholders’ equity1    8.14 %    8.09 %    10.01 %    9.83 %    11.05 %
Operating return on average tangible common equity1    10.80 %    10.70 %    13.26 %    12.93 %    14.53 %
Operating efficiency ratio1    67.60 %    68.07 %    62.10 %    63.46 %    60.31 %
Operating noninterest income / average assets1    0.63 %    0.60 %    0.63 %    0.58 %    0.69 %
Operating noninterest expense / average assets1    2.23 %    2.23 %    2.30 %    2.29 %    2.34 %
                               
Selected Interest Rates and Yields:                              
Yield on loans and leases    4.40 %    4.53 %    4.95 %    4.52 %    4.67 %
Yield on earning assets, FTE    3.18 %    3.20 %    3.67 %    3.65 %    3.88 %
Cost of interest-bearing deposits    0.27 %    0.29 %    0.34 %    0.39 %    0.44 %
Cost of total deposits    0.20 %    0.22 %    0.25 %    0.29 %    0.33 %
Cost of interest-bearing liabilities    0.36 %    0.39 %    0.44 %    0.49 %    0.54 %
Net interest margin, FTE    2.91 %    2.92 %    3.35 %    3.29 %    3.48 %
                               
Per Common Share:                              
Net income, basic $  0.49   $  0.40   $  0.62   $  0.59   $  0.65  
Net income, diluted    0.49      0.40      0.61      0.58      0.65  
Operating earnings, basic¹    0.51      0.52      0.64      0.60      0.65  
Operating earnings, diluted¹    0.51      0.52      0.63      0.60      0.65  
Book value    24.86      25.56      25.28      24.71      24.10  
Tangible book value¹    18.64      19.26      19.03      18.69      18.39  
Common shares outstanding    16,893,282      16,802,990      16,801,447      15,109,736      15,104,536  

 

¹Non-GAAP measure. See reconciliation of Non-GAAP measures.

 

 

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information – (unaudited)

(dollars in thousands)

NON-GAAP RECONCILIATIONS

                                 
    Three Months Ended  
    Mar   Dec   Sep   Jun   Mar  
    2022   2021   2021   2021   2021  
Operating Earnings:                                
Net income (GAAP)   $  8,259   $  6,655   $  9,600   $  8,778   $  9,756  
Noninterest income:                                
Securities gains (losses), net      —      —      (45)      —      —  
Noninterest expenses:                                
Merger related and restructuring expenses      439      2,762      464      372      103  
Income taxes:                                
Income tax effect of adjustments      (113)      (713)      (108)      (96)      (27)  
Operating earnings (Non-GAAP)   $  8,585   $  8,704   $  9,911   $  9,054   $  9,832  
Operating earnings per common share (Non-GAAP):                                
Basic   $  0.51   $  0.52   $  0.64   $  0.60   $  0.65  
Diluted      0.51      0.52      0.63      0.60      0.65  
                                 
Operating Noninterest Income:                                
Noninterest income (GAAP)   $  7,111   $  6,806   $  6,309   $  5,143   $  5,691  
Securities gains (losses), net      —      —      (45)      —      —  
Operating noninterest income (Non-GAAP)   $  7,111   $  6,806   $  6,264   $  5,143   $  5,691  
Operating noninterest income (Non-GAAP)/average assets1      0.63 %    0.60 %    0.63 %    0.58 %    0.69 %
                                 
Operating Noninterest Expense:                                
Noninterest expense (GAAP)   $  25,718   $  27,823   $  23,309   $  20,797   $  19,464  
Merger related and restructuring expenses      (439)      (2,762)      (464)      (372)      (103)  
Operating noninterest expense (Non-GAAP)   $  25,279   $  25,061   $  22,845   $  20,425   $  19,361  
Operating noninterest expense (Non-GAAP)/average assets2      2.23 %    2.23 %    2.30 %    2.29 %    2.34 %
                                 
