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SmartFinancial Announces Results for the First Quarter 2024
来源: Nasdaq GlobeNewswire / 22 4月 2024 17:00:41 America/New_York
KNOXVILLE, Tenn., April 22, 2024 (GLOBE NEWSWIRE) -- SmartFinancial, Inc. ("SmartFinancial" or the "Company"; NYSE: SMBK), today announced net income of $9.4 million, or $0.55 per diluted common share, for the first quarter of 2024, compared to net income of $11.5 million, or $0.68 per diluted common share, for the first quarter of 2023, and compared to prior quarter net income of $6.2 million, or $0.37 per diluted common share. Operating earnings1, which excludes non-recurring income related to the gain on sale of a branch location, net of tax adjustments, totaled $8.4 million, or $0.49 per diluted common share, in the first quarter of 2024, compared to $11.5 million, or $0.68 per diluted common share, in the first quarter of 2023, and compared to $6.9 million, or $0.41 per diluted common share, in the fourth quarter of 2023.
Highlights for the First Quarter of 2024
- Operating earnings1 of $8.4 million, or $0.49 per diluted common share
- Net organic loan and lease growth of $34 million - 4% annualized quarter-over-quarter increase
- Credit quality remains solid with nonperforming assets to total assets of 0.18%
- Deposit growth of $126.3 million – 12% annualized quarter-over-quarter increase
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1 Non-GAAP measure. See “Non-GAAP Financial Measures” for more information and see the Non-GAAP reconciliation
Billy Carroll, President & CEO, stated: “Our company started 2024 with nice momentum. The first quarter was highlighted by continued growth in both loans and deposits, each growing 4% and 12%, respectively, along with expense discipline and focus on operating leverage improvement. The investments we’ve made over the last few years have positioned us well and with a margin inflection point on the horizon, we remain very bullish.”SmartFinancial's Chairman, Miller Welborn, concluded: “Our team continued to make substantial forward progress on our key strategic initiatives in the first quarter. Our associates worked diligently to grow revenue and control expenses, setting the stage for operating leverage gains for the remainder of 2024. Continued commitment to EXCELLENT client service and growing shareholder value remains “top of mind” for our team.”
Net Interest Income and Net Interest Margin
Net interest income was $31.7 million for the first quarter of 2024, compared to $31.5 million for the prior quarter. Average earning assets totaled $4.50 billion, an increase of $116.4 million from the prior quarter. The increase in average earnings assets was primarily driven by an increase in average interest-earning cash of $64.0 million, average loans and leases of $49.7 million and average securities of $2.7 million. Average interest-bearing liabilities increased by $144.2 million from the prior quarter, attributable to an increase in average deposits of $146.3 million, offset by a decrease in average borrowings of $2.2 million.
The tax equivalent net interest margin was 2.85% for the first quarter of 2024, compared to 2.86% for the prior quarter. The tax equivalent net interest margin was negatively impacted by the increased cost of interest-bearing liabilities, coupled with a slower rise on yield on interest-earning assets, quarter-over-quarter. The yield on loans and leases, excluding loan fees, was 5.71% for the first quarter, compared to 5.61% for the prior quarter.
The cost of total deposits for the first quarter of 2024 was 2.52% compared to 2.35% in the prior quarter. The cost of interest-bearing liabilities increased to 3.23% for the first quarter of 2024, compared to 3.07% for the prior quarter. The cost of average interest-bearing deposits was 3.16% for the first quarter of 2024, compared to 3.00% for the prior quarter, an increase of 16 basis points.
The following table presents selected interest rates and yields for the periods indicated:
Three Months Ended Mar Dec Increase Selected Interest Rates and Yields 2024 2023 (Decrease) Yield on loans and leases, excluding loan fees 5.71 % 5.61 % 0.10 % Yield on loans and leases 5.82 % 5.68 % 0.14 % Yield on earning assets, on a fully tax equivalent basis (FTE) 5.36 % 5.22 % 0.14 % Cost of interest-bearing deposits 3.16 % 3.00 % 0.16 % Cost of total deposits 2.52 % 2.35 % 0.17 % Cost of interest-bearing liabilities 3.23 % 3.07 % 0.16 % Net interest margin, FTE 2.85 % 2.86 % (0.01 ) %
Provision for Credit Losses on Loans and Leases and Credit QualityAt March 31, 2024, the allowance for credit losses was $34.2 million. The allowance for credit losses to total loans and leases was 0.98% as of March 31, 2024, compared to 1.02% as of December 31, 2023.
