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Edited Transcript of SMBK earnings conference call or presentation 22-Jan-20 3:00pm GMT

Q4 2019 SmartFinancial Inc Earnings Call

Chattanooga Jan 29, 2020 (Thomson StreetEvents) -- Edited Transcript of SmartFinancial Inc earnings conference call or presentation Wednesday, January 22, 2020 at 3:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Ronald J. Gorczynski

SmartFinancial, Inc. - Executive VP & CFO

* Wesley Miller Welborn

SmartFinancial, Inc. - Chairman of the Board

* William Young Carroll

SmartFinancial, Inc. - President, CEO & Director

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Conference Call Participants

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* Feddie Justin Strickland

Janney Montgomery Scott LLC, Research Division - Associate

* Kevin Patrick Fitzsimmons

D.A. Davidson & Co., Research Division - MD & Senior Research Analyst

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Presentation

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Operator [1]

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Good morning and welcome to the SmartFinancial Fourth Quarter 2019 Earnings Conference Call. (Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to Miller Welborn, Chairman of the Board. Please go ahead.

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Wesley Miller Welborn, SmartFinancial, Inc. - Chairman of the Board [2]

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Thanks, Aly. Good morning, and thanks for joining our Q4 call this morning. Before I get started, I'd like you to please refer to Page 2 of the deck with our legal statement and forward-looking disclaimer. With me this morning is Billy Carroll, our CEO; Ron Gorczynski, our CFO; Cynthia Cain, our Senior Vice President of Financial Planning; and Frank Hughes with Investor Relations.

As you know, we reported out our Q4 '19 earnings at the close of business yesterday, and we're excited to chat about those numbers this morning. A couple of highlights from Q4. Strong income at $6.7 million. Really strong EPS, we feel, with $0.48 GAAP earnings and $0.46 operating earnings versus a consensus of about $0.40. Strong quarterly ROA at 1.12%. Our asset quality remained pristine, and we're very proud of that with NPAs at 0.21%. Strong loan growth, right where we projected, about 7% annualized. And our tangible book value increased to $16.82, really proud of that 14.9% increase for the year 2019.

We did announce another acquisition of Progressive Financial, and we initiated the first-ever quarterly dividend with our company, and we think that's a landmark move for us, too. As you can see, we've never been busier here at the bank, and we've never been more excited about the future of this bank. Our Board is very bullish on our markets and our team and our economic outlook for the Southeast. Sure, there are a few headwinds with the current low rate environment, but we are confident we will still continue to outwork others and gain market share.

With that, I'm going to turn it over to Billy Carroll, and let him dive into some of the details. Billy?

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William Young Carroll, SmartFinancial, Inc. - President, CEO & Director [3]

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Sounds good. Thanks, Miller. And thanks, everyone, for joining the call today. As Miller said, a really solid quarter for us. While we had several moving parts over the past few months, we continue to really make nice strides in our company and closed out a really successful year. We accomplished a number of our goals in '19 and, I believe we've set ourselves up really well as we look into 2020.

We had a bunch of change in our bank during 2019, and still ended up hitting most all of our targets for the fourth quarter, as Miller alluded to, it came in with a nice ROA, it had an operating ROA of 1.08% and operating ROE of just over 11%. Again, some moving parts that helped us hit those numbers, and Ron's going to give some additional color on that in just a second. But as you see, the overall return trends that we have continue to progress and continue to be solid.

Loan growth was in line with our expectations, coming in at 7% annualized for the quarter and right at 7% year-to-date. And as we looked at our pipelines and over the last week or so, and we're starting to see the new sales hires that we added in 2019 starting to hit stride, I do feel we can continue our organic growth pace at that 7% plus or minus level and still maintain the credit quality we want as we look into the coming year.

We do continue to fight some margin headwinds that came in right within our projected range as we closed out the year. We're going to discuss a little more our thoughts on 2020 margin in a moment, but I feel confident that given where rates are forecasting currently that we can stabilize this margin in the next couple of quarters after we get through Q1 and get this Progressive deal closed.

