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Reported Diluted EPS of $0.37 / Adjusted Diluted EPS of $0.47

Loan Growth at 17.6% (annualized) / Core Deposit Growth at 7.5% (annualized)

Announced Definitive Agreement to Acquire First Advantage Bank

Closed on $60 Million Subordinated Debt Offering

BRENTWOOD, Tenn.–(BUSINESS WIRE)–$RBNC–Reliant Bancorp, Inc. (“Reliant Bancorp” or the “Company”) (Nasdaq: RBNC), the parent company for Reliant Bank (“Reliant” or the “Bank”), reported net income available to common shareholders of $4.1 million, or $0.37 per diluted common share for the fourth quarter of 2019 and net income available to common shareholders of $16.2 million, or $1.44 per common diluted share, for the year ended December 31, 2019, compared to $4.1 million, or $0.36 per diluted common share, for the fourth quarter of 2018 and net income available to common shareholders of $14.1 million, or $1.23 per common diluted share, for the year ended December 31, 2018. Excluding merger-related expense, the Company reported net income available to common shareholders of $5.3 million, or $0.47 per diluted common share, for the fourth quarter of 2019 compared to $4.1 million, or $0.36 per diluted common share, for the fourth quarter of 2018 (“non-GAAP”).

DeVan Ard, Jr., Reliant Bancorp’s Chairman, President and CEO stated, “This was a transformational quarter for our company. We announced a definitive agreement to acquire First Advantage Bancorp headquartered in Clarksville, Tennessee, successfully closed on a $60 million subordinated debt offering, and completed the previously announced acquisition of Community Bank & Trust.”

Ard continued, “Our team delivered another outstanding quarter. Loan production exceeded $216 million, providing good momentum as we start 2020, and customer deposits increased by $77 million, a 28% annualized growth rate. These results reflect the quality of our bankers, the attractiveness of our franchise and the continued strength of our Middle Tennessee and Chattanooga markets.”

Quarterly Highlights

Consistent, Sustainable Growth Driven by Strong, In-Market Relationships and Strategic Acquisitions

Loans-held-for-investment increased $59.3 million, or 17.6%, annualized, linked quarter, and by $178.9 million, or 14.5% year-over-year. Fourth quarter 2019 loan production totaled a franchise record of $216.7 million at a weighted average rate of 4.7%.

Total deposits decreased $26.8 million, or 6.7%, annualized, linked quarter, but increased $145.9 million, or 10.1%, year-over-year. The linked quarter decrease primarily was due to a $101.6 million reduction in wholesale funding. Core deposits increased $17.6 million, or 7.5%, linked quarter and $72.5 million, or 8.2%, year-over-year and customer deposits (excludes all wholesale funding) increased by $76.7 million, or 27.5% annualized, linked quarter, and $123.3 million, or 11.5% year-over-year. Ard continued, “The success we’ve experienced sourcing low cost, core deposits provides significant value to our franchise and will continue to be a strategic focus for our bankers in 2020, allowing us to continue reducing wholesale funding levels and our cost of funds.”

On October 23, 2019, the Company announced a definitive agreement to acquire First Advantage Bancorp (“FABK”), the parent of First Advantage Bank, headquartered in Clarksville, Tennessee. As of December 31, 2019, FABK reported approximately $738.0 million of total assets, approximately $646.4 million of loans-held-for-investment and approximately $610.9 million of deposits. The FABK acquisition is expected to close in the second quarter of 2020.

On January 2, 2020, the Company announced the completion of the acquisition of Tennessee Community Bank Holdings, Inc., (“TCB”) the parent of Community Bank & Trust (“CBT”), headquartered in Ashland City, Tennessee. At December 31, 2019, CBT reported approximately $252.9 million of total assets, approximately $174.0 million of loans-held-for-investment and approximately $210.1 million of deposits.

On a pro forma basis, the combined companies would have reported total assets of approximately $2.9 billion, loans-held-for-investment of approximately $2.2 billion and deposits of approximately $2.4 billion as of December 31, 2019.