The following table presents detailed information related to the provision for credit losses for the periods indicated (dollars in thousands):
Three Months Ended Mar Dec Provision for Credit Losses on Loans and Leases Rollforward 2024 2023 Change Beginning balance $ 35,066 $ 33,687 $ 1,379 Charge-offs (920 ) (424 ) (496 ) Recoveries 135 302 (167 ) Net (charge-offs) recoveries (785 ) (122 ) (663 ) Provision for credit losses (1) (78 ) 1,501 (1,579 ) Ending balance $ 34,203 $ 35,066 $ (863 ) Allowance for credit losses to total loans and leases, gross 0.98 % 1.02 % (0.04 ) % (1) The current quarter-ended and prior quarter-ended excludes unfunded commitments release of $362 thousand and a provision of $69 thousand, respectively. At March 31, 2024, the unfunded commitment liability totaled $2.0 million. Nonperforming loans and leases as a percentage of total loans and leases was 0.18% as of March 31, 2024, a decrease of 6 basis points from the 0.24% reported in the fourth quarter of 2023. 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 0.18% as of March 31, 2024, and 0.20% on December 31, 2023.
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 2024 2023 (Decrease) Nonaccrual loans and leases $ 6,171 $ 7,931 $ (1,760 ) Loans and leases past due 90 days or more and still accruing 95 170 (75 ) Total nonperforming loans and leases 6,266 8,101 (1,835 ) Other real estate owned 696 517 179 Other repossessed assets 2,033 1,117 916 Total nonperforming assets $ 8,995 $ 9,735 $ (740 ) Nonperforming loans and leases to total loans and leases, gross 0.18 % 0.24 % (0.06 ) % Nonperforming assets to total assets 0.18 % 0.20 % (0.02 ) %
Noninterest IncomeNoninterest income increased $801 thousand to $8.4 million for the first quarter of 2024 compared to $7.6 million for the prior quarter. The current quarter increase was primarily associated with the $1.3 million pre-tax gain on the sale of a former branch building.
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 2024 2023 (Decrease) Service charges on deposit accounts $ 1,612 $ 1,673 $ (61 ) Mortgage banking income 280 227 53 Investment services 1,380 1,339 41 Insurance commissions 1,103 1,133 (30 ) Interchange and debit card transaction fees 1,253 1,370 (117 ) Other 2,752 1,837 915 Total noninterest income $ 8,380 $ 7,579 $ 801
Noninterest ExpenseNoninterest expense decreased $1.1 million to $28.6 million for the first quarter of 2024 compared to $29.7 million for the prior quarter. The current quarter decrease was primarily related to a decrease in other noninterest expenses associated with a Community Reinvestment Act donation of a former branch location and accruals in respect of pending litigation in the prior quarter.
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 2024 2023 (Decrease) Salaries and employee benefits $ 16,639 $ 16,275 $ 364 Occupancy and equipment 3,396 3,378 18 FDIC insurance 915 915 - Other real estate and loan related expenses 584 781 (197 ) Advertising and marketing 302 336 (34 ) Data processing and technology 2,465 2,458 7 Professional services 924 1,136 (212 ) Amortization of intangibles 612 643 (31 ) Merger related and restructuring expenses - - - Other 2,716 3,773 (1,057 ) Total noninterest expense $ 28,553 $ 29,695 $ (1,142 )
Income Tax ExpenseIncome tax expense was $2.6 million for the first quarter of 2024, an increase of $990 thousand, compared to $1.6 million for the prior quarter.
The effective tax rate was 21.94% for the first quarter of 2024 and 20.95% for the prior quarter.
