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Reliant Bancorp, Inc. Reports Record Second Quarter Loans

Company Release – 7/25/2018 4:05 PM ET

Reports Second Quarter Net Income of $2.1 Million, or $0.19 Per Fully Diluted Share

Net Income, Excluding Merger Related Charges, Rises to $3.9 Million, or $0.34 Per Diluted Share

BRENTWOOD, Tenn.–(BUSINESS WIRE)– Reliant Bancorp, Inc. (“Reliant Bancorp” or the “Company”) (Nasdaq: RBNC), the parent company for Reliant Bank (“Reliant”), announced its second quarter results, including record loans and assets for the quarter ended June 30, 2018, and the successful conversion of the Community First’s operating platform to Reliant’s core system.

Second quarter net income attributable to common shareholders was $2.1 million, or $0.19 per fully diluted share, compared to $2.2 million, or $0.28 per fully diluted share, for the second quarter of 2017 and $3.7 million, or $0.33 per fully diluted share for the first quarter of 2018. Second quarter year to date net income attributable to common shareholders was $5.9 million, or $0.51 per fully diluted share, compared to $4.2 million, or $0.54 per fully diluted share for the same period in 2017. The 2018 results included merger related expenses of approximately $2.5 million for the second quarter and $2.7 million year to date arising from the merger with Community First that closed on January 1, 2018. Excluding merger related charges, second quarter net income attributable to common shareholders rose to $3.9 million, compared to $2.2 million for the second quarter of 2017 and $3.7 million for the first quarter of 2018. Excluding merger related charges, second quarter net income attributable to common shareholders rose 21.4% to $0.34 per fully diluted share when compared to the second quarter of 2017. Excluding merger related charges, net income attributable to common shareholders for the first six months of 2018 rose to $7.6 million, or $0.66 per fully diluted share, compared to $4.2 million, or $0.54 per fully diluted share, for the same period in 2017, an increase of 22.2%.

“Our second quarter results represent the third consecutive quarter of higher earnings, excluding merger related charges, which were driven by accelerating loan growth in the second half of the quarter, improved asset quality, efficiencies gained with the Community First merger and conversion, and increased bank segment noninterest income,” stated DeVan D. Ard, Jr., Chairman, President, and Chief Executive Officer. “We completed the conversion of Community First’s systems in mid-May and expect to realize additional operating efficiencies and revenue synergies in the third quarter. Our associates worked very hard on all aspects of the conversion, and as a result customer retention has been very high.

“Job growth continues to power Nashville’s economy, led by Williamson and Maury counties, where employment grew 33% and 30%, respectively, from 2012 to 2017 according to the BLS. Further, Williamson County’s population is anticipated to grow 153% from 2010 to 2040, followed by Rutherford County, where we will open a new full service office in August, at a 99% growth rate. Jobs, low unemployment, and a relatively low cost of living continue to spur loan demand by businesses and individuals across the region, and have led to intense competition for deposits. We expect these positive economic trends to continue in the third quarter and for both loan yield and deposit costs to increase,” concluded Ard.

