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| 8-K - 8-K SMARTFINANCIAL INC 4TH QUARTER 2016 EARNINGS RELEASE - SMARTFINANCIAL INC. | a2016q4earningsreleasecover.htm |
Exhibit 99.1
4Q 2016
SmartFinancial Reports Fourth Quarter Results
KNOXVILLE, TN - January 17, 2017 - SmartFinancial, Inc. ("SmartFinancial"; NASDAQ: SMBK), announced today net income of $1.6 million in its fourth quarter of 2016, compared to $1.2 million a year ago. In the first quarter of 2016, SmartFinancial completed the merger of Cornerstone Community Bank with and into SmartBank. This quarter completes the third full quarter's results of the merged bank.
Billy Carroll, President & CEO, stated: "We are extremely proud of the achievements of our associates during our first full year as a combined company. We had outstanding organic loan growth of over $85 million, increased demand deposits by over $33 million, and maintained a net interest margin of over 4.00 percent for the year. We generated over $4 million in non-interest income during the year thanks to increased revenues from the sale of mortgage and SBA loans and higher revenues from deposit account services. We are successfully capturing our post merger efficiency gains as demonstrated by two consecutive quarterly decreases in noninterest expense to average assets. As a result we have generated increases in both net income and return on assets the last two quarters and look forward to continuing the trend of quarterly improvements into 2017.”
SmartFinancial's Chairman, Miller Welborn, concluded: "The only thing more exciting than what we as a company have accomplished over the last year are the opportunities we have before us heading into 2017. We have added a veteran team of bankers in Bradley County, Tennessee to go along with our planned branch acquisition in that market and as part of our organic growth strategy we are opening a new branch in Panama City, Florida, and that is just to start the year. We will continue to execute our objectives of growing the company while maintaining a strong margin, rigorous underwriting standards, and increasing efficiency. Every day we strive to achieve our goals of being a great place to work, a great place to bank, and making our company a rewarding investment for our shareholders. "
Performance Highlights
• | Net income available to common shareholders totaled $1.4 million or $0.23 per share during the fourth quarter of 2016 which is up from $1.2 million or $0.20 per share in the fourth quarter of 2015. |
• | Annualized return on average assets equaled 0.64 percent in the fourth quarter of 2016, compared to 0.63 percent in the third quarter of 2016. |
• | Annualized net loan growth was approximately 8 percent in the fourth quarter and 12 percent for the full year 2016. |
• | Asset quality was outstanding with nonperforming assets to total assets of just 0.43 percent. |
• | Net interest margin, taxable equivalent, increased to 4.06 percent in the quarter as the asset sensitive balance sheet reacted to the increases in interest rates and as the percentage of earning-assets to total assets increased. |
Fourth Quarter 2016 compared to Third Quarter 2016
Net income available to common shareholders totaled $1.4 million in the fourth quarter of 2016, or $0.22 per diluted share, compared to $1.3 million, or $0.22 per diluted share, in the third quarter of 2016. Net operating earnings available to common shareholders, which excludes purchased loans accounting adjustments, securities gains, merger and conversion costs, and foreclosed assets gains and losses, totaled $1.4 million in the fourth quarter of 2016 compared to $1.1 million in the previous quarter.
Net interest income to average assets of 3.82 percent for the quarter increased from 3.76 percent in the third quarter of 2016. Net interest income totaled $9.9 million in the fourth quarter of 2016 compared to $9.7 million in the third quarter of 2016. Net interest income was positively impacted during the quarter by increases in earning asset balances and higher earning asset yields. Net interest margin, taxable equivalent, increased from 4.04 percent in the third quarter of 2016 to 4.06 percent in the fourth quarter of 2016 primarily due to higher average loan balances and higher loan yields.
Provision for loan losses was $171 thousand in the fourth quarter of 2016, compared to $261 thousand in the third quarter of 2016. The decrease in provision for loan losses was due to credit improvements in the loan portfolio during the quarter. Annualized net charge-offs in the fourth quarter of 2016 remained at a very low level, just 0.02 percent of average loans compared to 0.01 percent the third quarter of 2016.
