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Section 1: 8-K (8-K SMARTFINANCIAL 4TH QTR 2018 EARNINGS RELEASE)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
FORM 8-K
 
CURRENT REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
Date of earliest event reported: January 23, 2019

SMARTFINANCIAL, INC.
(Exact Name of Registrant as Specified in its Charter)
 

Tennessee
 
333-203449
 
62-1173944
(State or Other Jurisdiction of Incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)
 

5401 Kingston Pike, Suite 600
 
 
Knoxville, Tennessee
 
37919
(Address of Principal Executive Offices)
 
(Zip Code)
  
(865) 437-5700
(Registrant’s telephone number, including area code)
 
 
(Former Name or Former Address, if Changed Since Last Report) 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Item 2.02
Results of Operations and Financial Condition.
 
On January 23, 2019, SmartFinancial, Inc. issued a press release reporting earnings results for its fourth quarter ending December 31, 2018. The information included in the press release is considered to be “furnished” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). SmartFinancial will include final financial statements and additional analysis for the quarter ended December 31, 2018 as part of its annual report on Form 10-K covering that period.

Item 7.01
Regulation FD Disclosure.

SmartFinancial is filing an investor slide presentation that it intends to review in conjunction with its earnings release conference call on January 24, 2019. The slides are included as Exhibit 99.2 to this report and shall not be deemed to be “filed” for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01
Financial Statements and Exhibits
Exhibit No.
Description
99.1
Press release announcing fourth quarter 2018 financial results dated January 23, 2019

99.2
Fourth quarter 2018 investor presentation






SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
SMARTFINANCIAL, INC.
 
 
Date: January 23, 2019
 
 
/s/ William Y. Carroll, Jr.
 
William Y. Carroll, Jr.
 
President & Chief Executive Officer





EXHIBIT INDEX 

Exhibit No.
 
Description
 
 
 
 
Press release announcing fourth quarter 2018 financial results dated January 23, 2019

 
Fourth quarter 2018 investor presentation




(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


Exhibit 99.1
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4Q 2018

SmartFinancial Reports $0.47 Earnings per Diluted Share for the Fourth Quarter of 2018
Net operating earnings per diluted common share (non-GAAP) was $0.43 for the fourth quarter of 2018
 
Performance Highlights 
 
Net income available to common shareholders totaled $6.4 million in the quarter and ROAA increased to 1.17 percent.
Net operating earnings available to common shareholders (non-GAAP) totaled $5.9 million in the quarter and net operating ROAA (non-GAAP) increased to 1.07 percent.
Noninterest expense to average assets of 2.84 percent, a decrease of 0.51 percentage points from a year ago.
Loan growth, excluding loans acquired from Foothills, at 10 percent annualized.
A 26.8 percent increase in total revenue, to $23.1 million in the the fourth quarter of 2018, compared with total revenue of $16.9 million in the fourth quarter of 2017.
Asset quality was outstanding with nonperforming assets to total assets of just 0.24 percent.

KNOXVILLE, TN - January 23, 2018 - SmartFinancial, Inc. ("SmartFinancial"; NASDAQ: SMBK), announced today net income available to common shareholders of $6.4 million in its fourth quarter of 2018 ,or $0.47 per diluted share, compared to $38 thousand, or $0.00 per diluted share a year ago, which included $2.4 million of tax charges related to changes in tax law. On November 1, 2018, SmartFinancial completed the acquisition of Foothills Bancorp, Inc. and Foothills Bank & Trust and this quarter includes two months of the results of the acquired companies. This quarter also included $1.3 million in pre-tax merger related expenses and $1.6 million in tax benefit related adjustments from director options that were previously exercised.
 
Billy Carroll stated, "We are extremely proud of our accomplishments in the fourth quarter and for the year.  2018 was our company's busiest yet.  We converted two banks and closed on a third, but just as important was our continued strong organic growth that is building a great core bank. In addition, the announcement of our merger with Entegra Financial Corp. positions our company to take a transformative step in 2019. We are very excited about what the future holds."

SmartFinancial Chairman, Miller Welborn, concluded, "I've been very pleased with what our team has accomplished this year and the fourth quarter showed our continued positive trends on our financial performance.  Closing the Foothills Bank deal during the quarter was a great addition to our Knoxville, TN market area, as well as the new talent we added to the team during the year, both of which will yield great upside in 2019. "

Fourth Quarter 2018 compared to Third Quarter 2018
 
Net income available to common shareholders totaled $6.4 million in the fourth quarter of 2018, or $0.47 per diluted share, compared to $4.3 million, or $0.34 per diluted share, in the third quarter of 2018. Net operating earnings available to common shareholders (Non-GAAP), which excludes securities gains, merger expenses, and tax benefit related adjustments, totaled $5.9 million in the fourth quarter of 2018, or $0.43 per diluted share, compared to $5.0 million, or $0.39 per diluted share, in the previous quarter.
 
Net interest income to average assets of 3.90 percent for the quarter increased from 3.70 percent in the third quarter of 2018. Net interest income totaled $21.4 million in the fourth quarter of 2018 compared to $18.9 million in the third quarter of 2018. 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 4.11 percent in the third quarter of 2018 to 4.29 percent in the fourth quarter of 2018 primarily due to higher average loan balances, higher loan yields (including purchased loan accounting adjustments), and higher security yields, which was partially offset by increases in funding costs.


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Provision for loan losses was $1.3 million in the fourth quarter of 2018, compared to $302 thousand in the third quarter of 2018. The increase in provision for loan losses was primarily due to increases in net loan growth. Annualized net charge-offs in the fourth quarter of 2018 remained at a very low level, just 0.04 percent of average loans compared to 0.06 percent in the third quarter of 2018.
 
The allowance for loan losses, was $8.3 million, or 0.46 percent of total loans, as of December 31, 2018, compared to $7.2 million, or 0.45 percent of total loans, as of September 30, 2018. There were $21.5 million net purchase discounts on $640.2 million of acquired loans as of December 31, 2018, compared to $19.5 million net purchase discounts on $558.0 million of acquired loans as of September 30, 2018.
 
Nonperforming loans as a percentage of total loans was 0.16 percent as of December 31, 2018, which remained unchanged from 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 0.24 percent as of December 31, 2018, compared to 0.33 percent as of September 30, 2018.
 
Noninterest income to average assets of 0.31 percent for the quarter decreased slightly from 0.36 percent in the third quarter of 2018. Noninterest income totaled $1.7 million in the fourth quarter of 2018, compared to $1.8 million in the third quarter of 2018. The decrease in noninterest income was primarily due to lower gains on the sale of loans and other assets.

Noninterest expense to average assets of 2.84 percent for the quarter decreased from 2.90 percent in the third quarter of 2018. Noninterest expense totaled $15.7 million in the fourth quarter of 2018, which included $1.3 million in merger related charges, compared to $14.8 million in third quarter of 2018, which had $838 thousand in merger charges.
 
Income tax benefit was $0.3 million in the fourth quarter of 2018, which included $1.6 million in tax benefit related adjustments. Income tax expense in the third quarter of 2018 was $1.3 million. Excluding the tax benefit the company's effective tax rate was 26.0 percent in the fourth quarter of 2018 compared to 23.2 percent in the third quarter of 2018.

Fourth Quarter 2018 compared to Fourth Quarter 2017

Net income available to common shareholders totaled $6.4 million in the fourth quarter of 2018, or $0.47 per diluted share, compared to $38 thousand, or $0.00 per diluted share, in the fourth quarter of 2017. Net operating earnings available to common shareholders (Non-GAAP), which excludes securities gains, merger expenses, tax benefit related adjustments, and revaluation of deferred tax assets due to change in tax law, totaled $5.9 million in the fourth quarter of 2018 compared to $3.7 million in the fourth quarter of 2017.

Net interest income to average assets of 3.90 percent for the quarter decreased from 4.09 percent in the fourth quarter of 2017. Net interest income totaled $21.4 million in the fourth quarter of 2018 compared to $15.3 million in the fourth quarter of 2017. Net interest margin, taxable equivalent, decreased from 4.63 percent in the fourth quarter of 2017 to 4.29 percent in the fourth quarter of 2018 primarily due to higher cost of interest-bearing liabilities.
 
Provision for loan losses was $1.3 million in the fourth quarter of 2018, compared to $442 thousand in the fourth quarter of 2017. The increase in provision was primarily due to increases in originated loan balances. Annualized net charge-offs in the fourth quarter of 2018 remained at a very low level, just 0.04 percent of average loans compared to net recoveries of 0.01 percent in the fourth quarter of 2017.