Key Highlights

  • Net loans rose 59.4% to $1.1 billion in the second quarter of 2018, compared with the second quarter of 2017 and were up 3.3% (13.2% annualized) when compared to the first quarter of 2018. Second quarter new loan production totaled $124.2 million, an increase of 22%, compared with the first quarter of 2018. New loan production was primarily centered in C&D (36%), C&I (19%), and CRE (18%) loans.
  • Total deposits grew 58.8% to $1.3 billion, compared with the second quarter of 2017, and declined slightly by 1.1% from the first quarter of 2018. We anticipate the openings of new banking centers in Murfreesboro in the third quarter and Chattanooga in the fourth quarter to be instrumental in growing core deposits in those markets.
  • Noninterest bearing deposits rose 65.1% to $225.4 million at June 30, 2018, compared with the second quarter of 2017, and declined slightly by1.2% from the first quarter of 2018.
  • Net interest margin declined to 3.74% for the second quarter of 2018, compared to 4.01% and 3.79% for the second of 2017 and the first quarter of 2018, respectively. The decrease in net interest margin in the second quarter of 2018 was due primarily to our cost of funds increasing at a faster pace than our yields on earning assets.
  • Noninterest income rose 83.1% to $2.3 million in the second quarter of 2018, compared with $1.2 million in the second quarter of 2017, and was down 24.6% from $3.0 million, compared with the first quarter of 2018, due mainly to a decline of 43.9% in mortgage revenue. Based on the joint-venture agreement, the Company does not absorb any losses incurred by its mortgage venture. Bank segment noninterest income rose 118.7%, compared with the second quarter of 2017, and increased 0.9%, compared to the first quarter of 2018, driven by a 16.7% increase in service charges resulting from revised deposit product pricing at conversion.
  • Noninterest expense rose 93.2% to $14.0 million, compared with $7.3 million in the second quarter of 2017. Noninterest expense rose 15.4% from $12.2 million in the first quarter of 2018. Noninterest expenses included pre-tax merger related expenses of approximately $2.5 million in the second quarter of 2018. Excluding merger related expenses, noninterest expenses declined 3.6%, compared with the first quarter of 2018, including lower salaries and employee benefits, occupancy, information technology and other operating expenses. Bank segment noninterest expenses rose 53.5% and mortgage segment noninterest expenses were up 88.1%, compared with the second quarter of 2017. We remain on track to recognize our estimated cost savings for the merger.
  • Asset quality remained strong at June 30, 2018. Nonperforming assets to total assets was 0.39% in the second quarter of 2018, compared with 0.61% and 0.50% for the second quarter of 2017 and first quarter of 2018, respectively. Net recoveries were 0.05% in the second quarter of 2018, up from 0.03% in the second quarter of 2017, as we aggressively pursue problem asset mitigation.
  • Our provision for loan losses for the second quarter of 2018 was $300,000 compared to $245,000 and $137,000, for the second 2017 and first quarter of 2018, respectively. The increase when compared to the first quarter of 2018 was driven by growth in loans.

Capital Position

Reliant’s capital position remained strong at June 30, 2018. The estimated tier 1 leverage ratio was 9.98%, compared with 10.25% at March 31, 2018, and 10.29% at June 30, 2017. Total stockholders’ equity rose to $202.3 million and tangible book value per common share was $13.06 at June 30, 2018, compared to $12.94 at March 31, 2018, and $12.73 at June 30, 2017, reflecting the impact of our private placement in the third quarter of 2017 and our merger with Community First in the first quarter of 2018 as well as earnings accretion. Reliant’s capital ratios are expected to be maintained significantly above the ratios of a “well-capitalized” institution.

Non-GAAP Financial Measures

This document contains non-GAAP financial measures. The non-GAAP measures in this release below include “adjusted net interest margin,” “adjusted net income attributable to common shareholders and related impact on ROA, ROE, and earnings per diluted share,” and “efficiency ratio.” 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.

About Reliant Bancorp and Reliant Bank

Reliant Bancorp, Inc. is a Brentwood, Tennessee-based bank holding company which operates banking centers in Davidson, Robertson, Sumner, Williamson, Maury and Hickman counties, Tennessee along with loan and deposit production offices in Rutherford and Hamilton counties, Tennessee, through its wholly-owned subsidiary Reliant Bank. 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 June 30, 2018, Reliant Bancorp had approximately $1.7 billion in total assets, approximately $1.1 billion in loans and approximately $1.3 billion in deposits. For additional information, locations and hours of operation, please visit their website at www.reliantbank.com.

Forward Looking Statements

All statements, other than statements of historical fact, included in this release 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. The words “believe,” “anticipate,” “expect,” “may,” “will,” “assume,” “should,” “predict,” “could,” “would,” “intend,” “targets,” “estimates,” “projects,” “plans,” “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 benefits to Reliant Bancorp of the Community First merger, Reliant Bancorp’s future financial and operating results (including the anticipated impact of the transaction on the combined company’s earnings per share and tangible book value) and Reliant Bancorp’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 Reliant Bancorp to differ materially from any results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others: (1) the effect of interest rate increases on the cost of deposits; (2) unanticipated weakness in loan demand or loan pricing; (3) greater than anticipated adverse conditions in the national or local economies in which we operate, including Middle Tennessee; (4) our ability to successfully integrate Community First’s business and operations with that of Reliant Bank; (5) lack of strategic growth opportunities or our failure to execute on those opportunities; (6) deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses; (7) the ability to grow and retain low-cost core deposits and retain large, uninsured deposits; (8) the impact of competition with other financial institutions, including pricing pressures and the resulting impact on Reliant Bancorp’s results, including as a result of compression to net interest margin; (9) our ability to effectively manage problem credits; (10) our ability to successfully implement efficiency initiatives on time and in amounts projected; (11) our ability to successfully develop and market new products and technology; (12) the vulnerability of Reliant Bank’s network and online banking portals, and the systems of parties with whom we contract, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss, and other security breaches; and (13) changes in laws or regulations. Additional factors which could affect the forward-looking statements can be found in Reliant Bancorp’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. Reliant Bancorp believes the forward-looking statements contained herein are reasonable; however, 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. Reliant Bancorp disclaims any obligation to update or revise any forward-looking statements contained in this release, which speak only as of the date hereof, whether as a result of new information, future events or otherwise.