The allowance for loan losses, or the ALLL, was $5.1 million, or 0.63 percent of total loans as of December 31, 2016, compared to $5.0 million, or 0.62 percent of total loans, as of September 30, 2016. Adjusted ALLL, which includes the ALLL as well as net acquisition accounting fair value adjustments for acquired loans, was 1.86 percent of total loans as of December 31, 2016, which was down from 1.93 percent as of September 30, 2016. The reduction in adjusted ALLL resulted from continued accretion of fair value discounts.
Nonperforming loans as a percentage of total loans was 0.26 percent as of December 31, 2016, which was up slightly from 0.17 percent in the prior quarter. Total nonperforming assets (which include nonaccrual loans, loans past due 90 days or more and still accruing, and foreclosed assets) as a percentage of total assets was 0.43 percent as of December 31, 2016, compared to 0.38 percent as of September 30, 2016.
Non-interest income to average assets of 0.37 percent for the quarter decreased from 0.47 percent in the third quarter of 2016. Non-interest income totaled $948 thousand in the fourth quarter of 2016, compared to $1.2 million in the third quarter of 2016. The decrease in non-interest income was primarily due to lower gains on sale of foreclosed assets.
Non-interest expense to average assets of 3.11 percent for the quarter was down from 3.13 percent in the third quarter of 2016 and was the lowest of any quarter in 2016. Non-interest expense totaled $8.0 million in the fourth quarter of 2016, which was down slightly from the third quarter of 2016.
Income tax expense was $960 thousand in the fourth quarter of 2016 compared to $947 thousand in the third quarter of 2016. The company's effective tax rate was 36.81 percent in the fourth quarter of 2016 compared to 37.03 percent in the third quarter of 2016.
Fourth Quarter 2016 compared to Fourth Quarter 2015
Net income available to common shareholders totaled $1.4 million in the fourth quarter of 2016, or $0.22 per diluted share, compared to $1.2 million, or $0.19 per diluted share, in the fourth quarter of 2015. Net operating earnings available to common shareholders, which excludes purchased loans accounting adjustments, securities gains, merger and conversion costs, and foreclosed assets gains and losses, totaled $1.4 million in the fourth quarter of 2016 compared to $584 thousand in the fourth quarter of 2015.
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 twelve branches, two loan production offices, and one mortgage production office, all of which are located in East Tennessee, the Florida Panhandle, and North Georgia. 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.
Cautionary Note Regarding Forward-Looking Statements
This release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. 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.
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) yield on earning assets, taxable equivalent, (ii) net interest margin, taxable equivalent, (iii) net operating earnings available to common shareholders; (iv) operating efficiency ratio; (v) adjusted allowance for loan losses to loans; and (vi) tangible common equity, in its analysis of the company's performance. Yield on earning assets, taxable equivalent, and net interest margin, taxable equivalent, take into account income on assets exempt from income taxes and are stated on a taxable-equivalent basis assuming a federal income tax rate of 34.0 percent. 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, foreclosed assets 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 foreclosed assets 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. Tangible common equity excludes total preferred stock, preferred stock paid in capital, goodwill, and other intangible assets.
Management believes that these 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'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.
Source
SmartFinancial, Inc.
