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: November 5, 2015

 

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 )

 

N/A

(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 November 5, 2015, SmartFinancial, Inc. issued a press release announcing its consolidated financial results for the third quarter of 2015. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 

Pursuant to the rules and regulations of the Securities and Exchange Commission, the information on this Item 2.02 disclosure, including Exhibit 99.1 and information set forth therein, is deemed to have been furnished and shall not be “filed” under the Securities exchange Act of 1934.

 

Item 9.01 Financial Statements & Exhibits

 

(d) Exhibits

 

Exhibit 99.1 Press release dated November 5, 2015 by SmartFinancial, Inc.

 

  2  

 

  

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: November 5, 2015  
   
  /s/ William Y. Carroll Jr.
  William Y. Carroll, Jr.
  President & Chief Executive Officer

 

  3  

 

  

EXHIBIT INDEX

 

Exhibit No.   Description
     
99.1   Press release dated November 5, 2015 by SmartFinancial, Inc.

 

  4  

 

Exhibit 99.1

 

 

3Q 2015

  

 

SmartFinancial, Inc. Reports for Third Quarter

 

 

KNOXVILLE, TN – November 5, 2015 — SmartFinancial, Inc. (“SmartFinancial”; OTCBB: SMBK), announced today results for its third quarter. The quarter was highlighted by the successful completion of the merging of the two holding companies, legacy SmartFinancial, Inc. and Cornerstone Bancshares, Inc., which was renamed “SmartFinancial, Inc.” following the merger. In conjunction with the transaction, merger related expenses for the quarter were $747,511 and $1.0 million for the year. These non-recurring expenses led to a $76,909 net loss for the quarter and year to date net income available to common shareholders of $237,585. Also noted are one-time expenses for the quarter of approximately $446,000 in write down on foreclosed assets to accelerate the liquidation timeframe to reduce non-performing assets. Merger related expenses and the write down on OREO were anticipated and in line with company expectations. Minimal expense in these areas are expected moving forward.

 

The third quarter’s results for 2015 reflect the first reporting for SmartFinancial, Inc. (Company) following the merger that was effective August 31, 2015. Prior to the merger date, the consolidated financial statements presented in the accompanying tables are those of legacy SmartFinancial, Inc. and do not include the operations of Cornerstone Bancshares, Inc. since the transaction was treated as a reverse merger for accounting and financial presentation purposes. As a result, only Cornerstone’s September income, expenses, assets, liabilities, and equity are represented in the results. Investors may wish to review previous filings of Cornerstone Bancshares, Inc. with the Securities and Exchange Commission (SEC). Cornerstone Bancshares, Inc. filed a Form 10-K in April 2015 that included audited financial statements for the years ended December 31, 2014 and December 31, 2013. Those financial statements reflected the operations of its subsidiary, Cornerstone Community Bank. Cornerstone Bancshares, Inc. also filed a Form 8-K/A on June 22, 2015, that includes unaudited pro forma combined condensed financial statements of Cornerstone Bancshares, Inc. and SmartFinancial, Inc. as of March 31, 2015.

 

Billy Carroll, President & CEO stated: “As our companies were united under SmartFinancial, Inc. in September, our talented teams within Cornerstone and SmartBank are energized and highly motivated to finalize the integration of our two banks, building a strong banking franchise in attractive markets spanning East Tennessee and Northwest Florida. Organic growth has been steady in all markets and we are looking forward to solid performance moving forward now that the holding company transaction is closed.”

 

Third Quarter Financial Highlights at September 30, 2015:

 

· Total Assets Exceed $1 billion
· Net Loans of $706.6 million
· Deposits Total $847.0 million
· Estimated Nonperforming Assets to Total Assets of 1.17%
· Estimated Tier 1 Leverage Ratio of 9.36%

 

 

  

   

 

  

SmartFinancial’s Chairman Miller Welborn stated: “In crossing the $1 billion in assets threshold, we remain focused on driving earnings with our scale. We will leverage our seasoned banking team and are prepared for our future as we deliver SmartBanking to our clients who seek a unique experience with a dynamic, innovative community bank.”

 

 

About SmartFinancial, Inc.

