SmartFinancial, Inc. Reports for Third Quarter

Nov 05, 2015, 14:00 ET from SmartFinancial, Inc.

KNOXVILLE, Tenn., Nov. 5, 2015 /PRNewswire/ -- SmartFinancial, Inc. ("SmartFinancial"); (OTCBB: SMBK), announced today results for its third quarter. The quarter was highlighted by the successful completion of the merging of the two holding companies, legacy SmartFinancial, Inc. and Cornerstone Bancshares, Inc., which was renamed "SmartFinancial, Inc." following the merger.  In conjunction with the transaction, merger related expenses for the quarter were $747,511 and $1.0 million for the year.  These non-recurring expenses led to a $76,909 net loss for the quarter and year to date net income available to common shareholders of $237,585.  Also noted are one-time expenses for the quarter of approximately $446,000 in write down on foreclosed assets to accelerate the liquidation timeframe to reduce non-performing assets.  Merger related expenses and the write down on OREO were anticipated and in line with company expectations.  Minimal expense in these areas are expected moving forward.

The third quarter's results for 2015 reflect the first reporting for SmartFinancial, Inc. (Company) following the merger that was effective August 31, 2015.  Prior to the merger date, the consolidated financial statements presented in the accompanying tables are those of legacy SmartFinancial, Inc. and do not include the operations of Cornerstone Bancshares, Inc. since the transaction was treated as a reverse merger for accounting and financial presentation purposes.  As a result, only Cornerstone's September income, expenses, assets, liabilities, and equity are represented in the results.  Investors may wish to review previous filings of Cornerstone Bancshares, Inc. with the Securities and Exchange Commission (SEC). Cornerstone Bancshares, Inc. filed a Form 10-K in April 2015 that included audited financial statements for the years ended December 31, 2014 and December 31, 2013. Those financial statements reflected the operations of its subsidiary, Cornerstone Community Bank. Cornerstone Bancshares, Inc. also filed a Form 8-K/A on June 22, 2015, that includes unaudited pro forma combined condensed financial statements of Cornerstone Bancshares, Inc. and SmartFinancial, Inc. as of March 31, 2015.

Billy Carroll, President & CEO stated:  "As our companies were united under SmartFinancial, Inc. in September,  our talented teams within Cornerstone and SmartBank are energized and highly motivated to finalize the integration of our two banks, building a strong banking franchise in attractive markets spanning East Tennessee and Northwest Florida.  Organic growth has been steady in all markets and we are looking forward to solid performance moving forward now that the holding company transaction is closed."

Third Quarter Financial Highlights at September 30, 2015:

  • Total Assets Exceed $1 billion
  • Net Loans of $706.6 million
  • Deposits Total $847.0 million
  • Estimated Nonperforming Assets to Total Assets of 1.17%
  • Estimated Tier 1 Leverage Ratio of 9.36%

SmartFinancial's Chairman Miller Welborn stated: "In crossing the $1 billion in assets threshold, we remain focused on driving earnings with our scale.  We will leverage our seasoned banking team and are prepared for our future as we deliver SmartBanking to our clients who seek a unique experience with a dynamic, innovative community bank."

About SmartFinancial, Inc.

SmartFinancial, Inc., based in Knoxville, Tennessee, is the bank holding company for SmartBank and Cornerstone Community Bank.  SmartBank is a full-service commercial bank founded in 2007, with seven branches and one loan production office spanning East Tennessee and the Florida Panhandle. Recruiting the best people, delivering exceptional client service, strategic branching and a conservative and disciplined approach to lending have all given rise to SmartBank's success. More information about SmartFinancial can be found on its website: www.smartbank.com.  Cornerstone Community Bank is a full-service commercial bank founded in 1996, with five branches throughout the Chattanooga MSA and one loan production office in Dalton, Georgia. Cornerstone Community Bank specializes in providing customized financial solutions for businesses and consumers, by offering a comprehensive range of products and services designed to help companies and individuals build strong financial foundations. More information about Cornerstone Community Bank can be found on its website: www.cscbank.com.

This release contains forward-looking statements. SmartFinancial cautions you that a number of important factors could cause actual results to differ materially from those currently anticipated in any forward-looking statement. Such factors include, but are not limited to: changes in management's plans for the future, prevailing economic and political conditions, particularly in our market area; credit risk associated with our lending activities; changes in interest rates, loan demand, real estate values and competition; changes in accounting principles, policies, and guidelines; changes in any applicable law, rule, regulation or practice with respect to tax or legal issues; and other economic, competitive, governmental, regulatory and technological factors affecting our operations, pricing, products and services and other factors that may be described in our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission from time to time.

In addition to these risks, acquisitions and business combinations present risks other than those presented by the nature of the business acquired. Acquisitions and business combinations may be substantially more expensive to complete than originally anticipated, and the anticipated benefits may be significantly harder—or take longer—to achieve than expected. As regulated financial institutions, our pursuit of attractive acquisition and business combination opportunities could be negatively impacted by regulatory delays or other regulatory issues. Regulatory and/or legal issues related to the pre-acquisition operations of an acquired or combined business may cause reputational harm to SmartFinancial following the acquisition or combination, and integration of the acquired or combined business with ours may result in additional future costs arising as a result of those issues.

The forward-looking statements are made as of the date of this release, and, except as may be required by applicable law or regulation, SmartFinancial assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.