Investor Contacts
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
SmartFinancial, Inc. and Subsidiaries | ||||||||||||||||||||
Condensed Consolidated Financial Information (unaudited) | ||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||
As of and for the three months ended | ||||||||||||||||||||
December 31, 2016 | September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | ||||||||||||||||
Selected Performance Ratios (Annualized) | ||||||||||||||||||||
Return on average assets | 0.64 | % | 0.63 | % | 0.48 | % | 0.54 | % | 0.47 | % | ||||||||||
Net operating return on average assets (Non-GAAP) | 0.54 | % | 0.44 | % | 0.26 | % | 0.40 | % | 0.24 | % | ||||||||||
Return on average shareholder equity | 6.24 | % | 6.19 | % | 4.64 | % | 5.29 | % | 4.75 | % | ||||||||||
Net operating return on average shareholder equity (Non-GAAP) | 5.32 | % | 4.35 | % | 2.47 | % | 3.89 | % | 2.47 | % | ||||||||||
Net interest income / average assets | 3.82 | % | 3.76 | % | 3.87 | % | 3.67 | % | 3.79 | % | ||||||||||
Yield on Earning Assets | 4.51 | % | 4.49 | % | 4.62 | % | 4.40 | % | 4.54 | % | ||||||||||
Yield on earning assets, TE (Non-GAAP) | 4.51 | % | 4.50 | % | 4.62 | % | 4.40 | % | 4.54 | % | ||||||||||
Cost of interest-bearing liabilities | 0.58 | % | 0.57 | % | 0.56 | % | 0.53 | % | 0.52 | % | ||||||||||
Net Interest margin | 4.05 | % | 4.03 | % | 4.16 | % | 3.96 | % | 4.09 | % | ||||||||||
Net interest margin, TE (Non-GAAP) | 4.06 | % | 4.04 | % | 4.16 | % | 3.96 | % | 4.10 | % | ||||||||||
Non-interest income / average assets | 0.37 | % | 0.47 | % | 0.39 | % | 0.43 | % | 0.46 | % | ||||||||||
Non-interest expense / average assets | 3.11 | % | 3.13 | % | 3.41 | % | 3.19 | % | 3.20 | % | ||||||||||
Efficiency ratio (1) | 74.29 | % | 74.06 | % | 80.13 | % | 77.95 | % | 75.24 | % | ||||||||||
Operating efficiency ratio (Non-GAAP) | 78.98 | % | 80.31 | % | 85.49 | % | 82.09 | % | 85.73 | % | ||||||||||
Pre-tax pre-provision income / average assets | 1.08 | % | 1.09 | % | 0.85 | % | 0.90 | % | 1.05 | % | ||||||||||
Per Common Share | ||||||||||||||||||||
Net income, basic | $ | 0.23 | $ | 0.23 | $ | 0.16 | $ | 0.20 | $ | 0.20 | ||||||||||
Net income, diluted | 0.22 | 0.22 | 0.15 | 0.19 | 0.19 | |||||||||||||||
Net operating earnings, basic (Non-GAAP) | 0.24 | 0.19 | 0.11 | 0.13 | 0.10 | |||||||||||||||
Net operating earnings, diluted (Non-GAAP) | 0.23 | 0.19 | 0.10 | 0.13 | 0.10 | |||||||||||||||
Book value | 15.81 | 15.83 | 15.64 | 15.47 | 15.19 | |||||||||||||||
Tangible book value (Non-GAAP) | 14.69 | 14.70 | 14.48 | 14.29 | 13.99 | |||||||||||||||
Common shares outstanding | 5,896 | 5,885 | 5,824 | 5,817 | 5,806 | |||||||||||||||
Composition Of Loans | ||||||||||||||||||||
Commercial & financial | $ | 85,696 | $ | 83,471 | $ | 87,253 | $ | 83,197 | $ | 85,526 | ||||||||||
Real estate construction & development | 117,748 | 128,727 | 115,385 | 113,028 | 105,132 | |||||||||||||||
Real estate commercial | 414,860 | 394,989 | 389,368 | 370,922 | 369,263 | |||||||||||||||
owner occupied | 181,840 | 172,397 | 177,052 | 166,364 | 161,698 | |||||||||||||||
non-owner occupied | 233,021 | 222,592 | 212,315 | 204,558 | 207,565 | |||||||||||||||
Real estate residential | 187,557 | 182,952 | 174,013 | 166,214 | 161,427 | |||||||||||||||
Other loans | 7,515 | 7,263 | 7,377 | 7,578 | 6,368 | |||||||||||||||