Before I hand it over to Ron, I want to point to a couple of slides in our deck, slide -- before I hand it over, look at Slide 6 and 7. Slide 6, I want to draw your attention to the consistent trend in our operating earnings growth. While sometimes a little bumpy quarter-to-quarter, this trend is very positive and continues to be a key focus for us. And Slide 7 shows several of our performance trends and our return metrics show a nice uptick from earlier in the year, and we're very proud of that, given the margin compression. The last bullet on Slide 7 is our nonperforming asset totals. Miller alluded to that number a second ago, 0.21%. We really continue to put a high bar on credit and feel very solid with our credit quality and the continued growth of our loan portfolio with really sound loans.

So overall, a really nice quarter and a really good year for SmartFinancial. And I'll stop there. I'm going to pick it back up in a minute with some additional comments, but I'm going to go and hand it over to Ron and let him dive into the numbers in some detail. So Ron?

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Ronald J. Gorczynski, SmartFinancial, Inc. - Executive VP & CFO [4]

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Thanks, Billy, and good morning, everyone. During my portion of this presentation, I will be providing some forward-looking guidance. So please be mindful of our forward-looking disclaimer statements in the beginning of this slide deck.

Our guidance will largely be for the first part of 2020 for our legacy stand-alone bank. We will update our guidance during our first quarter earnings call to include the acquisition of Progressive. With that said, let's start with slide 8, balance sheet trends. All of our trends are showing continued stable growth. For 2019, we increased our total assets with $175 million of growth. Both total loans and deposits have increased around $125 million. Our tangible book value, as Miller had indicated, had increased 14.9% for the year. We are continuing to build value for our shareholders.

Moving on to Slide 9, net interest income. We continued to have steady increases in our average earning assets and liabilities as our company grows. Our margin for the current quarter was 3.84%, a 7 basis point decrease from the prior linked quarter, primarily driven by lower loan yields as well as decreased investment yields. Loan yields, when removing accretion, have decreased 15 basis points to 5.07% in comparison with the prior linked quarter. We will continue to experience a decline in loan yields as we move forward into Q1 2020 as we see the full effects of the last rate cut, then we are expecting to see some stabilization after that.

During the current quarter, we recorded 29 basis points of loan accretion, a slight increase from the 26 basis points in our prior linked quarter. We continue to experience accelerated prepayments and paydowns in our acquired portfolio. Our margin, less accretion, was 3.59% for the fourth quarter, a decrease of 9 basis points from the 3.68% reported in Q3. Interest-bearing deposit costs have decreased 8 basis points to 1.29% when compared to the prior linked quarter. We have reduced rates primarily in our money market and time deposit accounts. We are still seeing opportunities for possible rate reductions with the majority of the opportunities within our time deposit portfolio. We will have approximately 20% of our time deposits, both retail and brokered, maturing and repricing during the first quarter of 2020.

Let me pause here and explain our process. During the second half of 2019, we created a management pricing committee to address our declining rate environment head on. This committee is comprised of the executive management team, regional presidents and the finance team. The committee has been a tremendous asset to the bank as we progressed through this lower interest rate environment. The members are not only coaching our associates but bringing its strategies and ideas forward. Going forward, our forecasted margin for Q1 2020 is scheduled around 3.75% to 3.8%, which includes estimated accretion of 15 to 20 basis points.

Moving on to Slide 10, operating noninterest income. Our operating noninterest income, which excludes nonoperating items, has been continually increasing quarter-over-quarter. During the quarter, we have experienced nominal increases for the majority of our noninterest income categories. Mortgage banking revenues had a minimal decrease when compared to the prior linked quarter as Q3 revenues were slightly elevated. Additionally, the fourth quarter has been a historically lower revenue reported quarter. Overall, mortgage banking is still experiencing high production levels from the favorable rate environment. Year-over-year, revenues have trended upward. We have also experienced some late month activity in December that should bolster the start of our Q1 2020 reporting.

Moving on to wealth. Revenues from our wealth platform has remained stable from the prior linked quarter, reporting approximately $260,000 of revenue. Year-over-year, our wealth platform continues to build momentum as revenues increased over 68%, finishing 2019 with revenues of approximately $950,000. Going forward into 2020, we will be reporting wealth as a separate line item on our noninterest income. Our operating noninterest income to average assets for the fourth quarter and for the year was approximately 35 basis points.