RELIANT BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

June 30, 2018, March 31, 2018 AND June 30, 2017

(Dollar Amounts in Thousands)

(Unaudited)

ASSETS

June 30, 2018 March 31, 2018 June 30, 2017
Cash and due from banks $ 32,321 $ 51,285 $ 26,551
Federal funds sold 381 67
Total cash and cash equivalents 32,702 51,352 26,551
Securities available for sale 308,069 290,012 184,789
Loans, net of unearned income 1,142,459 1,105,677 719,834
Allowance for loan losses (10,169 ) (9,731 ) (9,385 )
Loans, net 1,132,290 1,095,946 710,449
Mortgage loans held for sale, net 31,163 24,969 12,031
Accrued interest receivable 7,474 7,117 4,298
Premises and equipment, net 19,955 19,458 9,721
Restricted equity securities, at cost 11,677 9,500 7,155
Other real estate, net 2,060 1,650
Cash surrender value of life insurance contracts 44,927 44,630 29,203
Deferred tax assets, net 7,913 7,681 2,498
Goodwill 43,627 43,464 11,404
Core deposit intangibles 8,693 8,931 1,404
Other assets 9,108 6,915 4,447
TOTAL ASSETS $ 1,659,658 $ 1,611,625 $ 1,003,950
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Deposits
Demand $ 225,360 $ 228,121 $ 136,467
Interest-bearing demand 140,201 150,188 84,644
Savings and money market deposit accounts 352,724 360,134 210,635
Time 615,990 610,942 408,268
Total deposits 1,334,275 1,349,385 840,014
Accrued interest payable 801 814 167
Subordinated debentures 11,562 11,542
Federal Home Loan Bank advances 102,874 42,061 44,910
Dividends payable 919 918 941
Other liabilities 6,887 5,954 5,329
TOTAL LIABILITIES 1,457,318 1,410,674 891,361
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; 11,482,965, 11,479,608 and 7,839,562 shares issued and outstanding at June 30, 2018, March 31, 2018, and June 30, 2017, respectively 11,483 11,480 7,840
Additional paid-in capital 172,686 172,538 89,746
Retained earnings 21,090 19,870 15,516
Accumulated other comprehensive loss (2,919 ) (2,937 ) (513 )
TOTAL STOCKHOLDERS’ EQUITY 202,340 200,951 112,589
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,659,658 $ 1,611,625 $ 1,003,950

RELIANT BANCORP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE PERIODS INDICATED

(Dollar Amounts in Thousands, Except Per Share Amounts)

(Unaudited)