Nonperforming loans as a percentage of total loans was 0.16 percent as of December 31, 2018, which increased slightly from 0.13 percent in the prior year. 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 0.24 percent as of December 31, 2018, compared to 0.29 percent as of December 31, 2017.
 
Noninterest income to average assets of 0.31 percent for the quarter decreased from 0.42 percent in the fourth quarter of 2017. Noninterest income totaled $1.7 million in the fourth quarter of 2018, compared to $1.6 million in the fourth quarter of 2017.
 
Noninterest expense to average assets of 2.84 percent for the quarter decreased from 3.35 percent in the fourth quarter of 2017. Noninterest expense totaled $15.7 million in the fourth quarter of 2018, which included $1.3 million in merger related charges, compared to $12.6 million in the fourth quarter of 2017, which had $1.7 million in merger charges. The primary drivers of the increase in expense compared to the prior year were as a result of the Capstone, TN Bancshares, and Foothills mergers which materially increased salaries and employee benefits, occupancy expense, amortization of intangibles, and other noninterest expense.
 

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Income tax benefit was $0.3 million in the fourth quarter of 2018, which included $1.6 million in tax benefit related adjustments. Income tax expense in the fourth quarter of 2017 was $3.9 million which included a $2.4 million revaluation of deferred tax assets due to change in tax law.

Conference Call Information
SmartFinancial plans to issue its earnings release for the fourth quarter of 2018 on Wednesday, January 23, 2019, and will host a conference call on Thursday, January 24, 2019 at 10:00 a.m. ET. To access this interactive teleconference, dial (888) 317-6003 or (412) 317-6061 and enter the confirmation number, 6152900. A replay of the conference call will be available through January 24, 2020, by dialing (877) 344-7529 or (412) 317-0088 and entering the confirmation number, 10127945.
Conference call materials (earnings release & conference call presentation will be published on the company’s webpage located at http://www.smartfinancialinc.com/CorporateProfile, by 9:00 am ET the morning of the conference call.

About SmartFinancial, Inc.
SmartFinancial, Inc., headquartered in Knoxville, Tennessee, is the bank holding company for SmartBank, a full-service commercial bank founded in 2007 and domiciled in Pigeon Forge, Tennessee. SmartFinancial’s common stock is traded on the Nasdaq Capital Market under the ticker symbol SMBK. SmartBank has 29 branch offices across Tennessee, Alabama, and the Florida Panhandle. Recruiting the best people, delivering exceptional client service, strategic branching and acquisitions, and a disciplined approach to lending have all contributed to SmartFinancial’s and SmartBank’s success. More information about SmartFinancial can be found on its website: www.smartfinancialinc.com.

Source
SmartFinancial, Inc.
 
Investor Contacts
Billy Carroll                        Ron Gorczynski
President & CEO                        Executive Vice President, Chief Administrative Officer
(865) 868-0613 billy.carroll@smartbank.com        (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 Matters
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 several non-GAAP financial measures, including: (i) net operating earnings available to common shareholders; (ii) operating efficiency ratio; (iii) tangible common equity; and (iv) net operating return on average assets, 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 related expenses, the effect of the December, 2017 tax law change on deferred tax assets, and the income tax effect of adjustments. The operating efficiency ratio excludes securities gains and losses and merger related expenses from the efficiency ratio. Tangible common equity excludes goodwill and other intangible assets. Net operating return on average assets is annualized net operating income divided by GAAP total average assets. 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'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.


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FORWARD LOOKING STATEMENTS
Certain of the statements made in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” and “estimate,” and similar expressions, are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking, including statements about the benefits to SmartFinancial of its previously announced merger with Entegra Financial Corp. (“Entegra”), SmartFinancial’s future financial and operating results, and SmartFinancial’s plans, objectives, and intentions. All forward-looking statements are subject to risks, uncertainties, and other factors that may cause the actual results, performance, or achievements of SmartFinancial to differ materially from any results, performance, or achievements expressed or implied by such forward-looking statements. Such risks, uncertainties, and other factors include, among others, (1) the risk that the cost savings and any revenue synergies from the proposed merger with Entegra may not be realized or take longer than anticipated to be realized, (2) the risk that the cost savings and any revenue synergies from recently completed mergers may not be realized or may take longer than anticipated to realize, (3) disruption from the proposed merger with Entegra, or recently completed mergers, with customer, supplier, or employee relationships, (4) the occurrence of any event, change, or other circumstances that could give rise to the termination of the agreement and plan of merger among SmartFinancial, CT Merger Sub, Inc., and Entegra providing for the proposed merger with Entegra, (5) the failure to obtain necessary shareholder or regulatory approvals for the merger with Entegra, (6) the possibility that the amount of the costs, fees, expenses, and charges related to the merger with Entegra may be greater than anticipated, including as a result of unexpected or unknown factors, events, or liabilities, (7) the failure of the conditions to the merger with Entegra to be satisfied, (8) the risk of successful integration of the two companies’ businesses, including the risk that the integration of Entegra’s operations with those of SmartFinancial will be materially delayed or will be more costly or difficult than expected, (9) the risk of expansion into new geographic or product markets, (10) reputational risk and the reaction of SmartFinancial’s and Entegra’s customers to the merger, (11) the risk of potential litigation or regulatory action related to the merger with Entegra, (12) the dilution caused by SmartFinancial’s issuance of additional shares of its common stock in the merger with Entegra, and (13) general competitive, economic, political, and market conditions. Additional factors which could affect the forward-looking statements can be found in SmartFinancial’s annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) and available on the SEC’s website at http://www.sec.gov. SmartFinancial disclaims any obligation to update or revise any forward-looking statements contained in this press release, which speak only as of the date hereof, whether as a result of new information, future events, or otherwise.

IMPORTANT INFORMATION FOR SHAREHOLDERS AND INVESTORS
This press release shall not constitute an offer to sell, the solicitation of an offer to sell, or the solicitation of an offer to buy any securities or the solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. In connection with SmartFinancial’s proposed merger with Entegra, SmartFinancial will file a registration statement on Form S-4 with the SEC, which will contain the joint proxy statement of SmartFinancial and Entegra and a prospectus of SmartFinancial. Shareholders are encouraged to read the registration statement, including the joint proxy statement/prospectus that will be part of the registration statement, because it will contain important information about the proposed transaction, SmartFinancial, and Entegra. After the registration statement is filed with the SEC, the joint proxy statement/prospectus and other relevant documents will be mailed to SmartFinancial and Entegra shareholders and will be available for free on the SEC’s website (www.sec.gov). The joint proxy statement/prospectus will also be made available for free by contacting Ron Gorczynski, SmartFinancial’s Chief Administrative Officer, at (865) 437-5724 or David Bright, the Chief Financial Officer and Treasurer of Entegra, at (828) 524-7000. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

PARTICIPANTS IN THE SOLICITATION
SmartFinancial, Entegra, and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from SmartFinancial and Entegra shareholders in connection with the previously announced proposed merger of SmartFinancial and Entegra under the rules of the SEC. Information about the directors and executive officers of SmartFinancial may be found in the definitive proxy statement for SmartFinancial’s 2018 annual meeting of shareholders, filed with the SEC by SmartFinancial on April 2, 2018, and other documents subsequently filed by SmartFinancial with the SEC. Information about the directors and executive officers of Entegra may be found in the definitive proxy statement for Entegra’s 2018 annual meeting of shareholders, filed by Entegra with the SEC on April 2, 2018. Additional information regarding the interests of these participants will also be included in the joint proxy statement/prospectus regarding the proposed transaction when it becomes available. Free copies of these documents maybe obtained as described in the paragraph above.