 

SmartFinancial, Inc. and Subsidiaries





Consolidated Balance Sheets


























Unaudited








September 30,


December 31,




ASSETS


2015


2014









Cash and due from banks


$          35,691,381


$           32,386,247

Interest-bearing deposits at other financial institutions


39,009,274


6,643,101

Federal funds sold


15,235,000


7,710,028



Total cash and cash equivalents


89,935,655


46,739,376









Securities available for sale


152,149,667


98,876,498

Restricted Investments, at cost


4,451,050


2,090,150

Loans, net of allowance for loan losses of $3,827,938 and $3,879,665






at September 30, 2015 and December 31, 2014, respectively


706,611,292


359,523,466

Bank premises and equipment, net


25,266,482


15,939,117

Accrued interest receivable


2,227,003


1,221,006

Foreclosed assets


9,646,549


4,982,913

Core deposit intangible, net


2,868,391


258,242

Goodwill


4,166,069


-

Other assets


9,734,958


4,083,187




     Total assets


$     1,007,057,116


$         533,713,955












LIABILITIES AND STOCKHOLDERS' EQUITY













Deposits:





Noninterest-bearing demand deposits


$        123,551,461


$           53,639,741

Interest-bearing demand deposits


140,596,468


179,835,820

Savings deposits and money market accounts


231,477,468


42,368,697

Time deposits


351,366,762


178,962,822




Total deposits


846,992,159


454,807,080









Accrued interest payable


299,150


129,771

Federal funds purchased and securities sold under






agreements to repurchase


18,442,196


21,758,018

Federal Home Loan Bank advances and other borrowings


39,278,103


-

Other liabilities


3,609,152


1,131,299




Total liabilities


908,620,760


477,826,168









Stockholders' equity:





Preferred stock - $1 par value; 12,000 shares authorized






and outstanding in 2015 and 2014


12,000


12,000

Common stock - $1.00 par value; 40,000,000 shares authorized;






5,732,143 and 2,965,783 shares issued and outstanding in  2015 






and 2014, respectively


5,732,143


2,965,783

Additional paid-in capital


81,628,090


42,508,429

Retained earnings


10,942,361


10,704,776

Accumulated other comprehensive income


121,762


(303,201)




Total stockholders' equity


98,436,356


55,887,787




Total liabilities and stockholders' equity


$     1,007,057,116


$         533,713,955

















The Notes to Consolidated Financial Statements are an integral part of these statements.



 

SmartFinancial, Inc. and Subsidiaries

Consolidated Statements of Income










Unaudited


Unaudited


Three Months Ended


Nine Months Ended


September 30,


September 30,


2015


2014


2015


2014

INTEREST INCOME








Loans, including fees

$    6,660,440


$    4,978,481


$  15,856,077


$  14,035,526

Securities and interest-bearing deposits at other








  financial institutions

458,089


430,837


1,239,340


1,357,426

Federal funds sold and other earning assets

35,101


35,001


91,029


94,679

Total interest income

7,153,630


5,444,319


17,186,446


15,487,631









INTEREST EXPENSE








Time deposits

468,002


377,393


1,176,258


1,103,370

Other deposits

219,990


145,399


512,403


414,741

Federal funds purchased and securities








    sold under agreements to repurchase

7,394


3,413


16,640


8,306

Federal Home Loan Bank advances and other borrowings

31,326


-


31,270


-

Total interest expense

726,712


526,205


1,736,571


1,526,417









Net interest income before provision for loan losses

6,426,918


4,918,114


15,449,875


13,961,214

Provision (credit) for loan losses

32,397


(143,730)


356,325


299,385

Net interest income after provision for loan losses

6,394,521


5,061,844


15,093,550


13,661,829









NONINTEREST INCOME








Customer service fees

236,698


138,089


516,013


365,882

Net gains (losses) from sale of securities

-


-


52,255


(4,174)

Net gains from sale of loans and other assets

66,041


46,804


161,896


108,070

Net losses from sale of foreclosed assets

(445,980)


(50,720)


(426,168)


(284,670)

Other noninterest income

317,202


255,370


784,230


719,445

Total noninterest income

173,961


389,543


1,088,226


904,553









NONINTEREST EXPENSE








Salaries and employee benefits

3,186,787


2,494,991


7,723,506


6,828,348

Net occupancy and equipment expense

688,426


517,514


1,769,494


1,591,706

Depository insurance

175,697


119,329


419,747


354,402

Foreclosed assets, net

90,574


50,522


179,796


126,312

Other operating expenses

2,351,718


1,123,101


5,021,567


3,269,426

Total noninterest expenses

6,493,202


4,305,457


15,114,110


12,170,194









Income before income tax expense

75,280


1,145,930


1,067,666


2,396,188

Income tax expense

152,189


440,723


740,081


920,010









Net income (loss)

(76,909)


705,207


327,585


1,476,178









Preferred stock dividend requirements

30,000


30,000


90,000


90,000









Net income (loss) available to common shareholders

$     (106,909)


$       675,207


$       237,585


$    1,386,178









EARNINGS (LOSS) PER COMMON SHARE








Basic

$           (0.03)


$             0.22


$             0.07


$             0.45

Diluted

$           (0.03)


$             0.20


$             0.06


$             0.42









DIVIDENDS DECLARED PER COMMON SHARE

$                 -


$                 -


$                 -


$                 -

















The Notes to Consolidated Financial Statements are an integral part of these statements.


 

SOURCE SmartFinancial, Inc.



RELATED LINKS

http://www.smartbank.com