SmartFinancial, Inc. Reports Fourth Quarter Results

Feb 01, 2016, 11:09 ET from SmartFinancial, Inc.

KNOXVILLE, Tenn., Feb. 1, 2016 /PRNewswire/ -- SmartFinancial, Inc. ("SmartFinancial"; NASDAQ: SMBK), announced today earnings of $1.2 million or $0.20 per share for its fourth quarter.  This quarter is the first with a full three months' results from each subsidiary bank, as in the third quarter 2015, SmartFinancial successfully completed the merger of two holding companies, legacy SmartFinancial, Inc. and Cornerstone Bancshares, Inc., and carried forward the name "SmartFinancial, Inc.".

Billy Carroll, President & CEO stated: "We enjoyed a favorable final quarter, but look forward to completing the combination of our two banks slated for late February, at which time we'll begin realizing greater efficiencies.  As we unite as SmartBank, spanning East Tennessee and Northwest Florida, 2016 will be our year to focus on fundamentals, reinforce the foundation of an innovative, forward-looking brand and execute on our disciplined growth strategy."

SmartFinancial's Chairman Miller Welborn added: "It's exciting to be on the eve of unveiling SmartBank in Chattanooga, which encompasses a region that has tremendous prospects for growth and will remain a significant market for SmartBank for years to come.  The banking industry is ready for re-envisioning and this company's energetic, entrepreneurial leadership and talented team of associates poise us perfectly to deliver a new experience in banking which we anticipate will reward clients, associates and shareholders alike."

Performance Highlights

  • Annualized loan growth of 9.5% in the quarter, as net loans finished the year at $723.4 million compared to $706.6 million for the third quarter.
  • Outstanding asset quality as estimated Nonperforming Assets to Total Assets fell to 0.75% compared to 1.17% at the end of the third quarter.
  • Net income available to common shareholders accelerated to $1.2 million, or $0.19 per diluted share, in Q4 2015 compared to a loss of ($0.1) million or ($0.03) per diluted share in Q3 2015.  The loss in prior quarter was primarily due to one-time merger expenses at the holding company.
  • Net operating earnings available to common shareholders, which excludes certain non-operating items, improved to $1.1 million, or $0.18 per diluted share, in Q4 2015 from $0.10 per diluted share in Q3 2015.

Billy Carroll concluded:  "We're optimistic about the synergies our banks will generate once combined.  While we've been focused on the merger, we have a newly established mortgage unit with experienced personnel which is already driving revenue and will serve the entire franchise beginning in March.  This specialty group will allow us to better serve clients, offer a wider range of products and complement a focus on servicing high-net worth clientele.  We look forward to reporting on the results of this investment in coming quarters."

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.

Statements included in this press release include 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 non-GAAP financial measures, including: (i) net operating earnings available to common shareholders; (ii) operating efficiency ratio; and (iii) adjusted allowance for loan losses to loans, in its analysis of the Company's performance. Net operating earnings available to common shareholders excludes the following from net income available to common shareholders: securities gains and losses, merger and conversion costs, OREO gain and losses, and the income tax effect of adjustments. The operating efficiency ratio excludes securities gains and losses, merger and conversion costs, and adjustment for OREO gains and losses from the efficiency ratio. Adjusted allowance for loan losses adds net acquisition accounting fair value discounts to the allowance for loan losses.

Management believes that non-GAAP financial measures provide additional useful information that allows readers to evaluate the ongoing performance of the Company and provide meaningful comparisons to its peers. 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 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.

 

SmartFinancial, Inc. and Subsidiaries

Condensed Consolidated Financial Information (unaudited)

(In thousands except per share data)

As of and for the three months ending

Dec. 31, 2015

Sept. 30, 2015

June 30, 2015

March 31, 2015

Dec. 31, 2014

Selected Performance Ratios (Annualized)

Return on average assets

0.47%

-0.04%

0.05%

0.27%

0.28%

Net operating return on average assets (Non-GAAP)

0.44%

0.25%

0.25%

0.17%

0.56%

Return on average shareholder equity

4.75%

-0.44%

0.47%

2.44%

2.53%

Net operating return on average shareholder equity (Non-GAAP)