Focus on Stabilizing Net Interest Margin Through Asset Mix Optimization and Pricing Discipline

Net interest margin declined 5 basis points from the linked quarter to 3.46%. The $60 million subordinated debt offering, which closed on December 13, 2019, accounted for 4 basis points of fourth quarter margin contraction and increased fourth quarter cost of funds by 4 basis points. Our yield on earning assets declined by 16 basis point linked quarter, as 45.8% of loans and 21.2% of bonds carry variable interest rates. Loans-held-for-investment were down 11 basis points and securities were down 17 basis points, due partly to our bond rotation strategy and some accelerated premium amortization experienced during the quarter. Our cost of funds decreased 11 basis points, linked quarter, as competition supported higher interest rates on customer deposits even as the cost of wholesale funding decreased by 25 basis points.

Ard stated, “We continued our strategy of optimizing earning asset mix by reducing the securities portfolio by another $37 million and using the proceeds to fund loan growth, picking up between 110 and 120 basis points of yield on the rotation. Securities accounted for 16.5% of average earning assets at the end of the fourth quarter, down from 18.9% in December 2018. We expect that securities will continue to decline as a percentage of earning assets and are targeting 10% to 12% in 2020.”

Asset Quality Remains a Hallmark of the Franchise

Credit quality remained strong, as nonperforming loans accounted for 0.29% of total loans-held-for-investment and nonperforming assets accounted for 0.26% of total assets at December 31, 2019. Loans past due 89 days or less accounted for 0.06% of total loans-held-for-investment. Additionally, the Company disposed of two of the three remaining other real estate properties realizing a $166,000 gain and disposed of the remaining property in January 2020. The loan loss reserve was 0.89% of loans-held-for-investment at December 31, 2019 (1.10% when unamortized purchased loan discounts are included), down 2 basis points from September 30, 2019. Provision for loan losses of $405,000 was realized during the fourth quarter of 2019. Net charge-offs for the quarter accounted for 0.03% of total loans-held-for-investment. For the year, the Company recorded net recoveries of $475,000, or 0.03% of total loans-held-for-investment.

Financial Strength Positions Company for Growth and Creates Shareholder Value

Stockholders’ equity increased by $4.1 million linked quarter, or 7.4% percent annualized, to $223.8 million at December 31, 2019. Both the Company and Bank continue to meet the criteria to be classified as “Well Capitalized” financial institutions under applicable banking regulations. The Company closed on a $60 million subordinated debt offering on December 13, 2019. The debt carries a fixed coupon of 5.125% for the first five years with a floating coupon rate for the final five years. The Company declared a dividend of $0.10 per share on January 22, 2020, payable on February 14, 2020, a 11.1% increase over the dividend paid for the fourth quarter of 2018, marking the nineteenth consecutive quarter in which a dividend has been declared.

Book value per share increased by $0.35, or 7.1% annualized, to $19.97 linked quarter and by $1.90 or 10.5% year-over-year. Tangible book value per share (“TBVPS”) (non-GAAP) increased by $0.37, or 9.8% annualized, to $15.42 linked quarter and by $1.84, or 13.5%, year-over-year.

Conclusion

Ard concluded, “I am proud of what our team accomplished during the fourth quarter and throughout 2019. We are transforming our balance sheet and market footprint through two strategic acquisitions, continuing to deliver balanced and profitable growth and staying focused on building the core franchise to support a profitable future. I want to thank our team for their dedication and hard work in 2019, and I am very optimistic about the future of our Company as we enter into a new year.”

Conference Call Information

The Company will hold a conference call to discuss fourth quarter 2019 results on Friday, January 24, 2020, at 9:00 a.m. CST, and the earnings conference call will be broadcast live over the Internet at https://www.webcaster4.com/Webcast/Page/1855/32672. A link to these events can be found on the Company’s website at www.reliantbank.com and will be available for 12 months. Related presentation materials will be posted to the “Investor Relations” section of the Company’s web site at www.reliantbank.com prior to the call.

