SmartFinancial Announces Results for the First Quarter 2022
*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, Tenn., April 25, 2022 (GLOBE NEWSWIRE) -- 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 earnings^1, 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.
^1 Non-GAAP measures. See “Non-GAAP Financial Measures” for more information and see the Non-GAAP reconciliation
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^1 was $18.64 at March 31, 2022, compared to $19.26 at December 31, 2021. Tangible common equity^1 as a percentage of tangible assets^1 was 6.82% at March 31, 2022, compared with 7.18% at December 31, 2021.
^1 Non-GAAP measures. See “Non-GAAP Financial Measures” for more information and see the Non-GAAP reconciliation
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 Interest^1 Cost^1 Balance Interest^1 Cost^1 Balance Interest^1 Cost^1
*Assets:*
Loans and leases, including fees^2 $ 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)*
*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* * * *Estimated*^*3*
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 assets^1 0.76 % 0.77 % 1.00 % 1.01 % 1.19 %
Operating PTPP return on average assets^1 1.05 % 1.03 % 1.39 % 1.30 % 1.52 %
Operating return on average shareholders' equity^1 8.14 % 8.09 % 10.01 % 9.83 % 11.05 %
Operating return on average tangible common equity^1 10.80 % 10.70 % 13.26 % 12.93 % 14.53 %
Operating efficiency ratio^1 67.60 % 68.07 % 62.10 % 63.46 % 60.31 %
Operating noninterest income / average assets^1 0.63 % 0.60 % 0.63 % 0.58 % 0.69 %
Operating noninterest expense / average assets^1 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 assets^1 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 assets^2 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.