Balance Sheet Trends
Total assets at March 31, 2024 were $4.95 billion compared to $4.83 billion at December 31, 2023. The $125.3 million increase is primarily attributable to increases in cash and cash equivalents of $125.7 million and loans and leases of $33.1 Asset increases were offset by a decrease in securities of $35.1 million.
Total liabilities increased to $4.49 billion at March 31, 2024 from $4.37 billion at December 31, 2023. The increase of $118.4 million was primarily from organic deposit growth of $126.3 million, offset by a decrease in borrowings of $3.2 million and other liabilities of $4.7 million.
Shareholders' equity at March 31, 2024, totaled $466.8 million, an increase of $6.9 million, from December 31, 2023. The increase in shareholders' equity was primarily driven by net income of $9.4 million for the three months ended March 31, 2024, offset by the negative change of $1.5 million in accumulated other comprehensive income and dividends paid of $1.3 million. Tangible book value per share1 was $21.12 at March 31, 2024, compared to $20.76 at December 31, 2023. Tangible common equity1 as a percentage of tangible assets1 was 7.43% at March 31, 2024, compared with 7.47% at December 31, 2023.
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1 Non-GAAP measure. 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 2024 2023 (Decrease) Total assets $ 4,954,690 $ 4,829,387 $ 125,303 Total liabilities 4,487,894 4,369,501 118,393 Total equity 466,796 459,886 6,910 Securities 654,516 689,646 (35,130 ) Loans and leases 3,477,555 3,444,462 33,093 Deposits 4,394,121 4,267,854 126,267 Borrowings 9,849 13,078 (3,229 )
Conference Call InformationSmartFinancial issued this earnings release for the first quarter of 2024 on Monday, April 22, 2024, and will host a conference call on Tuesday, April 23, 2024, at 10:00 a.m. ET. To access this interactive teleconference, dial (833) 470-1428 or (404) 975-4839 and entering the access code, 060240. A replay of the conference call will be available through June 22, 2024, by dialing (866) 813-9403 or (929) 458-6194 and entering the access code, 672905. 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 Florida. 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-provision net revenue 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-provision net revenue earnings, (x) operating noninterest expense, (xi) tangible common equity, (xii) average tangible common equity, (xiii) tangible book value per common share, (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-provision net revenue return on average assets is the annualized operating pre-provision net revenue 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-provision net revenue earnings is net interest income plus operating noninterest income (Non-GAAP) less operating noninterest expense (Non-GAAP). Operating noninterest interest income and operating noninterest expense exclude non-operating related income and expense items. A detailed reconciliation of these items are available in the Non-GAAP reconciliations. 