About Reliant Bancorp, Inc. and Reliant Bank

Reliant Bancorp, Inc. is a Brentwood, Tennessee-based bank holding company which, through its wholly owned subsidiary Reliant Bank, operates banking centers in Cheatham, Davidson, Hamilton, Hickman, Maury, Montgomery, Robertson, Rutherford, Sumner, and Williamson counties, Tennessee. Reliant Bank is a full-service commercial bank that offers a variety of deposit, lending, and mortgage products and services to business and consumer customers. As of December 31, 2019, Reliant Bancorp had approximately $1.9 billion in total consolidated assets, approximately $1.4 billion in loans and approximately $1.6 billion in deposits. For additional information, locations and hours of operation, please visit www.reliantbank.com.

Non-GAAP Financial Measures

This document contains non-GAAP financial measures. The non-GAAP measures in this release include “adjusted net interest margin,” “adjusted net income attributable to common shareholders and related impact,” “average tangible stockholders’ equity,” “ROATCE,” “adjusted ROATCE,” “tangible assets,” tangible equity,” “TBVPS,” “efficiency ratio (subsidiary bank only excluding mortgage segment),” and “adjusted loan loss reserve.” We believe these non-GAAP measures provide useful information to investors because these are among the measures used by our management team to evaluate our operating performance and make day-to-day operating decisions. In addition, we believe certain purchase accounting adjustments, income relating to the recoveries of purchased credit impaired loans, and merger expenses do not necessarily reflect the operational performance of the business in these periods; accordingly, it is useful to consider these line items with and without such adjustments. We believe this presentation also increases comparability of period-to-period results.

Other companies may use similarly titled non-GAAP financial measures that are calculated differently from the way we calculate such measures. Accordingly, our non-GAAP financial measures may not be comparable to similar measures used by other companies. We caution investors not to place undue reliance on such non-GAAP measures, but instead to consider them with the most directly comparable GAAP measure. Non-GAAP financial measures have limitations as analytical tools, and should not be considered in isolation, or as a substitute for our results as reported under generally accepted accounting principles.