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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, 2018
 
September 30, 2018
 
June 30, 2018
 
March 31, 2018
 
December 31, 2017
Selected Performance Ratios (Annualized)
 
 
 
 
 
 
 
 
 
 
Return on average assets
 
1.17
%
 
0.85
%
 
0.81
%
 
0.80
%
 
0.01
 %
Net operating return on average assets (Non-GAAP)
 
1.07
%
 
0.98
%
 
1.00
%
 
0.89
%
 
0.99
 %
Return on average shareholder equity
 
9.44
%
 
6.86
%
 
6.76
%
 
6.25
%
 
0.08
 %
Return on average tangible common equity (Non-GAAP)
 
13.09
%
 
9.44
%
 
8.96
%
 
8.10
%
 
0.10
 %
Net operating return on average shareholder equity (Non-GAAP)
 
8.65
%
 
7.88
%
 
8.33
%
 
6.97
%
 
7.98
 %
Net operating return on average tangible common equity (Non-GAAP)
 
12.00
%
 
10.84
%
 
11.04
%
 
9.04
%
 
9.94
 %
Net interest income / average assets
 
3.90
%
 
3.70
%
 
4.03
%
 
3.93
%
 
4.09
 %
Yield on earning assets
 
5.34
%
 
5.02
%
 
5.34
%
 
5.02
%
 
5.20
 %
Yield on earning assets, TE
 
5.36
%
 
5.03
%
 
5.34
%
 
5.03
%
 
5.20
 %
Cost of interest-bearing liabilities
 
1.33
%
 
1.15
%
 
1.00
%
 
0.82
%
 
0.70
 %
Net interest margin
 
4.28
%
 
4.11
%
 
4.53
%
 
4.36
%
 
4.62
 %
Net interest margin, TE
 
4.29
%
 
4.11
%
 
4.54
%
 
4.36
%
 
4.63
 %
Noninterest income / average assets
 
0.31
%
 
0.36
%
 
0.33
%
 
0.34
%
 
0.42
 %
Noninterest expense / average assets
 
2.84
%
 
2.90
%
 
3.15
%
 
3.09
%
 
3.35
 %
Efficiency ratio
 
67.71
%
 
71.34
%
 
72.34
%
 
72.39
%
 
74.26
 %
Operating efficiency ratio (Non-GAAP)
 
62.00
%
 
67.17
%
 
64.82
%
 
69.12
%
 
60.64
 %
Pre-tax pre-provision income / average assets
 
1.36
%
 
1.23
%
 
1.21
%
 
1.18
%
 
1.16
 %
 
 
 
 
 
 
 
 
 
 
 
Per Common Share
 
 
 
 
 
 
 
 
 
 
Net income, basic
 
$
0.48

 
$
0.34

 
$
0.32

 
$
0.30

 
$

Net income, diluted
 
0.47

 
0.34

 
0.32

 
0.30

 

Net operating earnings, basic (Non-GAAP)
 
0.44

 
0.39

 
0.40

 
0.34

 
0.35

Net operating earnings, diluted (Non-GAAP)
 
0.43

 
0.39

 
0.39

 
0.34

 
0.34

Book value
 
20.31

 
19.74

 
19.48

 
18.60

 
18.46

Tangible book value (Non-GAAP)
 
14.64

 
14.38

 
14.09

 
14.09

 
13.90

 
 
 
 
 
 
 
 
 
 
 
Common shares outstanding
 
13,934

 
12,750

 
12,705

 
11,234

 
11,153

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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, 2018
 
September 30, 2018
 
June 30, 2018
 
March 31, 2018
 
December 31, 2017
Composition of Loans
 
 
 
 
 
 
 
 
 
 
Real estate commercial
 
 
 
 
 
 
 
 
 
 
owner occupied
 
$
372,030

 
$
364,164

 
$
360,294

 
$
288,666

 
$
281,297

non-owner occupied
 
487,551

 
400,275

 
385,536

 
375,028

 
361,691

Real estate commercial, total
 
859,581

 
764,439

 
745,830

 
663,694

 
642,988

Commercial & industrial
 
307,886

 
289,732

 
279,341

 
256,333

 
238,087

Real estate construction & development
 
187,868

 
166,089

 
179,361

 
142,702

 
135,409

Real estate residential
 
408,164

 
351,948

 
355,755

 
299,148

 
293,457

Other loans
 
13,728

 
12,986

 
15,148

 
12,380

 
13,317

Total loans
 
$
1,777,227

 
$
1,585,194

 
$
1,575,434

 
$
1,374,257

 
$
1,323,258

 
 
 
 
 
 
 
 
 
 
 
Asset Quality and Additional Loan Data
 
 
 
 
 
 
 
 
 
 
Nonperforming loans
 
$
2,856

 
$
2,604

 
$
1,730

 
$
1,931

 
$
1,764

Foreclosed assets
 
2,495

 
4,230

 
3,524

 
2,665

 
3,254

Total nonperforming assets
 
$
5,351

 
$
6,834

 
$
5,254

 
$
4,595

 
$
5,018

Restructured loans not included in nonperforming loans
 
$
116

 
$
369

 
$
660

 
$
40

 
$
41

Net charge-offs (recoveries) to average loans (annualized)
 
0.04
%
 
0.06
%
 
0.02
%
 
0.02
%
 
(0.01
)%
Allowance for loan losses to loans
 
0.46
%
 
0.45
%
 
0.45
%
 
0.47
%
 
0.44
 %
Nonperforming loans to total loans, gross
 
0.16
%
 
0.16
%
 
0.11
%
 
0.14
%
 
0.13
 %
Nonperforming assets to total assets
 
0.24
%
 
0.33
%
 
0.25
%
 
0.26
%
 
0.29
 %
Acquisition accounting discounts on acquired loans
 
$
21,528

 
$
19,500

 
$
20,748

 
$
16,323

 
$
17,862

Accretion income on acquired loans
 
2,755

 
1,208

 
2,583

 
1,274

 
2,411

 
 
 
 
 
 
 
 
 
 
 
Capital Ratios
 
 
 
 
 
 
 
 
 
 
Equity to Assets
 
12.44
%
 
12.27
%
 
12.00
%
 
11.87
%
 
11.96
 %
Tangible equity to tangible assets (Non-GAAP)
 
9.29
%
 
9.25
%
 
8.98
%
 
9.26
%
 
9.28
 %
Tangible common equity to tangible assets (Non-GAAP)
 
9.29
%
 
9.25
%
 
8.98
%
 
9.26
%
 
9.28
 %
SmartFinancial, Inc.:
 
Estimated1

 
Estimated1

 
 
 
 
 
 
Tier 1 leverage
 
9.47
%
 
9.26
%
 
9.82
%
 
9.59
%
 
10.48
 %
Common equity Tier 1
 
10.66
%
 
10.70
%
 
10.83
%
 
10.84
%
 
10.59
 %
Tier 1 capital
 
10.66
%
 
10.70
%
 
10.83
%
 
10.84
%
 
10.59
 %
Total capital
 
13.10
%
 
13.34
%
 
11.25
%
 
11.27
%
 
10.98
 %
SmartBank:
 
Estimated2

 
 
 
 
 
 
 
 
Tier 1 leverage
 
10.23
%
 
10.55
%
 
10.43
%
 
10.17
%
 
11.26
 %
Common equity Tier 1
 
11.52
%
 
11.99
%
 
11.41
%
 
11.12
%
 
10.90
 %
Tier 1 risk-based capital
 
11.52
%
 
11.99
%
 
11.41
%
 
11.12
%
 
10.90
 %
Total risk-based capital
 
11.95
%
 
12.40
%
 
11.83
%
 
11.56
%
 
11.30
 %
1Effective 9/30/18 the company files the FRY-9SP which does not include capital ratios
2 Ratios will be finalized with the filing of the quarterly Call Report




SmartFinancial, Inc. and Subsidiaries
 
 
 
 
Condensed Consolidated Financial Information (unaudited)
 
 
(In thousands)
 
 
 
 
BALANCE SHEET
 
 
 
 
 
 
 
 
 
 
 
 
Ending Balances
 
 
December 31, 2018
 
September 30, 2018
 
June 30, 2018
 
March 31, 2018
 
December 31, 2017
Assets
 
 
 
 
 
 
 
 
 
 
Cash & cash equivalents
 
$
115,822

 
$
130,104

 
$
170,235

 
$
96,710

 
$
113,027

Securities available for sale
 
201,688

 
173,039

 
156,577

 
156,210

 
151,945

Other investments
 
11,499

 
10,736

 
8,273

 
7,808

 
6,431

Total loans
 
1,777,227

 
1,585,194

 
1,575,434

 
1,374,257

 
1,323,258

Allowance for loan losses
 
(8,263
)
 
(7,156
)
 
(7,074
)
 
(6,477
)
 
(5,860
)
Loans, net
 
1,768,964

 
1,578,038

 
1,568,361

 
1,367,780

 
1,317,398

Premises and equipment
 
56,012

 
51,138

 
52,203

 
44,202

 
43,000

Foreclosed assets
 
2,495

 
4,230

 
3,524

 
2,665

 
3,254

Goodwill and other intangibles
 
79,034

 
68,254

 
68,449

 
50,660

 
50,837

Cash surrender value of life insurance
 
24,381

 
22,088

 
21,944

 
21,797

 
21,647

Other assets
 
14,514

 
13,320

 
12,666

 
12,593

 
13,232

Total assets
 
$
2,274,409

 
$
2,050,946

 
$
2,062,232

 
$
1,760,425

 
$
1,720,771

 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 

 
 

 
 

 
 

 
 