4.49%

2.51%

2.30%

1.51%

5.13%

Yield on earning assets, TE

4.54%

4.47%

4.27%

4.21%

4.62%

Cost of interest-bearing liabilities

0.52%

0.53%

0.49%

0.48%

0.49%

Net interest margin, TE

4.11%

4.02%

3.85%

3.77%

4.07%

Efficiency ratio

74.30%

97.44%

88.67%

71.68%

81.45%

Operating efficiency ratio (Non-GAAP)

75.57%

84.60%

76.70%

76.51%

67.55%

Per Common Share

Net income, basic

0.20

(0.03)

0.01

0.10

0.11

Net income, diluted

0.19

(0.03)

0.01

0.09

0.10

Net operating earnings, basic (Non-GAAP)

0.19

0.10

0.10

0.06

0.23

Net operating earnings, diluted (Non-GAAP)

0.18

0.10

0.09

0.05

0.21

Book value 

17.25

17.16

18.92

19.12

18.84

Common shares outstanding 

5,806

5,735

2,966

2,966

2,966

Composition Of Loans 

Commercial, financial & agriculture

85,526

81,107

37,507

34,285

33,719

Real estate construction & Development

105,132

97,050

52,634

64,180

52,505

Real estate commercial

369,263

365,607

208,937

190,214

193,451

Real estate residential

161,427

162,090

89,876

81,253

81,414

Other loans

6,368

4,585

1,770

1,478

2,314

Total loans

727,716

710,439

390,724

371,410

363,403

Asset Quality Data and Ratios

Nonperforming loans

2,359

1,715

4,067

4,156

5,067

Foreclosed assets

5,358

9,647

3,728

4,170

4,983

Total nonperforming assets

7,717

11,362

7,795

8,326

10,050

Restructured loans not included in nonperforming loans

3,693

3,731

1,831

1,849

1,937

Net charge-offs to average loans (annualized)

0.02%

0.03%

0.13%

0.00%

0.46%

Allowance for loan losses to loans

0.60%

0.54%

0.98%

1.05%

1.07%

Adjusted allowance for loan losses to loans (Non-GAAP)

2.18%

2.26%

2.38%

2.75%

2.84%

Nonperforming loans to loans

0.32%

0.24%

1.04%

1.12%

1.39%

Nonperforming assets to total assets

0.75%

1.13%

1.43%

1.57%

1.88%

Capital Ratios

Tangible equity to tangible assets

9.17%

9.14%

10.30%

10.68%

10.43%

Tangible common equity to tangible assets

9.17%

9.14%

10.30%

10.68%

10.43%

SmartFinancial Inc.:

Tier 1 leverage

9.32%

9.31%

10.92%

10.88%

10.74%

Common equity Tier 1

10.26%

10.25%

12.97%

13.59%

13.71%

Tier 1 risk-based capital

11.78%

11.77%

12.97%

13.59%

13.71%

Total risk-based capital

12.26%

12.25%

13.86%

14.54%

14.60%

 

 

SmartFinancial, Inc. and Subsidiaries

Condensed Consolidated Financial Information (unaudited)

(In thousands)

BALANCE SHEET

Ending Balances

Dec. 31, 2015

Sept. 30, 2015

June 30, 2015

March 31, 2015

Dec. 31, 2014

Assets

Cash & cash equivalents

79,965

89,936

43,810

41,244

46,739

Securities available for sale

166,413

152,150

83,747

92,295

98,876

Other investments

4,451

4,451

2,128

2,090

2,090

Total investment securities

170,864

156,601

85,875

94,385

100,967

Total loans

727,716

710,439

390,724

371,410

363,403

Allowance for loan losses

(4,355)

(3,828)

(3,834)

(3,915)

(3,880)