Item of note. During the fourth quarter, the state of Alabama terminated a loan program in which they had guaranteed a portion of the loan principal. Through this termination, they had essentially bought the guarantees out with us receiving a total of $1.4 million and $720,000 of that was recorded in noninterest income. The remaining proceeds were held in reserve for potential losses on specific identified loans within this program. We had classified the $720,000 as a nonoperating item. Going forward, our forecast for Q1 2020 is 39 basis points of average assets or $2.4 million.

On Slide 11, you'll find our operating noninterest expenses. With our restructured finance team in place, during the fourth quarter, we had taken advantage of, one, opportunities to reduce expenses; two, correct some prior year irregularities; and three, deploy earning-enhancing strategies. Our operating noninterest expense, which excludes nonoperating items, had increased $700,000 from the prior linked quarter, primarily from the overall growth of the company and contain the following items: salaries and employee benefits increased by $600,000 for the quarter, which consisted of increased salaries quarter-over-quarter, commissions and increase pertaining to an acquired SERP adjustment and an overall true-up of year incentive programs; FDIC insurance posted a credit balance of $215,000 for the third quarter and no expense for the fourth quarter; our data processing increased $259,000 for the fourth quarter as the third quarter included a core processor credit.

During the fourth quarter, we recorded a $468,000 credit for state of Tennessee franchise taxes. This credit was a result of tax credits generated during the quarter that were in excess of our Tennessee tax liability and were allowed to offset current franchise tax expense. I will discuss this in more detail in a few. We have also had nominal increases in other expense categories as we continue to grow our franchise. Our operating noninterest expense to average assets for the fourth quarter and for the year were approximately 2.56%. Our operating efficiency ratio hovered around 65% for the fourth quarter and for the year.

Item of note. During the fourth quarter of 2019, some of our nonoperating items were: $427,000 of merger-related expenses, $603,000 for a prior year salary and benefit adjustment, a $312,000 benefit for our prior year franchise adjustment relating to the 2018 tax true-up. Going forward, our forecast for Q1 2020 noninterest expense is $15.5 million to $16 million, and our forecast for salary and benefit expense is $9.5 million to $9.7 million.

Before we progress to the next slide, let's discuss income taxes. During the fourth quarter, we strategically originated community investment loans through the state of Tennessee to reduce our 2019 tax liability. The state tax benefit received our first supply to our tax liability, then any excess is applied to our current franchise taxes. Our fourth quarter overall benefit was $1.6 million, of that amount, 1.1 -- excuse me, $1.1 million was applied directly to the Tennessee income tax and the remainder of $468,000 was applied to Tennessee franchise tax, as mentioned prior. Going forward, we will take advantage of this program and seek more opportunities to lower our effective tax rates. Our effective tax rate for the fourth quarter was 6.6% compared to 24.6% for the third quarter.

Item of note. During the fourth quarter of 2019, we had a nonoperating item of a tax benefit of $304,000 relating to amended 2017 federal tax return. Going forward, our forecast for Q1 2020 is our effective tax rate will be in between 24.5% to 25%.

Now moving on to Slide 12, deposits. On the bar chart to the right, you'll see that our deposits have experienced overall steady growth from 2018 with overall deposits increasing 6.5% annually. Additionally, noninterest-bearing demand accounts have increased 13.7% for the year. The lower-left portion of the slide shows our cost of funds decreasing 7 basis points from the linked quarter and increasing 6 basis points year-over-year. During the first half of the year, we were combating increased deposit pricing from market competition. In the second half of the year, we were trying to reverse course with the several rate cuts that had occurred. Forecast for deposits, we're looking at an annualized growth rate of 6% or approximately $125 million.

Slide 13 provides an overview of our loan portfolio. The bar chart shows steady overall growth during 2019. Total loans increased 7.1% year-over-year with an increase of 7.4% compared to the linked quarter. Our loan pipelines are strong coming into 2020. Our loan-to-deposit ratio held at 93%. Our loan composition presented on the pie chart has been relatively consistent year-over-year. As we manage our growth to obtain a relatively stable portfolio mix, we also manage CRE ratios, as seen on the lower-left graph. We have been consistent over the past 5 quarters with our ratio levels remaining steady. This has been a large focus within our lending department as well as our focus on continued credit quality. Forecast for loans, we're looking at annualized growth rate of 6% to 7% or approximately $130 million, and our forecast for asset growth approximately 6%.

