SmartFinancial(US:SMBK)2022-07-26 17:56Financial Data and Key Metrics Changes - The company reported operating earnings of $10.3 million, or $0.61 per share, with a 30% annualized growth in loans and a 9% annualized growth in deposits, including a 14% annualized growth in non-maturity deposits [8][10][11] - The efficiency ratio improved to 64%, and the non-performing asset (NPA) ratio remained stable at 11 basis points [9][10] - Operating revenue increased by over $3 million, representing an annualized quarter-over-quarter increase of almost 33% [22] Business Line Data and Key Metrics Changes - The loan portfolio grew by over $206 million, excluding a reduction of approximately $19 million in forgiven PPP loan balances, resulting in a total of just under $3 billion in loans and leases outstanding [12][17] - Noninterest income generated over $7.2 million, with strong performance in wealth and insurance platforms, while mortgage banking faced headwinds [26][90] - The Fountain Equipment Finance team saw over 40% growth year-to-date [11] Market Data and Key Metrics Changes - The company noted strong personal and business relocations into its market areas, contributing to above-average economic stability [15] - The loan portfolio mix remained consistent, with core deposits increasing while time deposit balances slightly decreased [14] Company Strategy and Development Direction - The company is focused on integrating new teams, executing organic growth strategies, and gaining operating leverage [7][33] - There is an emphasis on expanding in existing markets, particularly in Nashville and Birmingham, rather than entering new markets [108] - The integration of the nCino lending workflow is expected to enhance efficiency and support growth in the lending side of the business [34][95] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continuing loan growth despite potential recessionary pressures, citing strong market conditions and conservative credit underwriting [15][44] - The outlook for the second half of the year anticipates continued support for lift-out teams and a moderate pace of loan growth [33][135] - Management is optimistic about maintaining strong profitability and capital levels to support future growth [30][31] Other Important Information - The company’s tangible book value was reported at $18.69 per share, with a year-to-date annualized growth rate of over 10% [31] - The company is transitioning to CECL and is closely monitoring credit conditions as they evolve [120][121] Q&A Session Summary Question: What are the expectations for continued deposit growth? - Management indicated that while deposit growth may not match the pace of loan growth, they remain optimistic about continued growth in deposits as new clients are brought in [41] Question: Concerns about loan growth in a recessionary environment? - Management reassured that they are maintaining conservative underwriting practices and are confident in the quality of the businesses being brought onto their balance sheet [44] Question: Details on margin guidance and deposit betas? - Management provided insights on expected deposit betas for the upcoming quarters, estimating around 19%-20% for Q3 and closer to historical levels of 30% for Q4 [46] Question: Outlook for noninterest income and technology initiatives? - Management discussed expectations for noninterest income, highlighting strong performance in wealth management and the impact of technology initiatives like the nCino integration [90][95] Question: Balancing new hires with profitability goals? - Management confirmed they are not slowing down on hiring but are focused on integrating existing teams and ensuring the right fit culturally [127][131]