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 per common share (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 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) changes in management’s plans for the future; (7) prevailing, or changes in, economic or political conditions, particularly in our market areas, including the effects of declines in the real estate market, high unemployment rates, inflationary pressures, elevated interest rates and slowdowns in economic growth, as well as the financial stress on borrowers as a result of the foregoing; (8) increased technology and cybersecurity risks, including generative artificial intelligence risks; (9) credit risk associated with our lending activities; (10) changes in loan demand, real estate values, or competition; (11) developments in our mortgage banking business, including loan modifications, general demand, and the effects of judicial or regulatory requirements or guidance; (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) potential impacts of adverse developments in the banking industry highlighted by high-profile bank failures, including impacts on customer confidence, deposit outflows, liquidity and the regulatory response thereto; (16) significant turbulence or a disruption in the capital or financial markets and the effect of a fall in stock market prices on our investment securities; (17) the effects of war or other conflicts including the impacts related to or resulting from Russia’s military action in Ukraine or the conflict in Israel and surrounding areas; 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 2024 2023 2023 2023 2023 Assets: Cash and cash equivalents $ 477,941 $ 352,271 $ 400,258 $ 238,898 $ 306,934 Securities available-for-sale, at fair value 474,347 408,410 385,131 540,308 560,418 Securities held-to-maturity, at amortized cost 180,169 281,236 282,313 283,564 284,776 Other investments 13,718 13,662 13,805 14,396 14,059 Loans held for sale 4,861 4,418 2,734 986 3,324 Loans and leases 3,477,555 3,444,462 3,378,999 3,337,790 3,281,787 Less: Allowance for credit losses (34,203 ) (35,066 ) (33,687 ) (32,747 ) (32,279 ) Loans and leases, net 3,443,352 3,409,396 3,345,312 3,305,043 3,249,508 Premises and equipment, net 92,694 92,963 92,020 92,351 92,190 Other real estate owned 696 517 1,370 1,708 1,708 Goodwill and other intangibles, net 106,537 107,148 107,792 108,439 109,114 Bank owned life insurance 83,957 83,434 82,914 82,419 81,938 Other assets 76,418 75,932 83,522 77,688 65,836 Total assets $ 4,954,690 $ 4,829,387 $ 4,797,171 $ 4,745,800 $ 4,769,805 Liabilities: Deposits: Noninterest-bearing demand $ 907,254 $ 898,044 $ 923,763 $ 1,003,432 $ 989,753 Interest-bearing demand 996,298 1,006,915 993,717 938,758 989,738 Money market and savings 1,952,410 1,812,427 1,766,409 1,720,202 1,761,847 Time deposits 538,159 550,468 562,620 537,192 488,208 Total deposits 4,394,121 4,267,854 4,246,509 4,199,584 4,229,546 Borrowings 9,849 13,078 14,117 15,496 16,546 Subordinated debt 42,120 42,099 42,078 42,057 42,036 Other liabilities 41,804 46,470 47,815 43,816 38,278 Total liabilities 4,487,894 4,369,501 4,350,519 4,300,953 4,326,406 Shareholders' Equity: Common stock 17,057 16,989 16,995 17,004 17,004 Additional paid-in capital 296,061 295,699 295,542 295,296 294,930 Retained earnings 181,103 173,105 168,271 167,564 160,085 Accumulated other comprehensive income (loss) (27,425 ) (25,907 ) (34,156 ) (35,017 ) (28,620 ) Total shareholders' equity 466,796 459,886 446,652 444,847 443,399 Total liabilities & shareholders' equity $ 4,954,690 $ 4,829,387 $ 4,797,171 $ 4,745,800 $ 4,769,805