Noninterest demand
 
$
319,861

 
$
301,197

 
$
301,318

 
$
276,249

 
$
220,520

Interest-bearing demand
 
311,482

 
267,146

 
246,942

 
278,965

 
231,644

Money market and savings
 
641,945

 
570,172

 
632,518

 
491,243

 
543,645

Time deposits
 
648,676

 
568,796

 
535,879

 
453,276

 
442,774

Total deposits
 
1,921,964

 
1,707,311

 
1,716,658

 
1,499,733

 
1,438,583

Repurchase agreements
 
11,756

 
16,786

 
18,635

 
15,968

 
24,055

FHLB & other borrowings
 
11,243

 
25,324

 
72,040

 
30,000

 
43,600

Subordinated debt
 
39,177

 
39,158

 

 

 

Other liabilities
 
7,258

 
10,724

 
7,413

 
5,775

 
8,681

Total liabilities
 
1,991,398

 
1,799,304

 
1,814,745

 
1,551,476

 
1,514,919

Shareholders' Equity
 
 
 
 
 
 
 
 
 
 
Common stock
 
13,934

 
12,750

 
12,705

 
11,234

 
11,152

Additional paid-in capital
 
231,851

 
208,999

 
208,513

 
174,981

 
174,009

Retained earnings
 
39,991

 
33,559

 
29,235

 
25,303

 
21,889

Accumulated other comprehensive loss
 
(2,765
)
 
(3,666
)
 
(2,966
)
 
(2,569
)
 
(1,198
)
Total shareholders' equity
 
283,011

 
251,642

 
247,487

 
208,949

 
205,852

Total liabilities & shareholders' equity
 
$
2,274,409

 
$
2,050,946

 
$
2,062,232

 
$
1,760,425

 
$
1,720,771





SmartFinancial, Inc. and Subsidiaries
 
 
 
 
Condensed Consolidated Financial Information (unaudited)
 
 
(In thousands, except per share data)
 
 
 
 
INCOME STATEMENT
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended
 
 
December 31, 2018
 
September 30, 2018
 
June 30, 2018
 
March 31, 2018
 
December 31, 2017
Interest Income
 
 
 
 
 
 
 
 
 
 
Loans, including fees
 
$
25,017

 
$
21,572

 
$
21,652

 
$
18,228

 
$
16,357

Investment securities and interest bearing due froms

 
1,574

 
1,326

 
1,198

 
1,049

 
770

Other interest income
 
180

 
170

 
144

 
101

 
117

Total interest income
 
26,771

 
23,068

 
22,993

 
19,378

 
17,244

Interest Expense
 
 
 
 
 
 
 
 
 
 
Deposits
 
4,680

 
3,969

 
3,238

 
2,401

 
1,806

Repurchase agreements
 
9

 
11

 
11

 
13

 
15

FHLB and other borrowings

 
51

 
209

 
207

 
153

 
81

Subordinated Debt
 
584

 
19

 

 

 

Total interest expense
 
5,324

 
4,208

 
3,455

 
2,567

 
1,902

Net interest income
 
21,447

 
18,861

 
19,538

 
16,811

 
15,342

Provision for loan losses
 
1,329

 
302

 
617

 
689

 
442

Net interest income after provision for loan losses
 
20,118

 
18,559

 
18,921

 
16,122

 
14,899

Noninterest income
 
 
 
 
 
 
 
 
 
 
Service charges on deposit accounts
 
663

 
624

 
557

 
578

 
524

(Loss) gain on securities
 
2

 

 
(1
)
 

 

Gain on sale of loans and other assets
 
251

 
493

 
327

 
325

 
366

Interchange and debit card transaction fees
 
162

 
144

 
121

 
146

 
304

Other noninterest income
 
601

 
570

 
579

 
406

 
387

Total noninterest income
 
1,679

 
1,831

 
1,583

 
1,455

 
1,581

Noninterest expense
 
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
 
7,871

 
7,934

 
7,649

 
7,176

 
6,272

Occupancy expense
 
1,610

 
1,638

 
1,522

 
1,533

 
1,217

FDIC premiums
 
209

 
158

 
317

 
102

 
150

Foreclosed asset expense
 
267

 
79

 
245

 
189

 
59

Marketing
 
246

 
228

 
215

 
185

 
167

Data processing
 
372

 
407

 
600

 
526

 
583

Professional expenses
 
908

 
922

 
918

 
898

 
602

Amortization of other intangibles
 
312

 
248

 
229

 
188

 
155

Service contracts
 
577

 
507

 
492

 
479

 
426

Merger expense
 
1,322

 
838

 
1,123

 
498

 
1,694

Other noninterest expense
 
1,966

 
1,800

 
1,968

 
1,448

 
1,242

Total noninterest expense
 
15,660

 
14,759

 
15,278

 
13,222

 
12,566

Earnings before income taxes
 
6,137

 
5,631

 
5,226

 
4,355

 
3,913

Income tax expense (benefit)
 
(307
)
 
1,305

 
1,295

 
940

 
3,875

Net income
 
$
6,444

 
$
4,325

 
$
3,931

 
$
3,415

 
$
38

 
 
 
 
 
 
 
 
 
 
 
NET INCOME PER COMMON SHARE
 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.48

 
$
0.34

 
$
0.32

 
$
0.30

 
$

Diluted
 
0.47

 
0.34

 
0.32

 
0.30

 

 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding
 
 
 
 
 
 
 
 
 
 
Basic
 
13,535

 
12,719

 
12,201

 
11,211

 
10,552

Diluted
 
13,617

 
12,818

 
12,320

 
11,324

 
10,709





SmartFinancial, Inc. and Subsidiaries
 
 
 
 
 
 
 
 
 
 
Condensed Consolidated Financial Information (unaudited)
 
 
 
 
 
 
 
 
(In thousands)
 
 
 
 
 
 
 
 
 
 
 
 
YIELD ANALYSIS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31, 2018
 
Three Months Ended September 30, 2018
 
Three Months Ended December 31, 2017
 
 
Average
 
 
 
Yield/
 
Average
 
 
 
Yield/
 
Average
 
 
 
Yield/
 
 
Balance
 
Interest1
 
Cost1
 
Balance
 
Interest1
 
Cost1
 
Balance
 
Interest1
 
Cost1
Assets
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Loans
 
$
1,708,916

 
$
25,019

 
5.81
%
 
$
1,577,222

 
$
21,573

 
5.43
%
 
$
1,159,161

 
$
16,362

 
5.60
%
Investment securities and interest bearing due froms
 
214,310

 
1,666

 
3.08
%
 
232,041

 
1,361

 
2.33
%
 
131,215

 
781

 
2.36
%
Federal funds and other
 
67,036

 
180

 
1.07
%
 
13,033

 
170

 
5.17
%
 
25,905

 
117

 
1.79
%
Total interest-earning assets
 
1,990,262

 
26,865

 
5.36
%
 
1,822,296

 
23,104

 
5.03
%
 
1,316,281

 
17,260

 
5.20
%
Non-interest-earning assets
 
193,952

 
 
 
 
 
198,215

 
 
 
 
 
171,879

 
 
 
 
Total assets
 
$
2,184,214

 
 
 
 
 
$
2,020,511

 
 
 
 
 
$
1,488,160

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Stockholders’ Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
 
$
289,207

 
$
562

 
0.77
%
 
$
239,220

 
$
283

 
0.47
%
 
$
195,783

 
$
213

 
0.43
%
Money market and savings deposits
 
624,231

 
1,696

 
1.08
%
 
615,334

 
1,595

 
1.03
%
 
462,674

 
488

 
0.42
%
Time deposits
 
616,296

 
2,422

 
1.56
%
 
564,945

 
2,091

 
1.47
%
 
398,142

 
1,105

 
1.10
%
Total interest-bearing deposits
 
1,529,734

 
4,680

 
1.21
%
 
1,419,499

 
3,969

 
1.11
%
 
1,056,599

 
1,806

 
0.68
%
Securities sold under agreement to repurchase
 
10,661

 
9

 
0.33
%
 
17,694

 
11

 
0.27
%
 
20,226

 
15

 
0.29
%
Subordinated debt
 
39,178

 
584

 
5.91
%
 
1,277

 
19

 
5.90
%
 

 

 
%
Federal Home Loan Bank advances and other borrowings
 
4,070

 
51

 
4.97
%
 
16,442

 
209

 
5.11
%
 
8,281

 
81

 
3.88
%
Total interest-bearing liabilities
 
1,583,643

 
5,324

 
1.33
%
 
1,454,912

 
4,208

 
1.15
%
 
1,085,106

 
1,902

 
0.70
%
Noninterest-bearing deposits
 
320,412

 
 
