Attached files
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| 8-K - FORM 8-K - SMARTFINANCIAL INC. | v423925_8k.htm |
Exhibit 99.1
3Q 2015
SmartFinancial, Inc. Reports for Third Quarter
KNOXVILLE, TN – November 5, 2015 — 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.
Source
SmartFinancial, Inc.
Investor Contacts
SmartFinancial, Inc.
Billy Carroll
President & CEO
865.868.0613
Frank Hughes
Executive Vice President
Investor Relations
423.385.3009
Media Contact
Kelley Fowler
First Vice President, Public Relations & Marketing
SmartBank
865.868.0611
kfowler@smartbank.net
SmartFinancial, Inc. and Subsidiaries
Consolidated Statements of Income
| Unaudited Three Months Ended September 30, | Unaudited Nine Months Ended 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.
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.