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 2024 2023 2023 2023 2023 Interest income: Loans and leases, including fees $ 50,020 $ 48,767 $ 47,539 $ 45,446 $ 44,728 Investment securities: Taxable 4,548 4,344 4,335 4,335 3,651 Tax-exempt 352 352 356 357 353 Federal funds sold and other earning assets 4,863 4,032 3,045 1,956 4,446 Total interest income 59,783 57,495 55,275 52,094 53,178 Interest expense: Deposits 27,035 24,926 23,433 19,554 16,346 Borrowings 128 162 210 339 224 Subordinated debt 899 890 626 626 626 Total interest expense 28,062 25,978 24,269 20,519 17,196 Net interest income 31,721 31,517 31,006 31,575 35,982 Provision for credit losses (440 ) 1,571 795 113 550 Net interest income after provision for credit losses 32,161 29,946 30,211 31,462 35,432 Noninterest income: Service charges on deposit accounts 1,612 1,673 1,736 1,657 1,445 Gain (loss) on sale of securities, net — — (6,801 ) — — Mortgage banking 280 227 309 332 172 Investment services 1,380 1,339 1,461 1,300 1,005 Insurance commissions 1,103 1,133 1,153 1,139 1,259 Interchange and debit card transaction fees 1,253 1,370 1,357 1,347 1,383 Other 2,752 1,837 1,476 1,355 1,661 Total noninterest income 8,380 7,579 691 7,130 6,925 Noninterest expense: Salaries and employee benefits 16,639 16,275 16,785 15,947 16,742 Occupancy and equipment 3,396 3,378 3,547 3,318 3,208 FDIC insurance 915 915 825 875 541 Other real estate and loan related expense 584 781 603 441 572 Advertising and marketing 302 336 346 305 355 Data processing and technology 2,465 2,458 2,378 2,235 2,163 Professional services 924 1,136 735 764 807 Amortization of intangibles 612 643 647 675 659 Merger related and restructuring expenses — — 110 — — Other 2,716 3,773 2,540 2,850 2,482 Total noninterest expense 28,553 29,695 28,516 27,410 27,529 Income before income taxes 11,988 7,830 2,386 11,182 14,828 Income tax expense 2,630 1,640 319 2,346 3,328 Net income $ 9,358 $ 6,190 $ 2,067 $ 8,836 $ 11,500 Earnings per common share: Basic $ 0.56 $ 0.37 $ 0.12 $ 0.53 $ 0.69 Diluted $ 0.55 $ 0.37 $ 0.12 $ 0.52 $ 0.68 Weighted average common shares outstanding: Basic 16,849,735 16,814,647 16,807,548 16,806,389 16,791,406 Diluted 16,925,408 16,918,234 16,918,635 16,898,091 16,896,494
SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information - (unaudited)
(dollars in thousands)
YIELD ANALYSISThree Months Ended March 31, 2024 December 31, 2023 March 31, 2023 Average Yield/ Average Yield/ Average Yield/ Balance Interest Cost Balance Interest Cost Balance Interest Cost Assets: Loans and leases, including fees $ 3,458,109 $ 50,020 5.82 % $ 3,408,430 $ 48,767 5.68 % $ 3,258,452 $ 44,728 5.57 % Taxable securities 620,805 4,548 2.95 % 618,511 4,344 2.79 % 723,540 3,651 2.05 % Tax-exempt securities1 64,161 445 2.79 % 63,767 445 2.77 % 65,547 447 2.77 % Federal funds sold and other earning assets 353,913 4,863 5.53 % 289,896 4,032 5.52 % 378,253 4,446 4.77 % Total interest-earning assets 4,496,988 59,876 5.36 % 4,380,604 57,588 5.22 % 4,425,792 53,272 4.88 % Noninterest-earning assets 380,231 386,202 359,996 Total assets $ 4,877,219 $ 4,766,806 $ 4,785,788 Liabilities and Shareholders’ Equity: Interest-bearing demand deposits $ 996,147 6,060 2.45 % $ 974,637 5,631 2.29 % $ 944,132 4,227 1.82 % Money market and savings deposits 1,904,855 16,149 3.41 % 1,764,826 14,556 3.27 % 1,820,455 10,381 2.31 % Time deposits 541,792 4,826 3.58 % 556,996 4,739 3.38 % 469,361 1,738 1.50 % Total interest-bearing deposits 3,442,794 27,035 3.16 % 3,296,459 24,926 