Forward-Looking Statements

All statements, other than statements of historical fact, included in this release and any oral statements made regarding the subject of this release, including in the conference call referenced herein, that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements relating to the benefits of a strategic acquisition, the bond portfolio and non-core funding, future balance sheet growth and acquisition opportunities. The words “believe,” “anticipate,” “expect,” “may,” “will,” “assume,” “should,” “predict,” “could,” “would,” “intend,” “targets,” “estimates,” “projects,” “plans,” and “potential,” and other similar words and expressions of the future, are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking, including statements about the Company’s future financial and operating results and the Company’s plans, objectives, and intentions. All forward-looking statements are subject to risks, uncertainties, and other factors that may cause the actual results, performance, or achievements of the Company to differ materially from any results, performance, or achievements expressed or implied by such forward-looking statements. Such risks, uncertainties, and other factors include, among others: (1) the possibility that our asset quality could decline or that we experience greater loan losses than anticipated, (2) increased levels of other real estate, primarily as a result of foreclosures, (3) the impact of liquidity needs on our results of operations and financial condition, (4) competition from financial institutions and other financial service providers, (5) the effect of interest rate increases on the cost of deposits, (6) unanticipated weakness in loan demand or loan pricing, (7) lack of strategic growth opportunities or our failure to execute on those opportunities, (8) deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses, (9) the ability to grow and retain low-cost core deposits and retain large, uninsured deposits, (10) our ability to effectively manage problem credits, (11) our ability to successfully implement efficiency initiatives on time and in amounts projected, (12) our ability to successfully develop and market new products and technology, (13) the impact of negative developments in the financial industry and U.S. and global capital and credit markets, (14) our ability to retain the services of key personnel, (15) our ability to adapt to technological changes, (16) risks associated with litigation, including the applicability of insurance coverage, (17) the vulnerability of the Bank’s network and online banking portals, and the systems of parties with whom the Company and the Bank contract, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss, and other security breaches, (18) changes in state and federal laws, rules, regulations, or policies applicable to banks or bank or financial holding companies, including regulatory or legislative developments, (19) adverse results (including costs, fines, reputational harm, and/or other negative effects) from current or future litigation, regulatory examinations, or other legal and/or regulatory actions, (20) the risk that expected cost savings and revenue synergies from (i) the merger of the Company and TCB (the “TCB Holdings Transaction”) or (ii) the proposed merger between the Company and FABK (the “First Advantage Transaction” and, together with the TCB Holdings Transaction, collectively, the “Transactions”), may not be realized or may take longer than anticipated to be realized, (21) the ability to meet expectations regarding the timing and completion of the First Advantage Transaction and the accounting and tax treatment of the Transactions, (22) the effect of the announcement, pendency, or completion of the Transactions on customer, supplier, or employee relationships and operating results (including without limitation difficulties in maintaining relationships with employees and customers), as well as on the market price of the Company’s common stock, (23) the risk that the businesses and operations of TCB and its subsidiaries and of FABK and its subsidiaries cannot be successfully integrated with the business and operations of the Company and its subsidiaries or that integration will be more costly or difficult than expected, (24) the occurrence of any event, change, or other circumstances that could give rise to the termination of the definitive merger agreement for the First Advantage Transaction, (25) the amount of costs, fees, expenses, and charges related to the Transactions, including those arising as a result of unexpected factors or events, (26) the ability to obtain the shareholder and governmental approvals required for the First Advantage Transaction, (27) reputational risk associated with and the reaction of the parties’ customers, suppliers, employees, or other business partners to the Transactions, (28) the failure of any of the conditions to the closing of the First Advantage Transaction to be satisfied, or any unexpected delay in closing the First Advantage Transaction, (29) the dilution caused by the Company’s issuance of additional shares of its common stock in the Transactions, (30) the Company’s ability to simultaneously execute on two separate business combination transactions, (31) the risk associated with Company management’s attention being diverted away from the day-to-day business and operations of the Company to the completion of the Transactions, and (32) general competitive, economic, political, and market conditions, including economic conditions in the local markets where we operate. Additional factors which could affect the forward-looking statements can be found in the Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) and available on the SEC’s website at http://www.sec.gov. The Company believes the forward-looking statements contained herein are reasonable; however, many of such risks, uncertainties, and other factors are beyond the Company’s ability to control or predict and undue reliance should not be placed on any forward-looking statements, which are based on current expectations and speak only as of the date that they are made. Therefore, the Company can give no assurance that its future results will be as estimated. The Company does not intend to, and disclaims any obligation to, update or revise any forward-looking statement.

 

RELIANT BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2019, SEPTEMBER 30, 2019 AND DECEMBER 31, 2018

(Dollar Amounts in Thousands)

 

ASSETS

December 31,
2019

 

September 30,
2019

 

December 31,
2018

 

Unaudited

 

Unaudited

 

Audited

Cash and due from banks

$

50,990

 

 

$

51,247

 

 

$

34,807

 

Federal funds sold

52

 

 

73

 

 

371

 

Total cash and cash equivalents

51,042

 

 

51,320

 

 

35,178

 

Securities available for sale

260,293

 

 

297,310

 

 

296,323

 

Loans, net of unearned income

1,409,952

 

 

1,350,683

 

 

1,231,076

 

Allowance for loan losses

(12,578

)

 

(12,291

)

 

(10,892

)

Loans, net

1,397,374

 

 

1,338,392

 

 

1,220,184

 

Mortgage loans held for sale, net

37,476

 

 

16,757

 

 

15,823

 

Accrued interest receivable

7,111

 

 

7,488

 

 

8,214

 

Premises and equipment, net

21,376

 