Loans net

723,361

706,611

386,890

367,495

359,523

Premises and equipment

25,038

25,266

16,405

16,383

15,939

Foreclosed assets

5,358

9,647

3,728

4,170

4,983

Goodwill and other intangibles

6,941

7,034

177

217

258

Other assets

12,436

11,962

6,478

5,257

5,304

Total assets

1,023,963

1,007,057

543,363

529,153

533,714

Liabilities 

Non-interest demand

131,419

123,551

69,427

58,006

53,640

Interest-bearing demand

149,424

144,012

114,165

119,771

102,113

Money market and savings

236,901

231,477

131,810

120,147

120,091

Time deposits

340,739

347,951

167,344

168,636

178,963

Total deposits

858,483

846,992

482,745

466,560

454,807

Repurchase agreements

28,068

18,442

2,727

4,607

9,758

FHLB & other borrowings

34,187

39,278

-

-

12,000

Other liabilities

3,048

3,908

1,772

1,280

1,261

Total liabilities

923,786

908,621

487,245

472,447

477,826

Shareholders' Equity

Preferred stock

12

12

12

12

12

Common stock

5,806

5,732

2,966

2,966

2,966

Additional paid-in capital

82,616

81,628

42,516

42,512

42,508

Retained earnings

12,095

10,942

11,049

11,013

10,705

Accumulated other comprehensive loss

(352)

122

(425)

202

(303)

Total shareholders' equity

100,177

98,436

56,118

56,705

55,888

Total liabilities & shareholders' equity

1,023,963

1,007,057

543,363

529,153

533,714

 

 

SmartFinancial, Inc. and Subsidiaries

Condensed Consolidated Financial Information (unaudited)

(In thousands)

INCOME STATEMENT

Three months ending

Dec. 31, 2015

Sept. 30, 2015

June 30, 2015

March 31, 2015

Dec. 31, 2014

Interest Income

Loans, including fees

9,875

6,660

4,677

4,519

4,725

Investment securities and interest bearing deposits

628

458

363

418

585

Other interest income

64

35

28

28

29

Total interest income

10,567

7,153

5,068

4,965

5,339

Interest Expense

Deposits

938

688

498

503

507

Repurchase agreements

17

7

3

3

3

FHLB and other borrowings

66

31

3

0

0

Total interest expense

1,021

726

504

506

510

Net interest income

9,546

6,427

4,564

4,459

4,829

Provision for loan losses

567

32

40

284

133

Net interest income after provision for loan losses

8,979

6,395

4,524

4,175

4,696

Non-interest income 

Service charges on deposit accounts

397

237

149

130

147

Other non-interest income

340

317

237

230

243

Gain on securites

-

-

52

-

-

Gain on sale of loans and other assets

86

(294)

31

65

81

Gain (loss) on sale of foreclosed assets

332

(86)

(363)

383

(340)

Total non-interest income

1,155

174

106

808

131

Non-interest expense

Salaries and employee benefits

4,208

3,187

2,236

2,301

2,312

Occupancy expense

910

688

575

544

534

Data Processing

510

278

194

210

171

Professional expenses

761

908

334

352

430

Foreclosed asset expense

110

91

48

41

51

Marketing

100

142

111

111

78

Amortization of other intangibles

93

58

41

41

41

FDIC premiums

148

144

98

97

103

Other non-interest expense

1,213

997

704

585

553

Total non-interest expense

8,052

6,493

4,340

4,281

4,273

Earnings before income taxes

2,082

75

290

702

554

Income tax expense

901

152

225

363

198

Net income (loss)

1,182

(77)

66

339

356

Dividends on preferred stock

30

30

30

30

30

Net income available to common shareholders

1,152

(107)

36

309

326

NET INCOME PER COMMON SHARE

Basic

0.20

(0.03)

0.01

0.10

0.11

Diluted

0.19

(0.03)

0.01

0.09

0.10

Weighted average common shares outstanding

Basic

5,750

3,937

2,966

2,966

2,964

Diluted

6,037

4,244

3,293

3,293

3,293

 

 

SmartFinancial, Inc. and Subsidiaries

Condensed Consolidated Financial Information (unaudited)

(In thousands)