 
 
 
307,007

 
 
 
 
 
203,457

 
 
 
 
Other liabilities
 
9,275

 
 
 
 
 
8,529

 
 
 
 
 
15,302

 
 
 
 
Total liabilities
 
1,913,330

 
 
 
 
 
1,770,448

 
 
 
 
 
1,303,865

 
 
 
 
Shareholders’ equity
 
270,884

 
 
 
 
 
250,063

 
 
 
 
 
184,295

 
 
 
 
Total liabilities and stockholders’ equity
 
$
2,184,214

 
 
 
 
 
$
2,020,511

 
 
 
 
 
$
1,488,160

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income, taxable equivalent
 
 
 
$
21,541

 
 
 
 
 
$
18,896

 
 
 
 
 
$
15,358

 
 
Interest rate spread
 
 
 
 
 
4.03
%
 
 
 
 
 
3.88
%
 
 
 
 
 
4.50
%
Tax equivalent net interest margin
 
 
 
 
 
4.29
%
 
 
 
 
 
4.11
%
 
 
 
 
 
4.63
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of average interest-earning assets to average interest-bearing liabilities
 
 
 
 
 
125.68
%
 
 
 
 
 
125.25
%
 
 
 
 
 
121.3
%
Percentage of  average equity to average assets
 
 
 
 
 
12.40
%
 
 
 
 
 
12.38
%
 
 
 
 
 
12.38
%
1Taxable equivalent basis






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, 2018
 
September 30, 2018
 
June 30, 2018
 
March 31, 2018
 
December 31, 2017
Operating Earnings
 
 
 
 
 
 
 
 
 
 
Net income (GAAP)
 
$
6,444

 
$
4,324

 
$
3,931

 
$
3,415

 
$
38

Securities (gains) losses
 
(2
)
 

 
1

 

 

Merger expenses
 
1,322

 
838

 
1,123

 
498

 
1,694

Tax charge related to change in tax law and tax benefit from director options previously exercised
 
(1,600
)
 

 

 

 
2,440

Income tax effect of adjustments
 
(256
)
 
(196
)
 
(211
)
 
(103
)
 
(506
)
Net operating earnings (Non-GAAP)
 
$
5,908

 
$
4,966

 
$
4,845

 
$
3,810

 
$
3,666

Net operating earnings per common share (Non-GAAP):
 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.44

 
$
0.39

 
$
0.40

 
$
0.34

 
$
0.35

Diluted
 
0.43

 
0.39

 
0.39

 
0.34

 
0.34

 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Return Ratios
 
 
 
 
 
 
 
 
 
 
Net operating return on average assets (Non-GAAP)1
 
1.07
 %
 
0.98
 %
 
1.00
 %
 
0.89
 %
 
0.99
 %
Return on average tangible common equity (Non-GAAP)2
 
13.09
 %
 
9.44
 %
 
8.96
 %
 
8.10
 %
 
0.10
 %
Net operating return on average shareholder equity (Non-GAAP)3
 
8.65
 %
 
7.88
 %
 
8.33
 %
 
6.97
 %
 
7.98
 %
Net operating return on average tangible common equity (Non-GAAP)4
 
12.00
 %
 
10.84
 %
 
11.04
 %
 
9.04
 %
 
9.94
 %
 
 
 
 
 
 
 
 
 
 
 
Operating Efficiency Ratio
 
 
 
 
 
 
 
 
 
 
Efficiency ratio (GAAP)
 
67.71
 %
 
71.34
 %
 
72.31
 %
 
72.39
 %
 
74.22
 %
Adjustment for taxable equivalent yields
 
 %
 
(0.18
)%
 
(0.11
)%
 
(0.06
)%
 
(0.09
)%
Adjustment for securities gains (losses)
 
0.01
 %
 
 %
 
(0.01
)%
 
 %
 
 %
Adjustment for merger related costs
 
(5.72
)%
 
(3.99
)%
 
(5.28
)%
 
(2.71
)%
 
(9.97
)%
Operating efficiency ratio (Non-GAAP)
 
62.00
 %
 
67.17
 %
 
66.92
 %
 
69.62
 %
 
64.16
 %

 
 
 
 
 
 
 
 
 
 
Tangible Common Equity
 
 
 
 
 
 
 
 
 
 
Shareholders' equity (GAAP)
 
$
283,011

 
$
251,642

 
$
247,487

 
$
208,949

 
$
205,852

Less goodwill and other intangible assets
 
79,034

 
68,254

 
68,449

 
50,660

 
50,837

Tangible common equity (Non-GAAP)
 
$
203,977

 
$
183,388

 
$
179,036

 
$
158,289

 
$
155,015

 
 
 
 
 
 
 
 
 
 
 
Average Tangible Common Equity
 
 
 
 
 
 
 
 
 
 
Average shareholders' equity (GAAP)
 
$
270,884

 
$
250,063

 
$
233,285

 
$
221,711

 
$
184,295

Less average goodwill and other intangible assets
 
75,547

 
68,389

 
57,251

 
50,780

 
36,267

Average tangible common equity (Non-GAAP)
 
$
195,337

 
$
181,674

 
$
176,034

 
$
170,931

 
$
148,028

1 Net operating return on average assets (non-GAAP) is the annualized net operating earnings (non-GAAP) divided by average assets.
2 Return on average tangible common equity (non-GAAP) is the annualized net income divided by average tangible common equity (non-GAAP).
3 Net operating return on average shareholder equity (non-GAAP) is the annualized net operating earnings (non-GAAP) divided by average shareholder equity.
4 Net operating return on average tangible common equity (non-GAAP) is the annualized net operating earnings (non-GAAP) divided by average tangible common equity (non-GAAP).


(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

exhibit992smartfinancial
Fourth Quarter 2018 Earnings Release January 24, 2019


 
Legal Disclaimer Forward-Looking Statements Certain of the statements made in this presentation may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” and “estimate,” and similar expressions, are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking, including statements about the benefits to SmartFinancial of its previously announced merger with Entegra Financial Corp. (“Entegra”), SmartFinancial’s future financial and operating results, and SmartFinancial’s plans, objectives, and intentions. All forward-looking statements are subject to risks, uncertainties, and other factors that may cause the actual results, performance, or achievements of SmartFinancial to differ materially from any results, performance, or achievements expressed or implied by such forward-looking statements. Such risks, uncertainties, and other factors include, among others, (1) the risk that the cost savings and any revenue synergies from the proposed merger with Entegra may not be realized or take longer than anticipated to be realized, (2) the risk that the cost savings and any revenue synergies from recently completed mergers may not be realized or may take longer than anticipated to realize, (3) disruption from the proposed merger with Entegra, or recently completed mergers, with customer, supplier, or employee relationships, (4) the occurrence of any event, change, or other circumstances that could give rise to the termination of the agreement and plan of merger among SmartFinancial, CT Merger Sub, Inc., and Entegra providing for the proposed merger with Entegra, (5) the failure to obtain necessary shareholder or regulatory approvals for the merger with Entegra, (6) the possibility that the amount of the costs, fees, expenses, and charges related to the merger with Entegra may be greater than anticipated, including as a result of unexpected or unknown factors, events, or liabilities, (7) the failure of the conditions to the merger with Entegra to be satisfied, (8) the risk of successful integration of the two companies’ businesses, including the risk that the integration of Entegra’s operations with those of SmartFinancial will be materially delayed or will be more costly or difficult than expected, (9) the risk of expansion into new geographic or product markets, (10) reputational risk and the reaction of SmartFinancial’s and Entegra’s customers to the merger, (11) the risk of potential litigation or regulatory action related to the merger with Entegra, (12) the dilution caused by SmartFinancial’s issuance of additional shares of its common stock in the merger with Entegra, and (13) general competitive, economic, political, and market conditions. Additional factors which could affect the forward-looking statements can be found in SmartFinancial’s annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) and available on the SEC’s website at http://www.sec.gov. SmartFinancial disclaims any obligation to update or revise any forward-looking statements contained in this presentation, which speak only as of the date hereof, whether as a result of new information, future events, or otherwise. Non-GAAP Financial Measures Statements included in this presentation 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. The non-GAAP financial measures used in this presentation include: (i) tangible common equity, (ii) tangible book value per share, (iii) core net interest margin, (iv) operating efficiency ratio, (v) operating return on average assets, (vi) operating earnings per share, and (vii) operating return on tangible common equity. Tangible common equity excludes total preferred stock, preferred stock paid in capital, goodwill, and other intangible assets, and tangible book value per share reflects the per share value of tangible common equity. Core net interest margin adjusts net interest margin to exclude the impact of purchase accounting. The operating efficiency ratio excludes securities gains and losses and merger related expenses from the efficiency ratio. Net operating income excludes securities gains and losses and merger related expenses, and the effect of the December, 2017 tax law change on deferred tax assets, and the income tax effect of adjustments, and operating return on average assets is net operating income divided by GAAP total average assets. Operating earnings per share is net operating income divided by GAAP total average assets. Operating return on tangible common equity is net operating income divided by tangible common equity. 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'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. 2