 

21,390

 

 

22,033

 

Restricted equity securities, at cost

11,279

 

 

11,279

 

 

11,690

 

Other real estate, net

750

 

 

1,943

 

 

1,000

 

Cash surrender value of life insurance contracts

46,632

 

 

46,351

 

 

45,513

 

Deferred tax assets, net

3,933

 

 

456

 

 

7,428

 

Goodwill

43,642

 

 

43,642

 

 

43,642

 

Core deposit intangibles

7,270

 

 

7,507

 

 

8,219

 

Other assets

10,289

 

 

8,652

 

 

9,091

 

TOTAL ASSETS

$

1,898,467

 

 

$

1,852,487

 

 

$

1,724,338

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

LIABILITIES

 

 

 

 

 

Deposits

 

 

 

 

 

Demand

$

260,073

 

 

$

237,917

 

 

$

216,937

 

Interest-bearing demand

152,718

 

 

149,442

 

 

154,218

 

Savings and money market deposit accounts

408,724

 

 

397,243

 

 

401,308

 

Time

762,274

 

 

826,031

 

 

665,440

 

Total deposits

1,583,789

 

 

1,610,633

 

 

1,437,903

 

Accrued interest payable

2,022

 

 

1,610

 

 

1,063

 

Subordinated debentures

70,883

 

 

11,665

 

 

11,603

 

Federal Home Loan Bank advances

10,737

 

 

3,928

 

 

57,498

 

Dividends payable

76

 

 

1,012

 

 

1,036

 

Other liabilities

7,207

 

 

3,987

 

 

6,821

 

TOTAL LIABILITIES

1,674,714

 

 

1,632,835

 

 

1,515,924

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

Preferred stock, $1 par value; 10,000,000 shares authorized; no shares issued to date

 

 

 

 

 

Common stock, $1 par value; 30,000,000 shares authorized; 11,206,254, 11,195,062 and 11,530,810 shares issued and outstanding at December 31, 2019, September 30, 2019, and December 31, 2018, respectively

11,206

 

 

11,195

 

 

11,531

 

Additional paid-in capital

167,006

 

 

166,512

 

 

173,238

 

Retained earnings

40,472

 

 

36,339

 

 

27,329

 

Accumulated other comprehensive loss

5,069

 

 

5,606

 

 

(3,684

)

TOTAL STOCKHOLDERS’ EQUITY

223,753

 

 

219,652

 

 

208,414

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

1,898,467

 

 

1,852,487

 

 

1,724,338

 

 

RELIANT BANCORP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE PERIODS INDICATED

(Dollar Amounts in Thousands, Except Per Share Amounts)

(Unaudited)

 

Three Months Ended

 

YTD

 

December 31,

2019

 

September 30,

2019

 

December 31,

2018

 

December 31,

2019

 

December 31,

2018

INTEREST INCOME

 

 

 

 

 

 

 

 

 

Interest and fees on loans

$

17,790

 

$

17,502

 

 

$

15,854

 

 

$

68,421

 

$

58,351

Interest and fees on loans held for sale

 

347

 

 

263

 

 

 

177

 

 

 

961

 

 

1,278

Interest on investment securities, taxable

 

460

 

 

549

 

 

 

462

 

 

 

2,099

 

 

1,836

Interest on investment securities, nontaxable

 

1,508

 

 

1,576

 

 

 

1,684

 

 

 

6,452

 

 

6,605

Federal funds sold and other

 

334

 

 

321

 

 

 

286

 

 

 

1,252

 

 

1,155

 

 

 

 

 

 

 

 

 

 

TOTAL INTEREST INCOME

 

20,439

 

 

20,211

 

 

 

18,463

 

 

 

79,185

 

 

69,225

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

Demand

 

106

 

 

81

 

 

 

103

 

 

 

384

 

 

366

Savings and money market

 

1,000

 

 

973

 

 

 

880

 

 

 

4,154

 

 

2,589

Time

 