Total loans | $ | 813,376 | $ | 797,403 | $ | 773,396 | $ | 740,939 | $ | 727,716 | ||||||||||
(1) Efficiency ratio is calculated as non-interest expense divided by the sum of net interest income and non-interest income | ||||||||||||||||||||
SmartFinancial, Inc. and Subsidiaries | ||||||||||||||||||||
Condensed Consolidated Financial Information (unaudited) | ||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||
As of and for the three months ended | ||||||||||||||||||||
December 31, 2016 | September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | ||||||||||||||||
Asset Quality Data and Ratios | ||||||||||||||||||||
Nonperforming loans | $ | 2,142 | $ | 1,370 | $ | 2,226 | $ | 3,171 | $ | 2,754 | ||||||||||
Foreclosed assets | 2,386 | 2,536 | 4,936 | 5,133 | 5,358 | |||||||||||||||
Total nonperforming assets | $ | 4,528 | $ | 3,906 | $ | 7,162 | $ | 8,304 | $ | 8,112 | ||||||||||
Restructured loans not included in nonperforming loans | $ | 608 | $ | 3,388 | $ | 3,639 | $ | 3,677 | $ | 3,693 | ||||||||||
Net charge-offs to average loans (annualized) | 0.02 | % | 0.01 | % | 0.01 | % | (0.02 | )% | 0.02 | % | ||||||||||
Allowance for loan losses to loans | 0.63 | % | 0.62 | % | 0.61 | % | 0.61 | % | 0.60 | % | ||||||||||
Adjusted allowance for loan losses to loans (Non-GAAP) | 1.86 | % | 1.93 | % | 2.00 | % | 2.11 | % | 2.18 | % | ||||||||||
Nonperforming loans to total loans, gross | 0.26 | % | 0.17 | % | 0.29 | % | 0.43 | % | 0.38 | % | ||||||||||
Nonperforming assets to total assets | 0.43 | % | 0.38 | % | 0.69 | % | 0.82 | % | 0.79 | % | ||||||||||
Capital Ratios | ||||||||||||||||||||
Tangible equity to tangible assets | 9.34 | % | 9.53 | % | 9.37 | % | 9.43 | % | 9.17 | % | ||||||||||
Tangible common equity to tangible assets | 8.20 | % | 8.36 | % | 8.20 | % | 8.24 | % | 7.99 | % | ||||||||||
SmartFinancial Inc.: | Estimated | |||||||||||||||||||
Tier 1 leverage | 9.71 | % | 9.77 | % | 9.66 | % | 9.74 | % | 9.45 | % | ||||||||||
Common equity Tier 1 | 9.98 | % | 10.04 | % | 10.53 | % | 10.61 | % | 10.3 | % | ||||||||||
Tier 1 risk-based capital | 11.35 | % | 11.42 | % | 12.04 | % | 12.14 | % | 11.78 | % | ||||||||||
Total risk-based capital | 11.93 | % | 12.00 | % | 12.60 | % | 12.7 | % | 12.32 | % | ||||||||||
SmartBank: | Estimated | |||||||||||||||||||
Tier 1 leverage | 9.57 | % | 9.63 | % | 9.70 | % | 9.49 | % | 10.05 | % | ||||||||||
Common equity Tier 1 | 11.19 | % | 11.26 | % | 11.31 | % | 11.64 | % | 12.16 | % | ||||||||||
Tier 1 risk-based capital | 11.19 | % | 11.26 | % | 11.31 | % | 11.64 | % | 12.16 | % | ||||||||||
Total risk-based capital | 11.76 | % | 11.83 | % | 11.87 | % | 12.20 | % | 12.97 | % | ||||||||||
SmartFinancial, Inc. and Subsidiaries | ||||||||||||||||||||
Condensed Consolidated Financial Information (unaudited) | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
BALANCE SHEET | ||||||||||||||||||||
Ending Balances | ||||||||||||||||||||
December 31, 2016 | September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | ||||||||||||||||
Assets | ||||||||||||||||||||
Cash & cash equivalents | $ | 68,748 | $ | 58,587 | $ | 71,737 | $ | 68,933 | $ | 79,965 | ||||||||||
Securities available for sale | 129,422 | 138,628 | 142,875 | 157,560 | 166,413 | |||||||||||||||
Other investments | 5,628 | 4,451 | 4,451 | 4,451 | 4,451 | |||||||||||||||