 
Compliance Disclosures Important Information for Shareholders and Investors This presentation shall not constitute an offer to sell, the solicitation of an offer to sell, or the solicitation of an offer to buy any securities or the solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. In connection with SmartFinancial’s proposed merger with Entegra, SmartFinancial will file a registration statement on Form S-4 with the SEC, which will contain the joint proxy statement of SmartFinancial and Entegra and a prospectus of SmartFinancial. Shareholders are encouraged to read the registration statement, including the joint proxy statement/prospectus that will be part of the registration statement, because it will contain important information about the proposed transaction, SmartFinancial, and Entegra. After the registration statement is filed with the SEC, the joint proxy statement/prospectus and other relevant documents will be mailed to SmartFinancial and Entegra shareholders and will be available for free on the SEC’s website (www.sec.gov). The joint proxy statement/prospectus will also be made available for free by contacting Ron Gorczynski, SmartFinancial’s Chief Administrative Officer, at (865) 437-5724 or David Bright, the Chief Financial Officer and Treasurer of Entegra, at (828) 524-7000. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. Participants in the Solicitation SmartFinancial, Entegra, and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from SmartFinancial and Entegra shareholders in connection with the previously announced proposed merger of SmartFinancial and Entegra under the rules of the SEC. Information about the directors and executive officers of SmartFinancial may be found in the definitive proxy statement for SmartFinancial’s 2018 annual meeting of shareholders, filed with the SEC by SmartFinancial on April 2, 2018, and other documents subsequently filed by SmartFinancial with the SEC. Information about the directors and executive officers of Entegra may be found in the definitive proxy statement for Entegra’s 2018 annual meeting of shareholders, filed by Entegra with the SEC on April 2, 2018. Additional information regarding the interests of these participants will also be included in the joint proxy statement/prospectus regarding the proposed transaction when it becomes available. Free copies of these documents maybe obtained as described in the paragraph above. 3


 
Overview of SmartFinancial ▪ SmartFinancial, Inc. (Nasdaq: SMBK) is a $2.3 billion Branch Footprint asset bank holding company headquartered in Knoxville, Tennessee Nashville Knoxville Greensboro ▪ Jonesboro Operates one subsidiary bank, SmartBank, which was founded 40 in January 2007 ARKANSAS ▪ TENNESSEE NORTH CAROLINA Located primarily in attractive, high-growthMemphismarkets Chattanooga throughout East Tennessee, Alabama and Florida ▪ 77 380 full-time employees Huntsville SOUTH ▪ ~$256 million market capitalization(1) 85 CAROLINA ▪ Balance Sheet (12/31/18) Atlanta Birmingham 20 ▪ Assets: $2.3 billion Tuscaloosa GEORGIA ▪ Gross Loans: $1.8 billion ▪ Deposits: $1.9 billion MISSISSIPPI ALABAMA Columbus ▪ Jackson 16 Tangible Common Equity: $204 million Montgomery ▪ Profitability (Q4 ’18) Savannah ▪ 65 Net Income / Operating Net Income: $6.4 million / $5.9 million 75 95 ▪ ROAA / Operating ROAA: 1.17% / 1.07% ▪ ROATCE / Operating ROATCE: 13.09% / 12.00% Mobile 10 ▪ Baton Rouge Efficiency Ratio / Operating Efficiency Ratio: 67.7% / 62.0% Tallahassee SMBK Branch New Orleans FLORIDA ▪ Asset Quality ▪ Superior asset quality and proven credit culture ▪ NPAs / Assets of 0.24% ▪ NCOs / Average Loans of 0.04% Financial data as of or for the three months ended 12/31/18 (1) Pricing data as of 01/23/19 Note: For a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures see Appendix 4


 
Culture We are building a culture where Associates thrive and are empowered to be leaders. The core values that we have established as a company help us operate in unison and have become a critical part of our culture. Our Associates are key to SmartBank’s success. Core Values Act with Integrity Delivering Be Enthusiastic Exhibiting Creating Exceptional, reate Positivity over-the-top C “WOW” Professional & Enthusiasm Demonstrate Accountability Experiences Knowledgeable and Positivity Embrace Change Service Positioning Statement At SmartBank, delivering unparalleled value to our Shareholders, Associates, Clients and the Communities we serve drives every decision and action we take. Exceptional value means being there with smart solutions, fast responses and deep commitment every single time. By doing this, we will create the Southeast’s next, great community banking franchise. 5


 
An Emerging Southeast Acquirer ▪ SmartFinancial is transforming into an experienced and preferred Southeast acquirer, having completed six transactions that added low-cost core deposits in attractive markets across three states ▪ The pending merger of equals announced with Entegra Financial Corporation on January 15, 2019 increases both scale and scarcity value, creating one of the top 20 largest banks by total assets across an expansive six state footprint in desirable Southeast markets Core Merger Current Deposits Completion SmartBank Acquired1 Merger Target Merger Type Date Target Markets Branches ($000) GulfSouth Private Bank FDIC - Assisted Transaction 10/19/12 Panhandle Florida 2 111,900 Cornerstone Community Bank Reverse Merger of Equals 08/31/15 Chattanooga MSA 5 287,609 Cleveland, TN Branch Branch 05/19/17 Cleveland, TN 1 21,900 Capstone Bank Whole Bank 11/01/17 Alabama 8 379,911 Southern Community Bank Whole Bank 05/01/18 Middle TN/Huntsville, AL 3 203,029 Foothills Bank & Trust Whole Bank 11/01/18 Knoxville, TN 3 183,037 Entegra Bank Merger of Equals - Western NC/Upstate SC/North GA 19 1,138,561 Acquired Franchise 41 2,325,947 Pro Forma SMBK Franchise2 47 2,851,418 1 Core deposits are defined as Total Deposits less Brokered Deposits and Listing Service Deposits, as reported just prior to completion 2 Pro Forma SMBK franchise reflects reported 3Q2018 Core Deposits, adjusted to include Foothills Bank & Trust (closed 11/01/18) and Entegra Bank Source: S&P Global Market Intelligence 6


 
Disciplined Acquisition Strategy ▪ SmartFinancial has adhered to a disciplined set of merger criteria including: ▪ No more than 3 years of initial TBV-per-share dilution ▪ Meaningful EPS accretion in the first full year of operations ▪ Conservative loan marks ▪ Franchise additive ▪ SmartFinancial is committed to balancing organic growth with thoughtful acquisitions and will not make acquisitions simply for the sake of growth ▪ The table below shows the initial projected impacts of the four whole bank acquisitions announced within the last 8 quarters First Full Year TBV EPS Accretion P/TBV Credit Mark Target Announcement Earnback1 (Projected) (Announce) Approach Capstone Bank May 2017 ~ 3.0 years 25% 159% >ALLL Southern Community Bank December 2017 < 2.5 years 10% 149% >ALLL Foothills Bank & Trust June 2018 ~ 2.7 years 8% 168% >ALLL Entegra Bank² January 2019 < 2.5 years 20% 119% >ALLL 1 Earnback periods and EPS accretion for mergers announced before federal tax reform should be more favorable to shareholders under the lower corporate tax rate ² Pricing based on closing price of SMBK stock on 01/14/19 7


 
Fourth Quarter Financial Highlights


 
Performance Trends ▪ Net Operating Earnings (Non-GAAP) of $5.9 ROAA (%) ROATCE (%) million for the quarter, up 61% from a year 1.17 % 13.09 % 1.07 % 12.00 % 0.99 % 1.00 % 0.98 % 11.04 % 10.84 % earlier 0.89 % 9.94 % 0.85 % 9.44 % 0.80 % 0.81 % 9.04 % 8.96 % 8.10 % ▪ ROAA of 1.17% for the quarter and Net Operating ROAA (Non-GAAP) of 1.07% 0.01 % 0.10 % ▪ ROATCE of 13.09% for the quarter and Operating ROATCE (Non-GAAP) of 12.00% Reported Operating (1)(2) ▪ Efficiency Ratio of 67.7% for the quarter and Operating Efficiency Ratio (Non-GAAP) of 62.0% Net Interest Margin (%) Efficiency Ratio (%) ▪ Net Interest Margin (fully taxable equivalent 4.54 % 72.3 % 72.4 % 72.3 % “FTE”) of 4.29%, up 18 basis points from the 4.49 % 71.3 % 4.36 % 4.29 % 69.1 % 4.11 % 67.7 % prior quarter 4.04 % 67.2 % 3.94 % 64.8 % 64.8 % 3.78 % 3.85 % 3.74 % 62.0 % ▪ Nonperforming Assets were 0.24% of Total Assets ▪ Completed acquisition of Foothills Bancorp, Inc. on November 1, 2018 Reported Operating (1)(2) (1) Operating profitability (non-GAAP) figures exclude gain on sale of securities, merger-related expenses and nonrecurring items (2) Operating net interest margin (non-GAAP) excludes purchase accounting adjustments Note: For a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures, see the Appendix 9