Three Months Ended Six Months Ended

June 30,
2018

March 31,
2018

June 30,
2017

June 30,
2018

June 30,
2017

INTEREST INCOME
Interest and fees on loans $ 14,066 $ 13,558 $ 8,333 $ 27,624 $ 16,115
Interest and fees on loans held for sale 326 481 115 807 209
Interest on investment securities, taxable 453 507 186 960 335
Interest on investment securities, nontaxable 1,708 1,504 946 3,212 1,774
Federal funds sold and other 277 312 124 589 244
TOTAL INTEREST INCOME 16,830 16,362 9,704 33,192 18,677
INTEREST EXPENSE
Deposits
Demand 84 77 46 161 89
Savings and money market 574 478 200 1,052 350
Time 2,199 1,996 853 4,195 1,546
Federal Home Loan Bank advances and other 397 272 102 669 218
Subordinated debentures 172 157 329
TOTAL INTEREST EXPENSE 3,426 2,980 1,201 6,406 2,203
NET INTEREST INCOME 13,404 13,382 8,503 26,786 16,474
PROVISION FOR LOAN LOSSES 300 137 245 437 655
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 13,104 13,245 8,258 26,349 15,819
NONINTEREST INCOME
Service charges on deposit accounts 900 771 317 1,671 627
Gains on mortgage loans sold, net 957 1,705 638 2,662 1,180
Gain on securities transactions, net 25 23 25 59
Gain on sale of other real estate 20 89 1 109 25
Other 352 426 252 778 479
TOTAL NONINTEREST INCOME 2,254 2,991 1,231 5,245 2,370
NONINTEREST EXPENSE
Salaries and employee benefits 6,613 6,954 4,485 13,567 8,754
Occupancy 1,210 1,229 870 2,439 1,632
Information technology 1,249 1,349 679 2,598 1,192
Advertising and public relations 141 89 48 230 123
Audit, legal and consulting 816 623 308 1,439 601
Federal deposit insurance 224 196 121 420 220
Merger expenses 2,483 177 2,660
Other operating 1,305 1,545 757 2,850 1,615
TOTAL NONINTEREST EXPENSE 14,041 12,162 7,268 26,203 14,137
INCOME BEFORE PROVISION FOR INCOME TAXES 1,317 4,074 2,221 5,391 4,052
INCOME TAX EXPENSE 115 797 427 912 699
CONSOLIDATED NET INCOME 1,202 3,277 1,794 4,479 3,353
NONCONTROLLING INTEREST IN NET LOSS OF SUBSIDIARY 937 464 393 1,401 892
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 2,139 $ 3,741 $ 2,187 $ 5,880 $ 4,245

Basic net income attributable to common shareholders, per share

$ 0.19 $ 0.33 $ 0.28 $ 0.52 $ 0.55

Diluted net income attributable to common shareholders, per share

$ 0.19 $ 0.33 $ 0.28 $ 0.51 $ 0.54

RELIANT BANCORP, INC.

SEGMENT FINANCIAL INFORMATION

FOR THE PERIODS INDICATED

(Dollar Amounts in Thousands)

(Unaudited)

Retail Banking
Three Months Ended Six Months Ended

June 30,
2018

March 31,
2018

June 30,
2017

June 30,
2018

June 30,
2017

Net interest income $ 13,190 $ 13,044 $ 8,405 $ 26,234 $ 16,300
Provision for loan losses 300 137 245 437 655
Noninterest income 1,299 1,288 594 2,587 1,188
Noninterest expense (excluding merger expenses) 9,389 9,451 6,115 18,840 11,833
Merger expense 2,483 177 2,660
Income before provision for income taxes 2,317 4,567 2,639 6,884 5,000
Income tax expense 178 826 452 1,004 755

Net income attributable to common shareholders

$ 2,139 $ 3,741 $ 2,187 $ 5,880 $ 4,245
Residential Mortgage Banking
Three Months Ended Six Months Ended

June 30,
2018

March 31,
2018

June 30,
2017

June 30,
2018

June 30,
2017

Net interest income $ 214 $ 338 $ 98 $ 552 $ 174
Provision for loan losses
Noninterest income 955 1,703 637 2,658 1,182
Noninterest expense 2,169 2,534 1,153 4,703 2,304
Loss before provision for income taxes (1,000 ) (493 ) (418 ) (1,493 ) (948 )
Income tax benefit (63 ) (29 ) (25 ) (92 ) (56 )
Net loss (937 ) (464 ) (393 ) (1,401 ) (892 )
Noncontrolling interest in net loss of subsidiary 937 464 393 1,401 892
Net income attributable to common shareholders $ $ $ $ $

The above financial information is presented, net of intercompany eliminations.

RELIANT BANCORP, INC.

SELECTED QUARTERLY FINANCIAL DATA

AT OR FOR THE THREE MONTHS ENDED

(Dollar Amounts in Thousands, Except Per Share Amounts)

(Unaudited)