Operating Pre-tax Pre-provision (“PTPP”) Earnings:                                
Net interest income (GAAP)   $  30,118   $  29,855   $  30,382   $  26,897   $  26,260  
Operating noninterest income (Non-GAAP)      7,111      6,806      6,264      5,143      5,691  
Operating noninterest expense (Non-GAAP)      (25,279)      (25,061)      (22,845)      (20,425)      (19,361)  
Operating PTPP earnings (Non-GAAP)   $  11,950   $  11,600   $  13,801   $  11,615   $  12,590  
                                 
Non-GAAP Return Ratios:                                
Operating return on average assets (Non-GAAP)3      0.76 %    0.77 %    1.00 %    1.01 %    1.19 %
Operating PTPP return on average assets (Non-GAAP)4      1.05 %    1.03 %    1.39 %    1.30 %    1.52 %
Return on average tangible common equity (Non-GAAP)5      10.39 %    8.18 %    12.84 %    12.54 %    14.41 %
Operating return on average shareholders’ equity (Non-GAAP)6      8.14 %    8.09 %    10.01 %    9.83 %    11.05 %
Operating return on average tangible common equity (Non-GAAP)7      10.80 %    10.70 %    13.26 %    12.93 %    14.53 %
                                 
Operating Efficiency Ratio:                                
Efficiency ratio (GAAP)      69.08 %    75.89 %    63.53 %    64.91 %    60.92 %
Adjustment for taxable equivalent yields      (0.31) %    (0.32) %    (0.25) %    (0.30) %    (0.28) %
Adjustment for securities gains (losses)      — %    — %    (0.08) %    — %    — %
Adjustment for merger related income and costs      (1.17) %    (7.50) %    (1.10) %    (1.15) %    (0.33) %
Operating efficiency ratio (Non-GAAP)      67.60 %    68.07 %    62.10 %    63.46 %    60.31 %

 

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  
    Mar   Dec   Sep   Jun   Mar  
    2022   2021   2021   2021   2021  
Tangible Common Equity:                                
Shareholders’ equity (GAAP)   $  420,042   $  429,430   $  424,720   $  373,393   $  364,058  
Less goodwill and other intangible assets      105,215      105,852      104,930      90,966      86,350  
Tangible common equity (Non-GAAP)   $  314,827   $  323,578   $  319,790   $  282,427   $  277,708  
                                 
Average Tangible Common Equity:                                
Average shareholders’ equity (GAAP)   $  427,945   $  426,808   $  392,798   $  369,325   $  360,919  
Less average goodwill and other intangible assets      105,617      104,193      96,250      88,551      86,424  
Average tangible common equity (Non-GAAP)   $  322,328   $  322,615   $  296,548   $  280,774   $  274,495  
                                 
Tangible Book Value per Common Share:                                
Book value per common share (GAAP)   $  24.86   $  25.56   $  25.28   $  24.71   $  24.10  
Adjustment due to goodwill and other intangible assets      (6.23)      (6.30)      (6.25)      (6.02)      (5.71)  
Tangible book value per common share (Non-GAAP)1   $  18.64   $  19.26   $  19.03   $  18.69   $  18.39  
                                 
Tangible Common Equity to Tangible Assets:                                
Total Assets   $  4,718,579   $  4,611,579   $  4,384,031   $  3,654,356   $  3,557,203  
Less goodwill and other intangibles      105,215      105,852      104,930      90,966      86,350  
Tangible Assets (Non-GAAP):   $  4,613,364   $  4,505,727   $  4,279,101   $  3,563,390   $  3,470,853  
Tangible common equity to tangible assets (Non-GAAP)     6.82%     7.18%     7.47%     7.93%     8.00%  

 

 

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

[1] Non-GAAP measures.  See “Non-GAAP Financial Measures” for more information and see the Non-GAAP reconciliation

[2] Non-GAAP measures.  See “Non-GAAP Financial Measures” for more information and see the Non-GAAP reconciliation