 
Balance Sheet Trends Total Assets ($mm) Net Loans ($mm) 2,500 2,000 2,274 1,769 2,062 2,051 1,568 1,578 2,000 1,600 1,721 1,760 1,317 1,368 1,500 1,200 1,062 808 1,000 800 500 400 0 0 YE 2016 YE 2017 Q1'18 Q2'18 Q3'18 Q4'18 YE 2016 YE 2017 Q1'18 Q2'18 Q3'18 Q4'18 Total Deposits ($mm) Book Value Per Share 2,400 $22.50 $20.31 2,000 1,922 $19.48 $19.74 1,717 1,707 $20.00 $18.46 $18.60 1,600 1,439 1,500 $17.50 1,200 $15.81 907 $14.69 $14.64 $15.00 $14.09 $14.09 $14.38 800 $13.90 400 $12.50 0 $10.00 YE 2016 YE 2017 Q1'18 Q2'18 Q3'18 Q4'18 YE 2016 YE 2017 Q1'18 Q2'18 Q3'18 Q4'18 Book Value Tangible Book Value(1) (1) For a reconciliation of this non-GAAP financial measure to its most directly comparable GAAP measures, see the Appendix 10


 
Earnings Profile – Fourth Quarter 2018 ▪ Net Operating Diluted EPS (Non- GAAP) increased 27% year over 4Q18 3Q18 4Q17 year (“YoY”) Total Interest Income $26,771 $23,068 $17,244 Total Interest Expense 5,324 4,208 1,902 ▪ Earnings Before Income Taxes increased 57% YoY Net Interest Income 21,447 18,860 15,342 Total Noninterest Income 1,680 1,831 1,581 ▪ Net Interest Income increased 40% Total Revenue 23,127 20,691 16,923 YoY primarily due to higher average Provision for Loan Losses 1,329 302 442 earning asset balances and higher Total Noninterest Expense 15,660 14,759 12,566 earning asset yields Earnings Before Income Taxes 6,137 5,630 3,913 ▪ Increases in Noninterest Expense Income Tax Expense (307) 1,305 3,875 primarily driven by higher salary Net Income Available to Common Shareholders $6,444 $4,325 $38 and occupancy expense from Net Income Per Share: completed acquisitions, as well as Diluted Net Income Per Share $0.47 $0.34 $0.00 merger expenses Net Operating Earnings Per Share (Non-GAAP): ▪ Total Revenue increased 37% YoY Diluted Operating Earnings Per Share $0.43 $0.39 $0.34 Note: For a reconciliation of non-GAAP financial measures to their most directly comparable GAAP measures, see the Appendix 11


 
Net Interest Income ▪ Net Interest Margin (FTE) increased quarter to quarter primarily due to higher accretion on acquired loans ▪ Compared to a year ago, Earning Asset Yields are up 16 basis points; the Average Cost of Interest-bearing Liabilities is up 63 basis points ▪ Excluding the effect of purchase accounting adjustments, the Net Interest Margin (FTE) decreased 11 basis points quarter to quarter, primarily due to the full quarter impact of recently issued subordinated debt 4Q18 3Q18 4Q17 Average Yields and Rates 4Q18 3Q18 4Q17 Net Interest Income $21,447 $18,860 $15,342 Average Earning Assets $1,995,112 $1,822,296 $1,316,281 Loans 5.81% 5.43% 5.60% Investment Securities and Interest-bearing Due from Banks 3.08% 2.33% 2.36% Net Interest Margin Federal Funds and Other Investments 1.07% 5.17% 1.79% Earning Asset Yields 5.36% 5.03% 5.20% 4.75% 4.50% Total Interest-bearing Deposits 1.21% 1.11% 0.68% 4.25% Securities Sold Under Agreement to Repurchase 0.33% 0.27% 0.29% 4.00% Subordinated Debt 5.91% 5.90% - Other Borrowings 4.97% 5.11% 3.88% 3.75% Total Interest-bearing Liabilities 1.33% 1.15% 0.70% 3.50% 4Q17 1Q18 2Q18 3Q18 4Q18 Net Interest Margin (FTE) 4.29% 4.11% 4.63% Net Interest Margin (FTE) Net Interest Margin (FTE - ex Purchase Accounting Adj.) (Non-GAAP) Cost of Funds 1.11% 0.94% 0.59% Note: For a reconciliation of non-GAAP financial measures to their most directly comparable GAAP measures, see the Appendix 12


 
Noninterest Income ▪ Consistent increases in service charges on deposit accounts, and other noninterest income components ▪ Noninterest Income trending upward, though 4Q18 reported decreased gain on sale of loans and other assets Noninterest Income $2,000,000 $1,500,000 (Loss) Gain on Securities $1,000,000 Other Noninterest Income Gain on Sale of Loans and Other Assets Service Charges on Deposit Accounts $500,000 $0 4Q17 1Q18 2Q18 3Q18 4Q18 13


 
Noninterest Expense ▪ Efficiency Ratio decreased to 67.7%, the lowest of any quarter since the Cornerstone merger in 2015. Operating Efficiency Ratio (Non-GAAP) was 62.0%. ▪ Salary increases are primarily due to the addition of associates from three completed acquisitions for periods presented ▪ Merger expense of $1.3 million in the quarter. Noninterest Expense $20,000,000 72.0% 70.0% Merger expense $15,000,000 68.0% Other 66.0% Amortization of Intangibles $10,000,000 64.0% Data Processing Occupancy 62.0% $5,000,000 Salaries & Benefits 60.0% Operating Efficiency Ratio $0 58.0% 4Q17 1Q18 2Q18 3Q18 4Q18 Note: For a reconciliation of non-GAAP financial measures to their most directly comparable GAAP measures, see the Appendix 14


 
Attractive Deposit Mix Deposit Composition (12/31/18) Historical Deposit Composition ($mm) $2,500 Noninterest Demand Time 17% Deposits Interest- $2,000 $1,922 34% bearing Demand $1,717 $1,707 16% $1,500 $649 Money $1,500 $1,439 $536 Market and $569 Savings $453 33% $443 $1,000 $642 $633 $570 $491 Historical Cost of Deposits $544 3.00% $500 $311 $279 $247 $267 2.50% $232 2.00% 2.50% $276 $301 $301 $320 2.25% $221 $0 1.50% 2.00% 1.75% 4Q17 1Q18 2Q18 3Q18 4Q18 1.00% 1.50% Noninterest Demand Interest-bearing Demand 1.00% 0.50% 0.79% 0.91% 0.57% 0.67% Money Market and Savings Time Deposits 0.00% 4Q17 1Q18 2Q18 3Q18 4Q18 Cost of Deposits Fed Funds Target 15


 
Overview of Loan Portfolio Loan Composition (12/31/18) Historical Loan Composition ($mm) Other $2,500 1% Residential RE 23% $2,000 C&I CRE, Non $1,777 17% Owner $1,585 Occupied $1,575 $408 27% $1,500 $1,374 CRE, C&D $1,323 $356 $352 Owner 11% Occupied $293 $299 21% $488 $1,000 $386 $400 $362 $375 Historical CRE Ratios $360 $364 $372 $500 $281 $289 $188 $143 $179 $166 400% $135 $238 $256 $279 $290 $308 300% 273.5% $0 200% 4Q17 1Q18 2Q18 3Q18 4Q18 100% C&I C&D 78.1% CRE, Owner Occupied CRE, Non Owner Occupied 0% 4Q17 1Q18 2Q18 3Q18 4Q18 Residential RE Other C&D CRE 16