June 30,
2018

March 31,
2018

June 30,
2017

Per Common Share Data
Net income attributable to shareholders, per share
Basic $ 0.19 $ 0.33 $ 0.28
Diluted $ 0.19 $ 0.33 $ 0.28
Book value per common share $ 17.62 $ 17.51 $ 14.36
Tangible book value per common share $ 13.06 $ 12.94 $ 12.73
Basic weighted average common shares 11,396,829 11,385,323 7,775,179
Diluted weighted average common shares 11,495,233 11,477,934 7,873,126
Common shares outstanding at period end 11,482,965 11,479,608 7,839,562
Selected Balance Sheet Data
Tangible common equity (TCE) ratio 9.33 % 9.53 % 10.07 %
Average loans $ 1,119,884 $ 1,088,166 $ 703,596
Average earning assets (1) 1,492,007 1,478,465 919,463
Average total assets 1,629,714 1,613,086 972,112
Average stockholders’ equity 202,305 201,433 109,637
Selected Asset Quality Measures
Nonaccrual loans $ 4,360 $ 6,427 $ 5,856
90+ days past due still accruing 51 4 251
Total nonperforming loans 4,411 6,431 6,107
Total nonperforming assets (2) 6,471 8,081 6,107
Net charge offs (recoveries) (139 ) 138 (49 )
Nonperforming loans to total loans 0.39 % 0.58 % 0.85 %
Nonperforming assets to total assets 0.39 % 0.50 % 0.61 %
Nonperforming assets to total loans and other real estate 0.57 % 0.73 % 0.85 %
Allowance for loan losses to total loans 0.89 % 0.88 % 1.30 %
Allowance for loan losses to nonperforming loans 230.54 % 151.31 % 153.68 %
Net charge offs (recoveries) to average loans (3) (0.05 )% 0.05 % (0.03 )%
Capital Ratios (Bank Subsidiary Only)(5)
Tier 1 leverage 9.98 % 10.25 % 10.29 %
Common equity tier 1 12.14 % 12.85 % 12.08 %
Total risk-based capital 12.93 % 13.65 % 13.23 %
Selected Performance Ratios (3) (4)
Return on average assets (ROA) 0.53 % 0.93 % 0.90 %
Return on average stockholders’ equity (ROE) 4.23 % 7.43 % 7.98 %
Return on tangible common equity (ROTCE) 5.71 % 10.04 % 9.03 %
Net interest margin 3.74 % 3.79 % 4.01 %

(1) Average earning assets is the daily average of earning assets. Earning assets consists of loans, mortgage loans held for sale, federal funds sold, deposits with banks, investment securities and restricted equity securities.

(2) Nonperforming assets consist of nonperforming loans (excluding troubled debt restructurings) and other real estate.

(3) Data has been annualized.

(4) Return on average assets is defined as net income attributable to common shareholders divided by average total assets; return on average stockholders’ equity is defined as net income attributable to common shareholders divided by average stockholders’ equity; net interest margin is defined as net interest income calculated on a tax-equivalent basis divided by average earning assets.

(5) Current quarter capital ratios are estimated.

RELIANT BANCORP, INC.
YIELD TABLES
FOR THE PERIODS INDICATED
(Dollar Amounts in Thousands)
(Unaudited)

The following table sets forth the amount of our average balances, interest income or interest expense for each category of interest-earning assets and interest-bearing liabilities and the average interest rate for interest-earning assets and interest-bearing liabilities, net interest spread and net interest margin for the periods indicated below:

Three Months Ended June 30,
2018

Three Months Ended March
31, 2018

Three Months Ended June
30, 2017

Average
Balances

Rates /
Yields
(%)

Interest
Income /
Expense

Average
Balances

Rates /
Yields
(%)

Interest
Income /
Expense

Average
Balances

Rates /
Yields
(%)

Interest
Income /
Expense

Interest earning assets
Loans $ 1,119,884 4.81 $ 13,393 $ 1,088,166 4.81 $ 12,872 $ 703,596 4.54 $ 7,801
Loan fees 0.24 673 0.26 686 0.30 532
Loans with fees 1,119,884 5.05 14,066 1,088,166 5.07 13,558 703,596 4.84 8,333
Mortgage loans held for sale 24,611 5.31 326 39,235 4.97 481 11,117 4.15 115
Deposits with banks 36,550 1.21 110 50,206 1.34 166 15,988 0.63 25
Investment securities – taxable 67,647 2.69 453 72,678 2.83 507 35,742 2.09 186
Investment securities – tax-exempt 231,874 3.75 1,708 218,246 3.57 1,504 144,969 4.08 946
Fed funds sold and other 11,441 5.85 167 9,934 5.96 146 8,051 4.93 99
Total earning assets 1,492,007 4.66 16,830 1,478,465 4.61 16,362 919,463 4.54 9,704
Nonearning assets 137,707 134,621 52,649
Total assets $ 1,629,714 $ 1,613,086 $ 972,112