Total investment securities | 135,050 | 143,079 | 147,326 | 162,011 | 170,864 | |||||||||||||||
Total loans | 813,376 | 797,143 | 773,396 | 740,939 | 727,716 | |||||||||||||||
Allowance for loan losses | (5,105 | ) | (4,964 | ) | (4,720 | ) | (4,527 | ) | (4,355 | ) | ||||||||||
Loans net | 808,271 | 792,178 | 768,676 | 736,412 | 723,361 | |||||||||||||||
Premises and equipment | 30,536 | 27,863 | 25,844 | 25,680 | 25,038 | |||||||||||||||
Foreclosed assets | 2,386 | 2,536 | 4,936 | 5,133 | 5,358 | |||||||||||||||
Goodwill and other intangibles | 6,636 | 6,675 | 6,754 | 6,848 | 6,941 | |||||||||||||||
Other assets | 10,830 | 9,808 | 9,524 | 11,207 | 12,436 | |||||||||||||||
Total assets | $ | 1,062,456 | $ | 1,040,726 | $ | 1,034,798 | $ | 1,016,224 | $ | 1,023,963 | ||||||||||
Liabilities | ||||||||||||||||||||
Non-interest demand | $ | 153,483 | $ | 145,509 | $ | 145,864 | $ | 132,481 | $ | 131,419 | ||||||||||
Interest-bearing demand | 162,702 | 152,216 | 153,166 | 161,454 | 149,424 | |||||||||||||||
Money market and savings | 274,605 | 271,259 | 258,281 | 241,500 | 236,901 | |||||||||||||||
Time deposits | 316,275 | 291,857 | 331,438 | 323,676 | 340,739 | |||||||||||||||
Total deposits | 907,065 | 860,843 | 888,749 | 859,111 | 858,483 | |||||||||||||||
Repurchase agreements | 26,622 | 24,202 | 26,883 | 20,747 | 28,068 | |||||||||||||||
FHLB & other borrowings | 18,505 | 43,048 | 10,091 | 30,125 | 34,187 | |||||||||||||||
Other liabilities | 5,024 | 7,463 | 6,011 | 4,253 | 3,048 | |||||||||||||||
Total liabilities | 957,216 | 935,557 | 931,734 | 914,236 | 923,786 | |||||||||||||||
Shareholders' Equity | ||||||||||||||||||||
Preferred stock | 12 | 12 | 12 | 12 | 12 | |||||||||||||||
Common stock | 5,896 | 5,885 | 5,824 | 5,817 | 5,806 | |||||||||||||||
Additional paid-in capital | 83,463 | 83,330 | 82,800 | 82,717 | 82,616 | |||||||||||||||
Retained earnings | 16,871 | 15,494 | 14,153 | 13,231 | 12,095 | |||||||||||||||
Accumulated other comprehensive loss | (1,002 | ) | 449 | 275 | 211 | (352 | ) | |||||||||||||
Total shareholders' equity | 105,240 | 105,170 | 103,064 | 101,988 | 100,177 | |||||||||||||||
Total liabilities & shareholders' equity | $ | 1,062,456 | $ | 1,040,727 | $ | 1,034,798 | $ | 1,016,224 | $ | 1,023,963 | ||||||||||
SmartFinancial, Inc. and Subsidiaries | ||||||||||||||||||||
Condensed Consolidated Financial Information (unaudited) | ||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||
INCOME STATEMENT | ||||||||||||||||||||
Three months ended | ||||||||||||||||||||
December 31, 2016 | September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | ||||||||||||||||
Interest Income | ||||||||||||||||||||
Loans, including fees | $ | 10,324 | $ | 10,111 | $ | 9,954 | $ | 9,374 | $ | 9,875 | ||||||||||
Investment securities | 570 | 602 | 665 | 717 | 630 | |||||||||||||||
Other interest income | 83 | 51 | 50 | 63 | 62 | |||||||||||||||
Total interest income | 10,977 | 10,763 | 10,670 | 10,154 | 10,567 | |||||||||||||||
Interest Expense | ||||||||||||||||||||
Deposits | 1,066 | 1,065 | 1,013 | 961 | 937 | |||||||||||||||
Repurchase agreements | 17 | 17 | 15 | 17 | 17 | |||||||||||||||
FHLB and other borrowings | 37 | 17 | 29 | 45 | 66 | |||||||||||||||
Total interest expense | 1,121 | 1,099 | 1,057 | 1,023 | 1,020 | |||||||||||||||
Net interest income | 9,856 | 9,665 | 9,613 | 9,131 | 9,547 | |||||||||||||||