 
Asset Quality ▪ Superior asset quality, with Nonperforming Nonperforming Assets Assets at 0.24% of Total Assets ▪ $8,000 0.40% Remaining fair value discounts on acquired $6,000 0.30% loans are more than 2.6x the current Allowance $4,000 0.20% For Loan Losses $2,000 ▪ $0 0.10% Acquisitions are marked conservatively for 4Q17 1Q18 2Q18 3Q18 4Q18 potential losses Foreclosed Assets Nonperforming Loans ▪ Proven credit culture, with Net Charge-Offs to Average Loans at 0.04% Nonperforming Assets/ Total Assets Loan Discounts Net Charge-Offs/ Average Loans $30,000 0.80% 0.10% 0.60% $20,000 0.06% 0.40% $10,000 0.05% 0.04% 0.20% 0.02% 0.02% $0 0.00% 4Q17 1Q18 2Q18 3Q18 4Q18 0.00% Allowance for Loan Losses (GAAP) (0.01%) Net Acquisition Accounting Fair Falue Discounts to Loans -0.05% Allowance for Loan Losses/ Loans 4Q17 1Q18 2Q18 3Q18 4Q18 17


 
Appendix


 
Non-GAAP Reconciliations 4Q18 3Q18 2Q18 1Q18 4Q17 Net interest income - ex purchase acct. adj. Net interest income (GAAP) $ 21,447 $ 18,860 $ 19,538 $ 16,811 $ 15,342 Taxable equivalent adjustment 94 35 23 12 16 Net interest income TEY 21,541 18,896 19,561 16,823 15,358 Purchase accounting adjustments 2,755 1,208 2,583 1,274 2,411 Net interest income -ex purchase acct. adj. (Non-GAAP) $ 18,786 $ 17,688 $ 16,978 $ 15,549 $ 12,947 Tangible Common Equity Shareholders' equity (GAAP) $ 283,011 $ 251,642 $ 247,487 $ 208,949 $ 205,852 Less goodwill and other intangible assets 79,034 68,254 68,449 50,660 50,837 Tangible Common Equity (Non-GAAP) $ 203,977 $ 183,388 $ 179,036 $ 158,289 $ 155,015 Non-GAAP Return Ratios Net operating return on average assets (Non-GAAP)(1) 1.07% 0.98% 1.00% 0.89% 0.99% Return on average tangible common equity (Non-GAAP)(2) 13.09% 9.44% 8.96% 8.10% 0.10% Net operating return on average shareholder equity (Non-GAAP)(3) 8.65% 7.88% 8.33% 6.97% 7.98% Net operating return on average tangible common equity (Non-GAAP)(4) 12.00% 10.84% 11.04% 9.04% 9.94% (1) Net operating return on average assets (non-GAAP) is the annualized net operating earnings (non-GAAP) divided by average assets. (2) Return on average tangible common equity (non-GAAP) is the annualized net income divided by average tangible common equity (non-GAAP). (3) Net operating return on average shareholder equity (non-GAAP) is the annualized net operating earnings (non-GAAP) divided by average shareholder equity. 19 (4) Net operating return on average tangible common equity (non-GAAP) is the annualized net operating earnings (non-GAAP) divided by average tangible common equity (non-GAAP).


 
Non-GAAP Reconciliations 4Q18 3Q18 2Q18 1Q18 4Q17 Operating Earnings Net income (GAAP) $ 6,444 $ 4,324 $ 3,931 $ 3,415 $ 38 Securities (gains) losses (2) - 1 - - Merger costs 1,322 838 1,123 498 1,694 Tax charge related to change in tax law and tax benefit (1,600) - - - 2,440 Income tax effect of adjustments (256) (196) (211) (103) (506) Net operating earnings available to common shareholders (Non-GAAP) $ 5,908 $ 4,966 $ 4,845 $ 3,810 $ 3,666 Net operating earnings per common share: Basic $0.44 $0.39 $0.40 $0.34 $0.35 Diluted $0.43 $0.39 $0.39 $0.34 $0.34 Operating Efficiency Ratio Efficiency ratio (GAAP) 67.71% 71.34% 72.31% 72.39% 74.22% Adjustment for taxable equivalent yields - (0.18%) (0.11%) (0.06%) (0.09%) Adjustment for securities gains (losses) 0.01% - (0.01%) - - Adjustment for merger expenses (5.72%) (3.99%) (5.28%) (2.71%) (9.97%) Operating efficiency ratio (Non-GAAP) 62.00% 67.17% 66.92% 69.62% 64.16% 20


 
Transformative Merger of Equals


 
Our Combined Leadership Team Miller Welborn Chairman 12 SMBK Directors 5 ENFC Directors Billy Carroll, Jr. Roger Plemens President & CEO President of the Carolinas Greg Davis David Bright Rhett Jordan Gary Petty Chief Lending Officer Chief Financial Officer Chief Credit Officer Chief Risk Officer Ryan Scaggs Ron Gorczynski Bill Yoder Diane Short Chief Operations Chief Administrative Chief Banking Officer Chief HR Officer Officer Officer Legacy SMBK 22 Legacy ENFC


 
Building Significant Scarcity Value ▪ Increases depth of executive leadership team and Board of Directors highly capable of running a pro forma ~$4.0 billion asset, NASDAQ-traded financial institution ▪ Advances combined entity into the top 20 largest publicly traded banks headquartered in its combined states of operation** Pro Forma Assets (MRQ) Rank (#) Institution Name ($000s) 1 Bank of America Corporation 2,338,833,000 2 BB&T Corporation 222,885,000 3 SunTrust Banks, Inc. 211,276,000 4 Regions Financial Corporation 124,578,000 5 Synovus Financial Corp.* 44,508,476 6 First Horizon National Corporation 40,635,924 7 First Citizens BancShares, Inc.* 36,346,131 8 BankUnited, Inc. 31,513,636 9 Pinnacle Financial Partners, Inc. 24,557,545 10 CenterState Bank Corporation* 16,377,710 11 Ameris Bancorp* 16,241,050 12 South State Corporation 14,522,215 13 United Community Banks, Inc. 12,405,132 14 Mercantil Bank Holding Corporation 8,435,802 15 ServisFirst Bancshares, Inc. 7,517,833 16 Seacoast Banking Corporation of Florida* 6,729,612 17 First Bancorp 5,711,630 18 FB Financial Corporation* 5,449,767 19 Franklin Financial Network, Inc. 4,167,813 SmartFinancial, Inc.* / Entegra Financial Corp. 3,939,747 21 Carolina Financial Corporation 3,721,485 22 Live Oak Bancshares, Inc. 3,444,757 23 HomeTrust Bancshares, Inc. 3,353,959 24 Capital City Bank Group, Inc. 2,819,190 25 Southern BancShares (N.C.), Inc. 2,674,603 26 Atlantic Capital Bancshares, Inc.* 2,491,121 27 Wilson Bank Holding Co. 2,460,097 SmartFinancial, Inc.* 2,270,181 Ranked by total assets as of 09/30/18, pro forma for acquisitions *Most recent quarter (MRQ) pro forma for acquisitions (whole-bank and branch) and branch divestitures; including pro forma impact of SMBK’s acquisition of Foothills Bancorp, Inc. on 11/01/18 23 **Defined as Alabama, Florida, Georgia, North Carolina, South Carolina and Tennessee Source: S&P Global Market Intelligence


 
Pro Forma Footprint and Highlights Pro Forma Highlights (as of 09/30/18) Nashville North Knoxville Murfreesboro Carolina Assets ($mm) 3,940 Tennessee Asheville Loans ($mm) 2,798 Chattanooga Deposits ($mm) 3,153 Greenville (1) Huntsville TCE Ratio (%) 8.7% South Branches 47 Alabama Gainesville Carolina Loans/Deposits 89% Atlanta Birmingham Pro Forma Deposits by State (as of 06/30/18) Tuscaloosa Georgia Alabama North Montgomery Florida 15% 3% Carolina 27% Mobile Georgia Pensacola Tallahassee Tennessee 10% Panama City 42% SmartFinancial, Inc. Florida South Entegra Financial Corp. Carolina 3% (1) Tangible common equity is a Non-GAAP measure. Refer to appendix for GAAP to Non-GAAP reconciliation. Deposits by state as of 06/30/18 FDIC deposit survey, adjusted for announced acquisitions 24 Pro forma highlights includes pro forma impact of SMBK’s acquisition of Foothills Bancorp, Inc. on 11/01/18; excludes merger-related and purchase accounting adjustments Sources: S&P Global Market Intelligence, FDIC


 
Pro Forma Deposit Market Share Pro Forma Counties of Operation North Market Deposits in Number Nashville Knoxville Carolina Share Market of Murfreesboro Rank Institution (%) ($000) Branches Tennessee Asheville 1 Regions Financial Corp. (AL) 10.27 9,206,647 131