 

SmartFinancial, Inc., based in Knoxville, Tennessee, is the bank holding company for SmartBank and Cornerstone Community Bank. SmartBank is a full-service commercial bank founded in 2007, with seven branches and one loan production office spanning East Tennessee and the Florida Panhandle. Recruiting the best people, delivering exceptional client service, strategic branching and a conservative and disciplined approach to lending have all given rise to SmartBank’s success. More information about SmartFinancial can be found on its website: www.smartbank.com. Cornerstone Community Bank is a full-service commercial bank founded in 1996, with five branches throughout the Chattanooga MSA and one loan production office in Dalton, Georgia. Cornerstone Community Bank specializes in providing customized financial solutions for businesses and consumers, by offering a comprehensive range of products and services designed to help companies and individuals build strong financial foundations. More information about Cornerstone Community Bank can be found on its website:  www.cscbank.com .

 

This release contains forward-looking statements. SmartFinancial cautions you that a number of important factors could cause actual results to differ materially from those currently anticipated in any forward-looking statement. Such factors include, but are not limited to: changes in management’s plans for the future, prevailing economic and political conditions, particularly in our market area; credit risk associated with our lending activities; changes in interest rates, loan demand, real estate values and competition; changes in accounting principles, policies, and guidelines; changes in any applicable law, rule, regulation or practice with respect to tax or legal issues; and other economic, competitive, governmental, regulatory and technological factors affecting our operations, pricing, products and services and other factors that may be described in our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission from time to time.

 

In addition to these risks, acquisitions and business combinations present risks other than those presented by the nature of the business acquired. Acquisitions and business combinations may be substantially more expensive to complete than originally anticipated, and the anticipated benefits may be significantly harder—or take longer—to achieve than expected. As regulated financial institutions, our pursuit of attractive acquisition and business combination opportunities could be negatively impacted by regulatory delays or other regulatory issues. Regulatory and/or legal issues related to the pre-acquisition operations of an acquired or combined business may cause reputational harm to SmartFinancial following the acquisition or combination, and integration of the acquired or combined business with ours may result in additional future costs arising as a result of those issues.

 

The forward-looking statements are made as of the date of this release, and, except as may be required by applicable law or regulation, SmartFinancial assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.

 

 

 

  

   

 

 

Source

 

SmartFinancial, Inc.

 

 

Investor Contacts

 

SmartFinancial, Inc.

Billy Carroll

President & CEO

865.868.0613

 

Frank Hughes

Executive Vice President

Investor Relations

423.385.3009

 

 

Media Contact

 

Kelley Fowler

First Vice President, Public Relations & Marketing

SmartBank

865.868.0611

kfowler@smartbank.net

 

 

 

 

   

 

 

SmartFinancial, Inc. and Subsidiaries

Consolidated Statements of Income

  

      Unaudited
Three Months Ended
September 30, 		      Unaudited
Nine Months Ended
September 30, 		 
      2015       2014       2015       2014  
INTEREST INCOME                                
Loans, including fees   $ 6,660,440     $ 4,978,481     $ 15,856,077     $ 14,035,526  
Securities and interest-bearing deposits at other                                
financial institutions     458,089       430,837       1,239,340       1,357,426  
Federal funds sold and other earning assets     35,101       35,001       91,029       94,679  
Total interest income     7,153,630       5,444,319       17,186,446       15,487,631  
                                 
INTEREST EXPENSE                                
Time deposits     468,002       377,393       1,176,258       1,103,370  
Other deposits     219,990       145,399       512,403       414,741  
Federal funds purchased and securities                                
sold under agreements to repurchase     7,394       3,413       16,640       8,306  
Federal Home Loan Bank advances and other borrowings     31,326       -       31,270       -  
Total interest expense     726,712       526,205       1,736,571       1,526,417  
                                 
Net interest income before provision for loan losses     6,426,918       4,918,114       15,449,875       13,961,214  
Provision (credit) for loan losses     32,397       (143,730 )     356,325       299,385  
Net interest income after provision for loan losses     6,394,521       5,061,844       15,093,550       13,661,829  
                                 