Interest bearing liabilities

Interest bearing demand $ 143,811 0.23 $ 84 $ 154,318 0.20 $ 77 $ 88,514 0.21 $ 46
Savings and money market 357,475 0.64 574 344,641 0.56 478 210,576 0.38 200
Time deposits – retail 517,209 1.43 1,848 516,424 1.31 1,664 305,935 0.84 644
Time deposits – wholesale 92,197 1.53 351 95,743 1.41 332 89,117 0.94 209
Total interest bearing deposits 1,110,691 1.03 2,857 1,111,126 0.93 2,551 694,142 0.64 1,099
Federal Home Loan Bank advances 79,520 2.00 397 70,172 1.57 272 30,510 1.34 102
Subordinated debt 11,556 5.97 172 11,536 5.52 157
Total borrowed funds 91,076 2.51 569 81,708 2.13 429 30,510 1.34 102
Total interest-bearing liabilities 1,201,768 1.14 3,426 1,192,834 1.01 2,980 724,652 0.66 1,201

Net interest rate spread (%) / Net interest income ($)

3.52 13,404 3.60 13,382 3.88 8,503
Non-interest bearing deposits 219,860 (0.17 ) 212,614 (0.15 ) 134,724 (0.10 )
Other non-interest bearing liabilities 5,781 6,205 3,099
Stockholder’s equity 202,305 201,433 109,637
Total liabilities and stockholders’ equity $ 1,629,714 $ 1,613,086 $ 972,112
Cost of funds 0.97 0.86 0.56
Net interest margin 3.74 3.79 4.01

Yield Table Assumptions – Average loan balances are inclusive of nonperforming loans. Yields computed on tax-exempt instruments are on a tax equivalent basis. Net interest spread is calculated as the yields realized on interest-bearing assets less the rates paid on interest-bearing liabilities. Net interest margin is the result of net interest income calculated on a tax-equivalent basis divided by average interest earning assets for the period. Changes in net interest income are attributed to either changes in average balances (volume change) or changes in average rates (rate change) for earning assets and sources of funds on which interest is received or paid. Volume change is calculated as change in volume times the previous rate while rate change is change in rate times the previous volume. Changes not due solely to volume or rate changes are allocated to volume change and rate change in proportion to the relationship of the absolute dollar amounts of the change in each category.

RELIANT BANCORP, INC.
YIELD TABLES
FOR THE PERIODS INDICATED
(Dollar Amounts in Thousands)
(Unaudited)

The following table sets forth the amount of our average balances, interest income or interest expense for each category of interest-earning assets and interest-bearing liabilities and the average interest rate for interest-earning assets and interest-bearing liabilities, net interest spread and net interest margin for the periods indicated below:

Six Months Ended June 30, 2018 Six Months Ended June 30, 2017

Average
Balances

Rates /
Yields (%)

Interest
Income /
Expense

Average
Balances

Rates /
Yields (%)

Interest
Income /
Expense

Interest earning assets
Loans $ 1,104,025 4.81 $ 26,268 $ 688,316 4.51 $ 15,064
Loan fees 0.25 1356 0.31 1051
Loans with fees 1,104,025 5.06 27,624 688,316 4.82 16,115
Mortgage loans held for sale 31,923 5.10 807 10,798 3.90 209
Deposits with banks 43,378 1.28 276 15,540 0.64 49
Investment securities – taxable 70,162 2.76 960 33,418 2.02 335
Investment securities – tax-exempt 225,060 3.66 3,212 139,259 4.02 1,774
Fed funds sold and other 10,688 5.91 313 7,911 4.97 195
Total earning assets 1,485,236 4.63 33,192 895,242 4.51 18,677
Nonearning assets 136,163 53,955
Total assets $ 1,621,399 $ 949,197
Interest bearing liabilities
Interest bearing demand $ 149,065 0.22 $ 161 $ 85,647 0.21 $ 89
Savings and money market 351,058 0.60 1,052 197,724 0.36 350
Time deposits – retail 516,816 1.37 3,512 298,764 0.78 1,150
Time deposits – wholesale 93,970 1.47 683 85,546 0.93 396
Total interest bearing deposits 1,110,909 0.98 5,408 667,681 0.60 1,985
Federal Home Loan Bank advances and other 74,846 1.80 669 38,243 1.15 218
Subordinated debt 11,546 5.75 329 0
Total borrowed funds 86,392 2.33 998 38,243 1.15 218
Total interest-bearing liabilities 1,197,301 1.08 6,406 705,924 0.63 2,203