Page 14 -- moving on to Page 14, asset quality. This continues to be our best performance area. We have continued to benefit from strong asset quality, both into our internal, external reporting and comparing us with our peer group. Our nonperforming assets of total assets was at 21 basis points, a much lower level from the 59 basis points from that of our peer group. At quarter end, our nonperforming assets totaled $5.1 million. Our allowance for loan losses to loans had increased slightly to 54 basis points largely from increases in our originated loan portfolio. Our remaining fair value discounts totaled $15.3 million at quarter end.

Slide 15, reported and operating earnings. During the past year, our quarterly earnings had much lumpiness as signified by the quarterly -- on the left-hand side of the graph. We had many moving pieces to corral and many events to deal with. Our team has accomplished much, and at the end of the day, we are heading in the right direction. Our full year earnings graph tells us the story. We are picking up both GAAP and core earnings growth. We had a great 2019.

And with that, back over to Billy.

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William Young Carroll, SmartFinancial, Inc. - President, CEO & Director [5]

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Thanks, Ron. I think you'll see from Ron's comments, and in the deck, it really was an interesting quarter. A lot of moving pieces, Ron did a great job explaining all of those. But at the end of the day, a really nice quarter even, all things considered, backing it out from a core standpoint. And we really feel great as we look ahead into 2020.

Big picture. The strategy that we've talked about is working, and it continues to work, and our company has really made great improvement year-over-year. We had some really nice movement from the beginning of the year on a number of fronts, most importantly, earnings. And Ron alluded to Slide 15 of the deck. I think if you look at that, you see a quarterly earnings graph and a full year earnings. Take a look at that slide, Slide 15. Between organic growth and the acquisitions over the last year, we're showing a 20% growth in our operating earnings from 2018 to 2019. That said, we still have a number of opportunities to continue to enhance revenue and continue to drive our efficiency ratios down.

And as I close, I want to refer to Slide 16, and I'm going to walk through some of this. We put this in several quarters back just to communicate some of the initiatives that we've got going on. This is the last time that you'll see these completed initiatives that were a key focus for our management team during 2019. And we checked those off, and we're ready to tackle some new ones in 2020. And so you'll notice that we've added some new initiatives to this chart down at the bottom. First, we've got 2 that are ongoing, and I think will always be ongoing as we continue to look to hire quality bank talent. We did -- made some great strides in that in 2019 as we added some great sales depth to our team, and we're going to continue to evaluate new M&A opportunities. So we kind of have those 2 as an ongoing.

And then the 3 new ones, I'm going to touch on just briefly. First initiative, integration of Progressive Financial. We touched on that just a little bit on the call, but I'll tell you, we remain -- we're very excited to get this bank deal closed, this Progressive transaction with its low-cost funding base, along with a couple of new lines of business to generate noninterest income. We think these things are going to reflect really well in our 2020 financials, and we've got that transaction slated to close late first quarter here. The second initiative that you'll see on the list are noninterest income acceleration. You've heard me mention in the past, we've been primarily a margin bank. And that's the reason that these margin headwinds have really kind of muted our ability to grow that net interest line as we had hoped. As we talked about, we think we -- as we get some stabilization and pick that back up, that's going to take care of itself. But we really want to start putting more focus on this noninterest income growth. We've been able to grow this line over the last couple of years, but we've really just kept pace with the asset growth. Our goal now is to expand these areas to create a stronger nonmargin-dependent income line. We're going to put more management resources behind this and get this needle moving more so on this front.

A couple of examples in there. Ron touched on wealth. We made some big investments in wealth in 2019 with the addition of several financial advisers in the purchasing of a couple of books of business. We see that number starting to really move the needle up for us in 2020. We're doing a service charge scrub that's part of this, looking for opportunities to pick up revenue from some of our services. We're digging in their ability to move pricing there where we can and still will remain in our competitive set in our geographies.

And then finally, the Progressive deal now gives us some new opportunities that we hadn't had before. P&C insurance, a title company, a mortgage servicing group that can be leveraged now throughout our bank platform. So that's a big initiative. We've got several management team members spending some significant time focusing on that, and we firmly expect to see that needle move as we move later into 2020.