NONINTEREST INCOME                                
Customer service fees     236,698       138,089       516,013       365,882  
Net gains (losses) from sale of securities     -       -       52,255       (4,174 )
Net gains from sale of loans and other assets     66,041       46,804       161,896       108,070  
Net losses from sale of foreclosed assets     (445,980 )     (50,720 )     (426,168 )     (284,670 )
Other noninterest income     317,202       255,370       784,230       719,445  
Total noninterest income     173,961       389,543       1,088,226       904,553  
                                 
NONINTEREST EXPENSE                                
Salaries and employee benefits     3,186,787       2,494,991       7,723,506       6,828,348  
Net occupancy and equipment expense     688,426       517,514       1,769,494       1,591,706  
Depository insurance     175,697       119,329       419,747       354,402  
Foreclosed assets, net     90,574       50,522       179,796       126,312  
Other operating expenses     2,351,718       1,123,101       5,021,567       3,269,426  
Total noninterest expenses     6,493,202       4,305,457       15,114,110       12,170,194  
                                 
Income before income tax expense     75,280       1,145,930       1,067,666       2,396,188  
Income tax expense     152,189       440,723       740,081       920,010  
                                 
Net income (loss)     (76,909 )     705,207       327,585       1,476,178  
                                 
Preferred stock dividend requirements     30,000       30,000       90,000       90,000  
                                 
Net income (loss) available to common shareholders   $ (106,909 )   $ 675,207     $ 237,585     $ 1,386,178  
                                 
EARNINGS (LOSS) PER COMMON SHARE                                
Basic   $ (0.03 )   $ 0.22     $ 0.07     $ 0.45  
Diluted   $ (0.03 )   $ 0.20     $ 0.06     $ 0.42  
                                 
DIVIDENDS DECLARED PER COMMON SHARE   $ -     $ -     $ -     $ -  

 

The Notes to Consolidated Financial Statements are an integral part of these statements.

 

   

 

 

SmartFinancial, Inc. and Subsidiaries

Consolidated Balance Sheets

 

      Unaudited
September 30, 		      December 31,  
ASSETS     2015       2014  
Cash and due from banks   $ 35,691,381     $ 32,386,247  
Interest-bearing deposits at other financial institutions     39,009,274       6,643,101  
Federal funds sold     15,235,000       7,710,028  
Total cash and cash equivalents     89,935,655       46,739,376  
                 
Securities available for sale     152,149,667       98,876,498  
Restricted Investments, at cost     4,451,050       2,090,150  
Loans, net of allowance for loan losses of $3,827,938 and $3,879,665                
at September 30, 2015 and December 31, 2014, respectively     706,611,292       359,523,466  
Bank premises and equipment, net     25,266,482       15,939,117  
Accrued interest receivable     2,227,003       1,221,006  
Foreclosed assets     9,646,549       4,982,913  
Core deposit intangible, net     2,868,391       258,242  
Goodwill     4,166,069       -  
Other assets     9,734,958       4,083,187  
     Total assets   $ 1,007,057,116     $ 533,713,955  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
                 
Deposits:                
Noninterest-bearing demand deposits   $ 123,551,461     $ 53,639,741  
Interest-bearing demand deposits     140,596,468       179,835,820  
Savings deposits and money market accounts     231,477,468       42,368,697  
Time deposits     351,366,762       178,962,822  
Total deposits     846,992,159       454,807,080  
                 
Accrued interest payable     299,150       129,771  
Federal funds purchased and securities sold under                
agreements to repurchase     18,442,196       21,758,018  
Federal Home Loan Bank advances and other borrowings     39,278,103       -  
Other liabilities     3,609,152       1,131,299  
Total liabilities     908,620,760       477,826,168  
                 
Stockholders' equity:                
Preferred stock - $1 par value; 12,000 shares authorized                
and outstanding in 2015 and 2014     12,000       12,000  
Common stock - $1.00 par value; 40,000,000 shares authorized;                
5,732,143 and 2,965,783 shares issued and outstanding in  2015                
and 2014, respectively     5,732,143       2,965,783  
Additional paid-in capital     81,628,090       42,508,429  
Retained earnings     10,942,361       10,704,776  
Accumulated other comprehensive income     121,762       (303,201 )
Total stockholders' equity     98,436,356       55,887,787  
Total liabilities and stockholders' equity   $ 1,007,057,116     $ 533,713,955  

 

The Notes to Consolidated Financial Statements are an integral part of these statements.