Net interest rate spread (%) / Net interest income ($)

3.55 26,786 3.88 16,474
Non-interest bearing deposits 216,237 (0.18 ) 132,054 (0.10 )
Other non-interest bearing liabilities 5,992 3,037
Stockholder’s equity 201,869 108,182
Total liabilities and stockholders’ equity $ 1,621,399 $ 949,197
Cost of funds 0.90 0.53
Net interest margin 3.76 4.01

Yield Table Assumptions – Average loan balances are inclusive of nonperforming loans. Yields computed on tax-exempt instruments are on a tax equivalent basis. Net interest spread is calculated as the yields realized on interest-bearing assets less the rates paid on interest-bearing liabilities. Net interest margin is the result of net interest income calculated on a tax-equivalent basis divided by average interest earning assets for the period. Changes in net interest income are attributed to either changes in average balances (volume change) or changes in average rates (rate change) for earning assets and sources of funds on which interest is received or paid. Volume change is calculated as change in volume times the previous rate while rate change is change in rate times the previous volume. Changes not due solely to volume or rate changes are allocated to volume change and rate change in proportion to the relationship of the absolute dollar amounts of the change in each category.

RELIANT BANCORP, INC.

NON-GAAP FINANCIAL MEASURES

FOR THE PERIODS INDICATED

(Dollar Amounts in Thousands, Except Per Share Amounts)

(Unaudited)

Three Months Ended Six Months Ended

June 30,
2018

March 31,
2018
June 30,
2017

June 30,
2018

June 30,
2017

NON-GAAP FINANCIAL MEASURES
Adjusted net interest margin (1)
Net interest income $ 13,404 $ 13,382 $ 8,503 $ 26,786 $ 16,474
Purchase accounting adjustments (326 ) (508 ) (125 ) (834 ) (243 )
Adjusted net interest income $ 13,078 $ 12,874 $ 8,378 $ 25,952 $ 16,231
Adjusted net interest margin 3.65 % 3.65 % 3.95 % 3.65 % 3.96 %

Adjusted net income attributable to common shareholders and Related Impact on ROA, ROE, and Earnings per Diluted Share (1)

Net income attributable to common shareholders $ 2,139 $ 3,741 $ 2,187 $ 5,880 $ 4,245
Purchase accounting adjustments (73 ) (293 ) (28 ) (366 ) (53 )
Merger expenses 2,483 177 2,660
Pre-tax adjustments to net income 2,410 (116 ) (28 ) 2,294 (53 )
Tax effect of adjustments to net income 632 (53 ) (11 ) 580 (20 )
After tax adjustments to net income $ 1,778 $ (63 ) $ (17 ) $ 1,714 $ (33 )
Adjusted net income attributable to common shareholders $ 3,917 $ 3,678 $ 2,170 $ 7,594 $ 4,212
Adjusted return on average assets 0.96 % 0.91 % 0.89 % 0.94 % 0.89 %
Adjusted return on average stockholders’ equity 7.75 % 7.30 % 7.92 % 7.52 % 7.79 %
Adjusted return on tangible common equity 10.45 % 7.86 % 9.87 % 10.16 % 8.83 %

Adjusted net income attributable to common shareholders, per diluted share

$ 0.34 $ 0.32 $ 0.28 $ 0.66 $ 0.54
Efficiency ratio (subsidiary bank only excluding mortgage segment)(1)
Non-interest expense $ 8,867 $ 8,980 $ 5,780 $ 17,847 $ 11,167
Net interest income 13,190 13,044 8,405 26,234 16,301

Tax equivalent adjustment for tax exempt interest income

490 445 530 935 1,004
Non-interest income 1,299 1,288 594 2,587 1,188
Less gain on sale of other real estate (20 ) (89 ) (1 ) (109 ) (25 )
Less gain on sale of securities (25 ) (23 ) (25 ) (59 )
Adjusted operating income $ 14,934 $ 14,688 $ 9,505 $ 29,622 $ 18,409
Efficiency Ratio 59.37 % 61.14 % 60.81 % 60.25 % 60.66 %

(1) Not a recognized measure under generally accepted accounting principles (GAAP).

Reliant Bancorp, Inc.
DeVan Ard, 615-221-2020
Chairman, President and Chief Executive Officer

Source: Reliant Bancorp, Inc.

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