Our SmartSpend project, you'll see that last initiative down there. That's an internal word that we're using, SmartSpend. We've done a nice job, I think, with expense control when getting our cost savings from recent acquisitions. But there's more -- I really believe we've got more opportunity there. And with this new finance team in place, which is just doing a fabulous job, we're going to dive into these numbers a little bit deeper, using the talent on Ron's team, that's got some great larger community bank experience now to find additional opportunities to shrink some of those expense lines. While there's probably not a lot of home runs in that number, I do believe we've got some solid singles and doubles.

So bottom line, I love where we're positioned right now. I think the environment is -- I think we're set well for 2020. With the additions and changes that we made last year, we're operating now at a really high -- a much higher level, and we continue to drive these return levels in the coming quarters. So our future is very, very bright. We're excited about it. And I'll stop there, and we'll open it up for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question will come from Kevin Fitzsimmons with D.A. Davidson.

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Kevin Patrick Fitzsimmons, D.A. Davidson & Co., Research Division - MD & Senior Research Analyst [2]

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Just to follow up on a couple of comments you made, Billy and Miller. On M&A specifically, how would you characterize the outlook there? Obviously, you're going to close Progressive. Just in terms of number of conversations, the receptivity of potential sellers, the price expectations. Is it something where you see the likelihood picking up in terms of smaller deals like Progressive looking out?

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Wesley Miller Welborn, SmartFinancial, Inc. - Chairman of the Board [3]

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Gosh, there's certainly a lot of activity in market, even a couple of deals announced yesterday afternoon after close of business. We're sort of getting a lot of looks and a lot of calls, probably, I would say, Billy, probably getting as many as we've ever gotten before. So that activity is certainly a busy time. We feel like we've got a lot of opportunity in our organic side with -- between the wealth and the insurance and the Progressive integration. But dadgummit, as we've said on every call for many quarters and in all our meetings, we think we've been a proven acquirer. We think we've done a good job with our partners that we've brought on board. We feel like we've been able to integrate them well. We like that line of business. We have a team that we feel like does a good job with those integrations, and we're going to continue to look. We will be very disciplined in how we look and what we look at, but shoot yes, there's a lot of opportunity out there, Kevin.

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William Young Carroll, SmartFinancial, Inc. - President, CEO & Director [4]

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Yes. And Kevin, I'll add. Yes, I mean, Miller hit the nail on the head. I think there is a lot of activity going on in the market. I think there's a lot of folks, just in this environment, just really looking strategically. So I think with where we are and where we're located, we're located in our geographies, we've got a number of opportunities, we believe. Miller said we're at the spot now where we've been able to get some scale. And really, we're still focusing -- while I still think that maybe in the past, acquisition had been probably -- and I've said this a little more 1a, organic 1b, I see that flipping. I do think we're a stronger organically. The teams that we put together and our ability to grow there is tremendous. So I don't think we really feel a lot of pressure. But if the right deals are there, and we can get the right pricing and makes the math work, we'd obviously...

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Wesley Miller Welborn, SmartFinancial, Inc. - Chairman of the Board [5]

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It is a little unfortunate for some of these community banks. These $500 million and under that are margin banks -- this dadgum margin squeeze makes it tougher for them. As we transition to a bigger bank, it's -- our horizons are broadening, and theirs, unfortunately, are getting dimmer.

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Kevin Patrick Fitzsimmons, D.A. Davidson & Co., Research Division - MD & Senior Research Analyst [6]

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Right. And I guess if you're going to have certain traits that you're looking for. I would assume anything that's enhancing to the funding base is something that is going to be high up on your list?

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William Young Carroll, SmartFinancial, Inc. - President, CEO & Director [7]

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I think that's exactly right. I think we're -- over the last several years, there's probably been more of a build scale. Now it's -- Progressive a great example. While not a large deal, at around $300 million in assets, it gives us some great -- it gives us a great funding base and gives us some great noninterest income [opportunities] a very strategic play. And I think those are the types of deals that we're probably -- would be more interested in as we look forward, things that really complement the foundation that we've built now to really help us drive returns. At this point, it's about stronger driving of the ROA and ROE numbers. And if we can find deals that enhance our ability to do that, we'd definitely be -- we'd definitely entertain them.

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Kevin Patrick Fitzsimmons, D.A. Davidson & Co., Research Division - MD & Senior Research Analyst [8]

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And you alluded to it a few minutes ago, the other mergers in your region or in adjacent regions. So with that deal announced yesterday and there's other larger deals going on, does your view change or accelerate in terms of hiring opportunities? I know you've been at that and been focusing on that for a while. But is it something to -- that if the right team or the right situation came up, you'd be willing to pounce and step up the hiring? But of course, that comes with a little bit of a lag in terms of getting the revenues.