YIELD ANALYSIS

Three Months Ended

Three Months Ended

Twelve Months Ended

Dec. 31, 2015

Sept. 30, 2015

Dec. 31, 2015

Avg. Balance

 Tax Equivalent Interest

Yield / Rate

Avg. Balance

 Tax Equivalent Interest

Yield / Rate

Avg. Balance

 Tax Equivalent Interest

Yield / Rate

ASSETS

Loans

719,140

9,875

5.45%

493,730

6,660

5.35%

490,262

25,731

5.15%

Investment securities

152,142

628

1.64%

107,061

458

1.70%

109,808

1,867

1.69%

Fed funds sold and other

52,461

64

0.48%

33,539

35

0.42%

24,904

155

0.44%

Total interest earning assets

923,743

10,567

4.54%

634,330

7,153

4.47%

624,974

27,753

4.44%

Non-interest earning assets

84,228

69,094

59,602

Total assets

1,007,971

703,424

685,626

LIABLITIES & EQUITY

Interest-bearing demand

138,156

119

0.34%

114,727

45

0.15%

117,185

239

0.19%

Money market and savings

234,637

194

0.33%

169,916

176

0.41%

161,742

589

0.36%

Time deposits

344,095

625

0.72%

234,018

467

0.79%

229,537

1,799

1.26%

Total interest-bearing deposits

716,888

938

0.52%

518,661

688

0.53%

508,464

2,627

0.52%

Repurchase agreements

22,528

17

0.30%

11,095

7

0.25%

11,042

30

0.29%

FHLB and other borrowings

35,806

66

0.73%

13,806

31

0.90%

12,403

100

0.41%

Total interest bearing liabilities

775,222

1,021

0.52%

543,562

726

0.53%

531,909

2,757

0.52%

Non-interest bearing deposits

130,212

88,468

83,378

Other liabilities

3,830

2,141

234

Total liabilities

909,264

634,171

615,521

Shareholders' equity

98,707

69,253

70,105

Total liabilities and shareholders equity

1,007,971

703,424

685,626

Net interest income, taxable equivalent

9,546

6,427

24,996

Interest rate spread

4.02%

3.94%

3.92%

Tax equivalent net interest margin

4.11%

4.02%

4.00%

Percent of average interest-earnings assets to average interest-bearing liabilities

119.16%

116.70%

117.50%

 

SmartFinancial, Inc. and Subsidiaries

Condensed Consolidated Financial Information (unaudited)

(In thousands)

Three months ending

Dec. 31, 2015

Sept. 30, 2015

June 30, 2015

March 31, 2015

Dec. 31, 2014

Operating Earnings

Net income (loss) (GAAP)

1,182

(77)

66

339

356

Securities (gains) losses

-

-

(52)

-

-

Merger and conversion costs

230

748

104

175

254

Foreclosed assets (gains) losses

(332)

86

363

(383)

340

Income tax effect of adjustments

39

(319)

(159)

79

(227)

Net operating earnings (Non-GAAP)

1,118

438

322

210

723

Dividends on preferred stock

(30)

(30)

(30)

(30)

(30)

Net operating earnings available to common shareholders (Non-GAAP)

1,088

408

292

180

693

Net operating earnings per common share:

Basic

0.19

0.10

0.10

0.06

0.23

Diluted

0.18

0.10

0.09

0.05

0.21

Operating Efficiency Ratio

Efficiency ratio (GAAP)

74.30%

97.44%

88.67%

71.68%

81.45%

Adjustment for securities (gains) losses

0.00%

0.00%

-1.20%

0.00%

0.00%

Adjustment for merger and conversion costs

-2.85%

-11.51%

-2.41%

-4.10%

-5.94%

Adjustment for OREO (gains) losses

4.13%

-1.32%

-8.36%

8.94%

-7.97%

Operating efficiency ratio (Non-GAAP)

75.57%

84.60%

76.70%

76.51%

67.55%

Allowance for loan losses (GAAP)

4,355

3,828

3,834

3,915

3,880

Net acquisition accounting fair value discounts to loans

11,781

12,520

5,599

6,467

6,630

Adjusted allowance for loan losses (Non-GAAP)

16,136

16,348

9,433

10,382

10,510

Loans (excluding acquisition accounting fair value discounts)

739,497

722,959

396,323

377,877

370,033

Adjusted allowance for loan losses to loans (Non-GAAP)

2.18%

2.26%

2.38%

2.75%

2.84%

 

 

SOURCE SmartFinancial, Inc.



RELATED LINKS

http://www.smartbank.com