3.00 % 3,233,948 16,346 2.05 % Borrowings 11,245 128 4.58 % 13,420 162 4.79 % 16,858 224 5.39 % Subordinated debt 42,107 899 8.59 % 42,087 890 8.39 % 42,022 626 6.04 % Total interest-bearing liabilities 3,496,146 28,062 3.23 % 3,351,966 25,978 3.07 % 3,292,828 17,196 2.12 % Noninterest-bearing deposits 872,840 915,259 1,015,670 Other liabilities 47,085 50,055 44,908 Total liabilities 4,416,071 4,317,280 4,353,406 Shareholders' equity 461,148 449,526 432,382 Total liabilities and shareholders' equity $ 4,877,219 $ 4,766,806 $ 4,785,788 Net interest income, taxable equivalent $ 31,814 $ 31,610 $ 36,076 Interest rate spread 2.13 % 2.14 % 2.76 % Tax equivalent net interest margin 2.85 % 2.86 % 3.31 % Percentage of average interest-earning assets to average interest-bearing liabilities 128.63 % 130.69 % 134.41 % Percentage of average equity to average assets 9.46 % 9.43 % 9.03 % 1Yields computed on tax-exempt instruments on a tax equivalent basis include $93 thousand, $94 thousand, and $94 thousand of taxable equivalent income for the quarters ended March 31, 2024, December 31, 2023, and March 31, 2023, 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 2024 2023 2023 2023 2023 Composition of Loans and Leases: Commercial real estate: Owner occupied $ 804,557 $ 798,416 $ 776,402 $ 769,978 $ 764,166 Non-owner occupied 938,648 940,789 890,774 871,779 871,368 Commercial real estate, total 1,743,205 1,739,205 1,667,176 1,641,757 1,635,534 Commercial & industrial 667,903 645,918 617,115 594,427 571,153 Construction & land development 321,860 327,185 373,068 394,742 386,253 Consumer real estate 659,209 649,867 638,518 624,828 606,343 Leases 71,909 68,752 68,538 66,401 67,701 Consumer and other 13,469 13,535 14,584 15,635 14,803 Total loans and leases $ 3,477,555 $ 3,444,462 $ 3,378,999 $ 3,337,790 $ 3,281,787 Asset Quality and Additional Loan Data: Nonperforming loans and leases $ 6,266 $ 8,101 $ 4,163 $ 3,722 $ 3,247 Other real estate owned 696 517 1,370 1,708 1,708 Other repossessed assets 2,033 1,117 348 282 66 Total nonperforming assets $ 8,995 $ 9,735 $ 5,881 $ 5,712 $ 5,021 Modified loans and leases1 not included in nonperforming loans and leases $ 4,413 $ 4,245 $ 2,376 $ 657 $ 97 Net charge-offs to average loans and leases (annualized) 0.09 % 0.04 % 0.04 % (0.01 ) % 0.03 % Allowance for credit losses to loans and leases 0.98 % 1.02 % 1.00 % 0.98 % 0.98 % Nonperforming loans and leases to total loans and leases, gross 0.18 % 0.24 % 0.12 % 0.11 % 0.10 % Nonperforming assets to total assets 0.18 % 0.20 % 0.12 % 0.12 % 0.11 % Capital Ratios: Equity to Assets 9.42 % 9.52 % 9.31 % 9.37 % 9.30 % Tangible common equity to tangible assets (Non-GAAP)2 7.43 % 7.47 % 7.23 % 7.25 % 7.17 % SmartFinancial, Inc.3 Tier 1 leverage 8.23 % 8.27 % 8.13 % 8.24 % 7.91 % Common equity Tier 1 10.20 % 10.16 % 10.07 % 10.12 % 9.95 % Tier 1 capital 10.20 % 10.16 % 10.07 % 10.12 % 9.95 % Total capital 11.85 % 11.80 % 11.90 % 11.94 % 11.77 % SmartBank Estimated4 Tier 1 leverage 9.07 % 9.18 % 9.00 % 9.18 % 8.87 % Common equity Tier 1 11.23 % 11.26 % 11.15 % 11.27 % 11.15 % Tier 1 capital 11.23 % 11.26 % 11.15 % 11.27 % 11.15 % Total capital 12.00 % 12.02 % 11.87 % 11.97 % 11.85 % 1Borrowers that have experienced financial difficulty.
2Total common equity less intangibles divided by total assets less intangibles. See reconciliation of Non-GAAP measures.
3All periods presented are estimated.
