SmartFinancial, Inc. (NASDAQ:SMBK) Q2 2018 Earnings Conference Call - Final Transcript

Jul 25, 2018 • 10:00 am ET

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SmartFinancial, Inc. (NASDAQ:SMBK) Q2 2018 Earnings Conference Call - Final Transcript

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Presentation
Executive
Billy Carroll

as Miller also mentioned, another great highlight for the quarter was a really nice end-market deal, Foothills Bancorp, Maryville, Tennessee. Our team's really excited about that, having one close to home is really nice. Being able to add some density in our home Knoxville, MSA is something we're very excited about and be glad to touch on that more if needed.

I'll start with the slide deck. Hopefully, everybody on the call has had an opportunity to take a look at our deck. We'll start on Page 4. For anyone that's relatively new to our story, this slide give you -- it gives you a little bit of a background on our now $2 billion in asset company. Also highlighted is the footprint we'll be picking up with the Foothills acquisition. We've also included some slides in the first part of the deck. This is a new deck format that we have that provides some additional background on our Company as well as some of our recent acquisitions and our acquisition strategy.

Jumping into the highlights for the quarter. On the earnings front, we did have a really nice earnings quarter. Core ROA and EPS were right in our target range, even while juggling all the M&A activity that we've talked about. Core net interest margin continuing to -- continue to hold very well, and I'm going to let -- Bryan's going to dive into the specifics of margin in his comments. We did have a little nonrecurring accretion that positively impacted NIM. But our core margins continue to be strong even with a slight tick up in funding cost. In addition to Southern Community Bank assets, our sales team organically added about $10 million in loans for the quarter. That's a little slower than the net balance growth that we had in Q1 but still ahead of our target on a year-to-date basis. Year-to-date, we're running at approximately 10% annualized on an organic front.

Efficiency ratio improved as we continue to be on pace to move into -- consistently move a core into that mid-to-low 60s range. So it was a nice to see our core efficiency ratio dip down again this quarter. And credit quality remains very strong with nonperforming assets at 0.25%.

Turn it over to Slide 11 in the deck. You'll see a summary of our key metrics for the last 5 quarters. Our core ROA, again, moved up as anticipated, as did our net interest income, the assets quarter-to-quarter. Noninterest income trend still remains flat. Our most recent acquisitions have not come with many noninterest revenue opportunities. But it remains the goal to increase this line, and we plan to see improvement in that metric as we move further into the year. Noninterest expense trends look really nice as we are taking advantage of the cost saves, our Capstone acquisition that was completed earlier in the year is now fully integrated, performing very well. Those cost saves are in place. So our net expense ratios