Provision for loan losses | 171 | 261 | 218 | 138 | 567 | |||||||||||||||
Net interest income after provision for loan losses | 9,685 | 9,404 | 9,394 | 8,993 | 8,980 | |||||||||||||||
Non-interest income | ||||||||||||||||||||
Service charges on deposit accounts | 277 | 296 | 259 | 296 | 397 | |||||||||||||||
Gain on securities | — | 18 | 98 | 83 | — | |||||||||||||||
Gain on sale of loans and other assets | 242 | 287 | 197 | 222 | 86 | |||||||||||||||
Gain (loss) on sale of foreclosed assets | 6 | 130 | (4 | ) | 58 | 332 | ||||||||||||||
Other non-interest income | 422 | 472 | 410 | 412 | 340 | |||||||||||||||
Total non-interest income | 948 | 1,204 | 961 | 1,071 | 1,155 | |||||||||||||||
Non-interest expense | ||||||||||||||||||||
Salaries and employee benefits | 4,422 | 4,312 | 4,486 | 4,495 | 4,208 | |||||||||||||||
Occupancy expense | 875 | 965 | 1,137 | 1,018 | 910 | |||||||||||||||
FDIC premiums | 166 | 153 | 151 | 136 | 148 | |||||||||||||||
Foreclosed asset expense | 37 | 79 | 64 | 57 | 110 | |||||||||||||||
Marketing | 79 | 179 | 184 | 173 | 100 | |||||||||||||||
Data Processing | 541 | 457 | 555 | 341 | 510 | |||||||||||||||
Professional expenses | 558 | 558 | 551 | 455 | 760 | |||||||||||||||
Amortization of other intangibles | 39 | 80 | 93 | 93 | 93 | |||||||||||||||
Service contracts | 281 | 272 | 316 | 286 | 248 | |||||||||||||||
Other non-interest expense | 1,028 | 994 | 936 | 897 | 965 | |||||||||||||||
Total non-interest expense | 8,026 | 8,050 | 8,472 | 7,952 | 8,052 | |||||||||||||||
Earnings before income taxes | 2,607 | 2,558 | 1,883 | 2,112 | 2,083 | |||||||||||||||
Income tax expense | 960 | 947 | 691 | 764 | 901 | |||||||||||||||
Net income (loss) | 1,647 | 1,611 | 1,192 | 1,348 | 1,182 | |||||||||||||||
Dividends on preferred stock | 270 | 270 | 270 | 212 | 30 | |||||||||||||||
Net income available to common shareholders | $ | 1,377 | $ | 1,341 | $ | 922 | $ | 1,136 | $ | 1,152 | ||||||||||
NET INCOME PER COMMON SHARE | ||||||||||||||||||||
Basic | $ | 0.23 | $ | 0.23 | $ | 0.16 | $ | 0.20 | $ | 0.20 | ||||||||||
Diluted | 0.22 | 0.22 | 0.15 | 0.19 | 0.19 | |||||||||||||||
Weighted average common shares outstanding | ||||||||||||||||||||
Basic | 5,891 | 5,835 | 5,820 | 5,807 | 5,750 | |||||||||||||||
Diluted | 6,206 | 6,096 | 6,132 | 6,108 | 6,037 | |||||||||||||||
SmartFinancial, Inc. and Subsidiaries | |||||||||||||||||||||||||||||||||
Condensed Consolidated Financial Information (unaudited) | |||||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||
YIELD ANALYSIS | |||||||||||||||||||||||||||||||||
Three Months Ended December 31, 2016 | Three Months Ended September 30, 2016 | Three Months Ended December 31, 2015 | |||||||||||||||||||||||||||||||
Average | Yield/ | Average | Yield/ | Average | Yield/ | ||||||||||||||||||||||||||||
Balance | Interest | Cost | Balance | Interest | Cost | Balance | Interest | Cost | |||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||||
Loans (1) | $ | 799,397 | $ | 10,329 | 5.14 | % | $ | 788,585 | $ | 10,112 | 5.10 | % | $ | 719,140 | $ | 9,875 | 5.45 | % | |||||||||||||||
Investment securities and interest bearing due froms (2) | 155,426 | 586 | 1.50 | % | 159,683 | 615 | 1.53 | % | 157,243 | 624 | 1.57 | % | |||||||||||||||||||||
Federal funds and other | 14,266 | 83 | 2.31 | % | 5,442 | 51 | 3.73 | % | 49,488 | 89 | 0.71 | % | |||||||||||||||||||||
