SmartFinancial(US:SMBK)2021-05-10 20:02Financial Performance - Net income for the first quarter of 2021 was $9.8 million, or $0.65 per diluted common share, compared to $2.7 million, or $0.19 per diluted common share, for the same period in 2020[147] - Net interest income increased to $26.4 million for the first quarter of 2021, up from $22.7 million for the first quarter of 2020[148] - Total noninterest income increased by $2.9 million, or 102.0%, in Q1 2021 compared to Q1 2020, driven by higher service charges, mortgage banking, and insurance commissions[153] - Noninterest expense increased by $671 thousand, or 3.6%, in Q1 2021 compared to Q1 2020, primarily due to higher salaries and employee benefits related to franchise growth[154] - The effective tax rate for Q1 2021 was approximately 21.5%, compared to 19.6% in Q1 2020, influenced by the utilization of an NOL carryforward in March 2020[154] Loan and Deposit Growth - Average loan balances increased by $445.5 million, and average interest-bearing deposits increased by $415.9 million from the first quarter of 2020 to the first quarter of 2021[148] - Organic net loans increased by $142.8 million, or 7.2%, from December 31, 2020, to $2.12 billion at March 31, 2021, including $119.5 million of PPP loans originated during the quarter[156] - Total net loans outstanding reached approximately $2.47 billion at March 31, 2021, up from $2.36 billion at December 31, 2020[155] - Total deposits as of March 31, 2021, were $3.05 billion, an increase of $243 million from December 31, 2020[175] Interest Income and Margin - The tax equivalent net interest margin decreased to 3.48% for the first quarter of 2021, down from 3.90% for the first quarter of 2020[147] - The yield on earning assets decreased from 4.83% for the first quarter of 2020 to 3.88% for the first quarter of 2021[148] - Total interest-earning assets amounted to $3,080,897 thousand with a yield of 3.88% in Q1 2021, down from 4.83% in Q1 2020[149] - The cost of average interest-bearing deposits decreased from 1.10% for the first quarter of 2020 to 0.44% for the first quarter of 2021[148] Asset Quality - Nonperforming loans as a percentage of total gross loans was 0.25% as of March 31, 2021, down from 0.24% as of December 31, 2020[160] - Total nonperforming assets as a percentage of total assets was 0.29% as of March 31, 2021, compared to 0.31% as of December 31, 2020[160] - The provision for loan losses for the three months ended March 31, 2021, was $67 thousand, a decrease of $3.1 million from $3.2 million in the same period of 2020[164] - The allowance for loan losses was $18.4 million as of March 31, 2021, representing 0.74% of total loans, compared to $18.3 million and 0.77% as of December 31, 2020[164] Liquidity and Interest Rate Risk - The company has established guidelines to limit the variance of net interest income in response to instantaneous changes in interest rates, with a maximum decline of 6.22% for a ±100 basis points change over the next 12 months[185] - For a ±200 basis points change, the maximum decline in net interest income is projected at 12.66% over the next 12 months[185] - The economic value of equity model indicates a maximum decline of 5.29% for a +100 basis points change and a decline of 7.48% for a -100 basis points change in prevailing interest rates[186] - The company has an unused borrowing capacity of $276.7 million available with the Federal Reserve, FHLB, and other institutions, ensuring adequate liquidity[191] - The company monitors liquidity needs through its Asset-Liability Committee (ALCO) and is subject to regulatory oversight regarding liquidity and capital resources[189]