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William Young Carroll, SmartFinancial, Inc. - President, CEO & Director [9]

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Comes with a cost, it does. But to answer your question, yes, I think, really, the -- we felt like that we're in several markets where we really needed some sales talent over the last year. And so Greg Davis, our Chief Lender and his team is going out, did a great job recruiting. We've added a lot of depth strategically last year. So we made a lot of spend there that we believe we'll start seeing better benefit for this year. Going forward, with the disruption, yes, there's always disruption. I think there could be opportunities there. And I do think we want to continue to be and will be opportunistic in that hiring. I like the teams that we've got in the markets where we are today. We've got some really good leadership and some really nice sales talent now. That said, if we get the opportunity to add good salespeople, we will definitely want to be able to take a look at that in the well.

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Wesley Miller Welborn, SmartFinancial, Inc. - Chairman of the Board [10]

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Cheaper than an acquisition.

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Kevin Patrick Fitzsimmons, D.A. Davidson & Co., Research Division - MD & Senior Research Analyst [11]

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That's right. It almost is like an acquisition in some cases.

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William Young Carroll, SmartFinancial, Inc. - President, CEO & Director [12]

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Yes. It is. Yes. Yes.

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Operator [13]

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Our next question comes from Feddie Strickland with Janney Montgomery Scott.

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Feddie Justin Strickland, Janney Montgomery Scott LLC, Research Division - Associate [14]

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Just had one more follow-up on Kevin's questions on M&A. Has your -- I guess, has your criteria for geography changed at all, that's still kind of Alabama, Florida, Tennessee? I know last quarter, you talked especially kind of around Birmingham area. Just curious if your outlook geographically has really changed.

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Wesley Miller Welborn, SmartFinancial, Inc. - Chairman of the Board [15]

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I don't know that it's changed any. I mean market density is critical and important to us. It obviously makes us -- continues our efficiency and scale. And so market density would -- anywhere in our current market would probably be 1a. And if we got out of market, it had to be awful close and attractive. But yes, close proximities.

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William Young Carroll, SmartFinancial, Inc. - President, CEO & Director [16]

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Yes. Yes, same, Feddie, I think, for us, it's -- and I've said, we've kind of staked out the outer bounds and we like East Tennessee over to Middle Tennessee, down I-65, throughout the state of Alabama, now with Huntsville and Tuscaloosa, we've got opportunities to fill density in there. And then while probably not as many opportunities. The Panhandle, the coastal region that we have is still performing nicely for us. So those zones, we've got a lot of opportunities in those zones, we believe, and that's going to be our primary focus.

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Feddie Justin Strickland, Janney Montgomery Scott LLC, Research Division - Associate [17]

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Got it. Appreciate it, guys. And one unrelated question. It looks like the Fed might pause for now, but with future rate cuts still maybe one day on the horizon, have you considered putting floors into your -- any of your new loan production to sort of hedge?

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William Young Carroll, SmartFinancial, Inc. - President, CEO & Director [18]

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We're evaluating that right now because I do think -- we're still -- I think, Ron, as we've looked through kind of -- we're still slightly asset sensitive. And so these down rates were not unusual and there's a lot of banks experience just a little bit of headwinds this year with these Fed cuts that we weren't anticipating a year ago. That said, we've got -- we're exploring some strategies to try to defend that margin if we do get further right cuts.

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Ronald J. Gorczynski, SmartFinancial, Inc. - Executive VP & CFO [19]

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Yes. As part of our Progressive transaction, we are revisiting some restructuring on our balance sheet and getting ideas on what worked, what didn't work, where do we have to be going forward. So that's something we are going to tackle over the next 2 months.

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Operator [20]

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(Operator Instructions) As I'm showing no further questions, this will conclude our question-and-answer session. I would like to turn the conference back over to Miller Welborn for any closing remarks.

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Wesley Miller Welborn, SmartFinancial, Inc. - Chairman of the Board [21]

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And I'll thank you, folks, for joining us today. We appreciate your interest in the bank and hope you all have a great day. Take care.

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Operator [22]

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The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.