Total interest-earning assets | 969,089 | 10,998 | 4.51 | % | 953,710 | 10,778 | 4.50 | % | 925,871 | 10,588 | 4.54 | % | |||||||||||||||||||||
Non-interest-earning assets | 53,721 | 66,735 | 82,100 | ||||||||||||||||||||||||||||||
Total assets | $ | 1,031,887 | $ | 1,020,445 | $ | 1,007,971 | |||||||||||||||||||||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||||||||||||||||||||
Interest-bearing demand deposits | $ | 151,108 | $ | 78 | 0.21 | % | $ | 147,102 | $ | 73 | 0.20 | % | $ | 138,156 | $ | 53 | 0.15 | % | |||||||||||||||
Money market and savings deposits | 273,257 | 318 | 0.46 | % | 268,307 | 283 | 0.42 | % | 234,637 | 259 | 0.44 | % | |||||||||||||||||||||
Time deposits | 295,529 | 670 | 0.90 | % | 312,889 | 709 | 0.90 | % | 344,095 | 625 | 0.72 | % | |||||||||||||||||||||
Total interest-bearing deposits | 719,894 | 1,066 | 0.59 | % | 728,298 | 1,065 | 0.58 | % | 716,888 | 937 | 0.52 | % | |||||||||||||||||||||
Securities sold under agreement to repurchase | 21,848 | 17 | 0.31 | % | 22,471 | 17 | 0.30 | % | 22,528 | 17 | 0.30 | % | |||||||||||||||||||||
Federal Home Loan Bank advances and other borrowings | 23,823 | 37 | 0.62 | % | 11,187 | 17 | 0.60 | % | 35,806 | 66 | 0.73 | % | |||||||||||||||||||||
Total interest-bearing liabilities | 765,565 | 1,120 | 0.58 | % | 761,956 | 1,099 | 0.57 | % | 775,222 | 1,020 | 0.52 | % | |||||||||||||||||||||
Noninterest-bearing deposits | 154,171 | 148,178 | 130,212 | ||||||||||||||||||||||||||||||
Other liabilities | 6,514 | 6,194 | 3,830 | ||||||||||||||||||||||||||||||
Total liabilities | 926,244 | 916,328 | 909,264 | ||||||||||||||||||||||||||||||
Shareholders’ equity | 105,643 | 104,117 | 98,707 | ||||||||||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 1,031,887 | $ | 1,020,445 | $ | 1,007,971 | |||||||||||||||||||||||||||
Net interest income, taxable equivalent | $ | 9,878 | $ | 9,679 | $ | 9,568 | |||||||||||||||||||||||||||
Interest rate spread (3) | 3.93 | % | 3.93 | % | 4.02 | % | |||||||||||||||||||||||||||
Tax equivalent net interest margin (4) | 4.06 | % | 4.04 | % | 4.10 | % | |||||||||||||||||||||||||||
Percentage of average interest-earning assets to average interest-bearing liabilities | 126.58 | % | 125.17 | % | 119.4 | % | |||||||||||||||||||||||||||
Percentage of average equity to average assets | 10.24 | % | 10.20 | % | 9.79 | % | |||||||||||||||||||||||||||
(1) Loans include nonaccrual loans. Loan fees included in loan income was $720 thousand, $556 thousand, and $518 thousand for the quarters ended December 2016, September 2016, and December 2015, respectively. Yields related to loans exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 34.0 percent. The taxable-equivalent adjustment was $5 thousand for the period ended December 31, 2016, $1 thousand for the period ended September 30, 2016 and zero for the period ended December 31, 2015.
(2) Yields related to investment securities exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 34.0 percent. The taxable-equivalent adjustment was $16 thousand for the period ended December 31, 2016, $13 thousand for the period ended September 30, 2016, and $21 thousand for the period ended December 31, 2015.
(3) Net interest spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
(4) Net interest margin represents net interest income divided by average interest-earning assets.