4Current 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 2024 2023 2023 2023 2023 Selected Performance Ratios (Annualized): Return on average assets 0.77 % 0.52 % 0.17 % 0.75 % 0.97 % Return on average shareholders' equity 8.16 % 5.46 % 1.84 % 7.98 % 10.79 % Return on average tangible common equity¹ 10.62 % 7.18 % 2.43 % 10.57 % 14.45 % Noninterest income / average assets 0.69 % 0.63 % 0.06 % 0.61 % 0.59 % Noninterest expense / average assets 2.35 % 2.47 % 2.37 % 2.34 % 2.33 % Efficiency ratio 71.20 % 75.95 % 89.96 % 70.82 % 64.16 % Operating Selected Performance Ratios (Annualized): Operating return on average assets1 0.69 % 0.57 % 0.60 % 0.75 % 0.97 % Operating PPNR return on average assets1 0.84 % 0.86 % 0.84 % 0.96 % 1.30 % Operating return on average shareholders' equity1 7.29 % 6.07 % 6.41 % 7.98 % 10.79 % Operating return on average tangible common equity1 9.49 % 7.98 % 8.46 % 10.57 % 14.45 % Operating efficiency ratio1 73.50 % 73.41 % 73.60 % 70.64 % 64.02 % Operating noninterest income / average assets1 0.58 % 0.63 % 0.62 % 0.61 % 0.59 % Operating noninterest expense / average assets1 2.35 % 2.39 % 2.36 % 2.34 % 2.33 % Selected Interest Rates and Yields: Yield on loans and leases, excluding loan fees 5.71 % 5.61 % 5.52 % 5.39 % 5.20 % Yield on loans and leases 5.82 % 5.68 % 5.61 % 5.51 % 5.57 % Yield on earning assets, FTE 5.36 % 5.22 % 4.99 % 4.82 % 4.88 % Cost of interest-bearing deposits 3.16 % 3.00 % 2.84 % 2.46 % 2.05 % Cost of total deposits 2.52 % 2.35 % 2.20 % 1.89 % 1.56 % Cost of interest-bearing liabilities 3.23 % 3.07 % 2.89 % 2.53 % 2.12 % Net interest margin, FTE 2.85 % 2.86 % 2.81 % 2.93 % 3.31 % Per Common Share: Net income, basic $ 0.56 $ 0.37 $ 0.12 $ 0.53 $ 0.69 Net income, diluted 0.55 0.37 0.12 0.52 0.68 Operating earnings, basic¹ 0.50 0.41 0.43 0.53 0.69 Operating earnings, diluted¹ 0.49 0.41 0.43 0.52 0.68 Book value 27.37 27.07 26.28 26.16 26.08 Tangible book value¹ 21.12 20.76 19.94 19.78 19.66 Common shares outstanding 17,056,704 16,988,879 16,994,543 17,004,092 17,004,092 1Non-GAAP measure. See reconciliation of Non-GAAP measures.
SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information - (unaudited)
(dollars in thousands)
NON-GAAP RECONCILIATIONSThree Months Ended Mar Dec Sep Jun Mar 2024 2023 2023 2023 2023 Operating Earnings: Net income (GAAP) $ 9,358 $ 6,190 $ 2,067 $ 8,836 $ 11,500 Noninterest income: Securities (gains) losses, net — — 6,801 — — Gain on sale of former branch building (1,346 ) — — — — Noninterest expenses: Donation of a former branch location — 250 — — — Accruals for pending litigation — 675 — — — Merger related and restructuring expenses — — 110 — — Income taxes: Income tax effect of adjustments 348 (239 ) (1,785 ) — — Operating earnings (Non-GAAP) $ 8,360 $ 6,876 $ 7,193 $ 8,836 $ 11,500 Operating earnings per common share (Non-GAAP): Basic $ 0.50 $ 0.41 $ 0.43 $ 0.53 $ 0.69 Diluted 0.49 0.41 0.43 0.52 0.68 Operating Noninterest Income: Noninterest income (GAAP) $ 8,380 $ 7,579 $ 691 $ 7,130 $ 6,925 Securities (gains) losses, net — — 6,801 — — Gain on sale of former branch building (1,346 ) — — — — Operating noninterest income (Non-GAAP) $ 7,034 $ 7,579 $ 7,492 $ 7,130 $ 6,925 Operating noninterest income (Non-GAAP)/average assets1 0.58 % 0.63 % 0.62 % 0.61 % 0.59 % Operating Noninterest Expense: Noninterest expense (GAAP) $ 28,553 $ 29,695 $ 28,516 $ 27,410 $ 27,529 Donation of a former branch