SmartFinancial(US:SMBK)2021-07-21 18:45Financial Data and Key Metrics Changes - Operating earnings for Q2 2021 were reported at $9.1 million or $0.60 per share, marking a 25% increase compared to the prior year quarter [10][18] - Tangible book value (TBV) increased to $18.69, reflecting a 10% year-over-year growth [10][23] - Net interest income for the quarter was over $27 million, slightly higher than the previous year's $26.4 million [26] - The interest margin was reported at 3.29%, a decline of 19 basis points from the prior quarter [27] Business Line Data and Key Metrics Changes - Net organic loan growth was over $87 million, or 16% annualized, excluding PPP loans [10][20] - Deposit growth was solid, with an increase of over $90 million during Q2 [11][25] - Non-interest income increased by almost 50% from the prior year quarter, with a forecast of $5.5 million for Q3 [32][34] Market Data and Key Metrics Changes - The loan portfolio saw a diversification with a 16% annualized organic loan growth, particularly in the commercial real estate (CRE) sector, which grew to approximately 39% of total portfolio outstandings [37][38] - The bank's asset quality metrics improved, with a non-performing asset (NPA) ratio of 0.17%, down from 0.29% in Q1 2021 [40][41] Company Strategy and Development Direction - The company is focusing on organic growth through team lift-outs and market expansions, particularly in Alabama and the Gulf Coast region [13][56] - The acquisition of Sevier County Bank is on track for closing, with plans for integration and rebranding [14][15] - The company aims to leverage its capital effectively while exploring additional lift-out opportunities as a strategic focus [69][70] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's positioning and growth potential, citing strong market conditions and a robust loan pipeline [7][57] - The Southeast region is expected to continue experiencing growth, driven by population trends and economic recovery [53][54] Other Important Information - The company reported no need for a provision for loan losses in the current quarter, indicating strong credit quality [47] - The allowance for originated loans and leases, excluding PPP loans, was reported at 0.86% [48] Q&A Session Summary Question: What are the expected total loan balances by the end of the year excluding Sevier County? - The expected total loan balance is approximately $2.52 billion, not including Sevier County [62][64] Question: Is the lift-out strategy viewed as the go-forward plan for inorganic growth? - The company is always looking for opportunities, with a current focus on lift-outs rather than mergers and acquisitions [68][69] Question: How big was the loan portfolio managed by the Auburn team at their prior institution? - The Auburn team managed around $0.5 billion in total loans at their previous institution [82] Question: What is the outlook for fees in the back half of the year? - The forecast for non-interest income in Q3 is around $5.5 million, similar to Q4 expectations [101][102] Question: What is the appetite for buybacks in the back half of the year? - The company is in a good capital position but does not foresee heavy buybacks due to current valuations [103][104]