SmartFinancial, Inc. and Subsidiaries | ||||||||||||||||||||
Reconciliation of Non-GAAP Financial Measures | ||||||||||||||||||||
Condensed Consolidated Financial Information (unaudited) | ||||||||||||||||||||
(In thousands, except for per share data) | ||||||||||||||||||||
Three months ended | ||||||||||||||||||||
December 31, 2016 | September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | ||||||||||||||||
Operating Earnings | ||||||||||||||||||||
Net income (GAAP) | $ | 1,647 | $ | 1,611 | $ | 1,192 | $ | 1,348 | $ | 1,182 | ||||||||||
Purchased loan accounting adjustments* | (430 | ) | (450 | ) | (597 | ) | (541 | ) | (818 | ) | ||||||||||
Securities (gains) losses | — | (18 | ) | (98 | ) | (83 | ) | — | ||||||||||||
Merger and conversion costs | — | — | 153 | 105 | 230 | |||||||||||||||
Foreclosed assets (gains) losses | (6 | ) | (130 | ) | 4 | (58 | ) | (332 | ) | |||||||||||
Income tax effect of adjustments | 464 | 387 | 250 | 221 | 352 | |||||||||||||||
Net operating earnings (Non-GAAP) | 1,674 | 1,400 | 904 | 992 | 614 | |||||||||||||||
Dividends on preferred stock | (270 | ) | (270 | ) | (270 | ) | (212 | ) | (30 | ) | ||||||||||
Net operating earnings available to common shareholders (Non-GAAP) | $ | 1,404 | $ | 1,130 | $ | 634 | $ | 780 | $ | 584 | ||||||||||
Net operating earnings per common share: | ||||||||||||||||||||
Basic | $ | 0.24 | $ | 0.19 | $ | 0.11 | $ | 0.13 | $ | 0.10 | ||||||||||
Diluted | 0.23 | 0.19 | 0.10 | 0.13 | 0.10 | |||||||||||||||
Operating Efficiency Ratio | ||||||||||||||||||||
Efficiency ratio (GAAP) | 74.29 | % | 74.06 | % | 80.13 | % | 77.95 | % | 75.24 | % | ||||||||||
Adjustment for amortization of intangibles | (0.49 | )% | (0.99 | )% | (1.10 | )% | (1.17 | )% | (1.16 | )% | ||||||||||
Adjustment for taxable equivalent yields | (0.26 | )% | (0.18 | )% | (0.16 | )% | (0.17 | )% | (0.26 | )% | ||||||||||
Adjustment for purchased loan accounting adjustments* | 5.36 | % | 5.59 | % | 7.05 | % | 6.81 | % | 10.16 | % | ||||||||||
Adjustment for securities (gains) losses | — | % | 0.23 | % | 1.16 | % | 1.05 | % | — | % | ||||||||||
Adjustment for merger and conversion costs | — | % | — | % | (1.81 | )% | (1.33 | )% | (2.85 | )% | ||||||||||
Adjustment for OREO (gains) losses | 0.08 | % | 1.62 | % | (0.05 | )% | 0.73 | % | 4.13 | % | ||||||||||
Operating efficiency ratio (Non-GAAP) | 78.98 | % | 80.33 | % | 85.22 | % | 83.87 | % | 85.26 | % | ||||||||||
Adjusted Allowance for Loan Losses | ||||||||||||||||||||
Allowance for loan losses (GAAP) | $ | 5,105 | $ | 4,964 | $ | 4,720 | $ | 4,527 | $ | 4,355 | ||||||||||
Net acquisition accounting fair value discounts to loans | 10,271 | 10,742 | 11,053 | 11,381 | 11,781 | |||||||||||||||
Adjusted allowance for loan losses (Non-GAAP) | 15,377 | 15,706 | 15,773 | 15,908 | 16,136 | |||||||||||||||
Loans (excluding acquisition accounting fair value discounts) | 828,753 | 812,848 | 789,169 | 752,321 | 739,497 | |||||||||||||||
Adjusted allowance for loan losses to loans (Non-GAAP) | 1.86 | % | 1.93 | % | 2.00 | % | 2.11 | % | 2.18 | % | ||||||||||
Tangible Common Equity | ||||||||||||||||||||
Shareholders' equity (GAAP) | $ | 105,240 | $ | 105,170 | $ | 103,064 | $ | 101,988 | $ | 100,177 | ||||||||||
Less preferred stock & preferred stock paid in capital | 12,000 | 12,000 | 12,000 | 12,000 | 12,000 | |||||||||||||||
Less goodwill and other intangible assets | 6,636 | 6,675 | 6,754 | 6,848 | 6,941 | |||||||||||||||
Tangible common equity (Non-GAAP) | $ | 86,604 | $ | 86,495 | $ | 84,310 | $ | 83,140 | $ | 81,236 | ||||||||||
*Consists of ASC 310-30 accretion above (below) contractual loan income and ASC 310-20 accretion