location — (250 ) — — — Accruals for pending litigation — (675 ) — — — Merger related and restructuring expenses — — (110 ) — — Operating noninterest expense (Non-GAAP) $ 28,553 $ 28,770 $ 28,406 $ 27,410 $ 27,529 Operating noninterest expense (Non-GAAP)/average assets2 2.35 % 2.39 % 2.36 % 2.34 % 2.33 % Operating Pre-provision Net revenue ("PPNR") Earnings: Net interest income (GAAP) $ 31,721 $ 31,517 $ 31,006 $ 31,575 $ 35,982 Operating noninterest income (Non-GAAP) 7,034 7,579 7,492 7,130 6,925 Operating noninterest expense (Non-GAAP) (28,553 ) (28,770 ) (28,406 ) (27,410 ) (27,529 ) Operating PPNR earnings (Non-GAAP) $ 10,202 $ 10,326 $ 10,092 $ 11,295 $ 15,378 Non-GAAP Return Ratios: Operating return on average assets (Non-GAAP)3 0.69 % 0.57 % 0.60 % 0.75 % 0.97 % Operating PPNR return on average assets (Non-GAAP)4 0.84 % 0.86 % 0.84 % 0.96 % 1.30 % Return on average tangible common equity (Non-GAAP)5 10.62 % 7.18 % 2.43 % 10.57 % 14.45 % Operating return on average shareholders' equity (Non-GAAP)6 7.29 % 6.07 % 6.41 % 7.98 % 10.79 % Operating return on average tangible common equity (Non-GAAP)7 9.49 % 7.98 % 8.46 % 10.57 % 14.45 % Operating Efficiency Ratio: Efficiency ratio (GAAP) 71.20 % 75.95 % 89.96 % 70.82 % 64.16 % Adjustment for taxable equivalent yields (0.17 ) % (0.18 ) % (0.27 ) % (0.18 ) % (0.14 ) % Adjustment for securities gains (losses) — % — % (15.89 ) % — % — % Adjustment for sale of branch location 2.46 % — % — % — % — % Adjustment for donation of a former branch location — % (0.64 ) % — % — % — % Adjustment for accruals for pending litigation — % (1.72 ) % — % — % — % Adjustment for merger related income and costs — % — % (0.20 ) % — % — % Operating efficiency ratio (Non-GAAP) 73.50 % 73.41 % 73.60 % 70.64 % 64.02 % 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 PPNR return on average assets (Non-GAAP) is the annualized operating PPNR 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 RECONCILIATIONSThree Months Ended Mar Dec Sep Jun Mar 2024 2023 2023 2023 2023 Tangible Common Equity: Shareholders' equity (GAAP) $ 466,796 $ 459,886 $ 446,652 $ 444,847 $ 443,399 Less goodwill and other intangible assets 106,537 107,148 107,792 108,439 109,114 Tangible common equity (Non-GAAP) $ 360,259 $ 352,738 $ 338,860 $ 336,408 $ 334,285 Average Tangible Common Equity: Average shareholders' equity (GAAP) $ 461,148 $ 449,526 $ 445,432 $ 444,283 $ 432,382 Less average goodwill and other intangible assets 106,920 107,551 108,194 108,851 109,537 Average tangible common equity (Non-GAAP) $ 354,228 $ 341,975 $ 337,238 $ 335,432 $ 322,845 Tangible Book Value per Common Share: Book value per common share (GAAP) $ 27.37 $ 27.07 $ 26.28 $ 26.16 $ 26.08 Adjustment due to goodwill and other intangible assets (6.25 ) (6.31 ) (6.34 ) (6.38 ) (6.42 ) Tangible book value per common share (Non-GAAP)1 $ 21.12 $ 20.76 $ 19.94 $ 19.78 $ 19.66 Tangible Common Equity to Tangible Assets: Total Assets (GAAP) $ 4,954,690 $ 4,829,387 $ 4,797,171 $ 4,745,800 $ 4,769,805 Less goodwill and other intangibles 106,537 107,148 107,792 108,439 109,114 Tangible Assets (Non-GAAP) $ 4,848,153 $ 4,722,239 $ 4,689,379 $ 4,637,361 $ 4,660,691 Tangible common equity to tangible assets (Non-GAAP) 7.43 % 7.47 % 7.23 % 7.25 % 7.17 % 1Tangible book value per share (Non-GAAP) is computed by dividing total shareholders’ equity, less goodwill and other intangible assets, by common shares outstanding.