4,509

 

 

4,828

 

 

 

3,125

 

 

 

17,361

 

 

9,862

Federal Home Loan Bank advances and other

 

9

 

 

66

 

 

 

580

 

 

 

543

 

 

1,855

Subordinated debentures

 

348

 

 

199

 

 

 

198

 

 

 

938

 

 

724

TOTAL INTEREST EXPENSE

 

5,972

 

 

6,147

 

 

 

4,886

 

 

 

23,380

 

 

15,396

NET INTEREST INCOME

 

14,467

 

 

14,064

 

 

 

13,577

 

 

 

55,805

 

 

53,829

PROVISION FOR LOAN LOSSES

 

405

 

 

606

 

 

 

276

 

 

 

1,211

 

 

1,035

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES

 

14,062

 

 

13,458

 

 

 

13,301

 

 

 

54,594

 

 

52,794

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

950

 

 

976

 

 

 

915

 

 

 

3,746

 

 

3,419

Gains on mortgage loans sold, net

 

1,735

 

 

1,385

 

 

 

357

 

 

 

4,905

 

 

4,418

Gain on securities transactions, net

 

1,145

 

 

 

 

1,451

 

 

43

Gain on sale of other real estate

 

166

 

 

 

 

166

 

 

259

Gain (loss) on disposal of premises and equipment

 

 

 

(3

)

 

 

 

13

Other

 

572

 

 

399

 

 

 

355

 

 

 

1,696

 

 

1,494

TOTAL NONINTEREST INCOME

 

4,568

 

 

2,760

 

 

 

1,624

 

 

 

11,964

 

 

9,646

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

7,909

 

 

7,634

 

 

 

7,030

 

 

 

30,514

 

 

27,510

Occupancy

 

1,354

 

 

1,359

 

 

 

1,276

 

 

 

5,423

 

 

4,949

Information technology

 

1,675

 

 

1,553

 

 

 

1,420

 

 

 

6,213

 

 

5,333

Advertising and public relations

 

377

 

 

387

 

 

 

187

 

 

 

1,293

 

 

600

Audit, legal and consulting

 

466

 

 

350

 

 

 

949

 

 

 

2,302

 

 

2,976

Federal deposit insurance

 

257

 

 

(96

)

 

 

163

 

 

 

605

 

 

793

Provision for losses on other real estate

 

98

 

 

 

 

98

 

Merger expenses

 

1,301

 

 

299

 

 

 

32

 

 

 

1,603

 

 

2,774

Other operating

 

1,536

 

 

1,561

 

 

 

1,139

 

 

 

5,841

 

 

5,626

TOTAL NONINTEREST EXPENSE

 

14,973

 

 

13,047

 

 

 

12,196

 

 

 

53,892

 

 

50,561

INCOME BEFORE PROVISION FOR INCOME TAXES

 

3,657

 

 

3,171

 

 

 

2,729

 

 

 

12,666

 

 

11,879

INCOME TAX EXPENSE

 

699

 

 

557

 

 

 

(59

)

 

 

2,129

 

 

1,372

CONSOLIDATED NET INCOME

 

2,958

 

 

2,614

 

 

 

2,788

 

 

 

10,537

 

 

10,507

NONCONTROLLING INTEREST IN NET LOSS OF SUBSIDIARY

 

1,175

 

 

1,386

 

 

 

1,335

 

 

 

5,659

 

 

3,578

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

4,133

 

$

4,000

 

 

$

4,123

 

 

$

16,196

 

$

14,085

Basic net income attributable to common shareholders, per share

$

0.37

 

$

0.36

 

 

$

0.36

 

 

$

1.44

 

$

1.24

Diluted net income attributable to common shareholders, per share

$

0.37

$

0.36

 

 

$

0.36

 

$

1.44

$

1.23

 

Contacts

DeVan Ard, Jr.

Chairman, President and CEO

Reliant Bancorp, Inc.

(615.221.2020)

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