First Quarter Shareholder Letter
May 14, 2014
Our unaudited financial highlights for the first quarter of 2014 are presented on the back of this letter. Net income of $1.1 million ($0.28/share) represents a 64.7% increase over the first quarter of 2013 and a 23.5% increase over the prior quarter. Earnings were driven by a combination of loan growth, reduced noninterest expenses, and a reduction in our loan loss reserve due to improved asset quality. Loans increased 2.2% in the first quarter (8.8% annualized), on higher levels of construction and commercial real estate loans. The local economy, particularly Williamson County, continues to benefit from very low unemployment and job growth from both new and existing businesses. Deposits grew 5.5% (22% annualized), on strong new account openings by both businesses and consumers. We launched a year-long customer acquisition growth initiative in January and saw new checking account openings increase by 71%, from 192 in the first quarter of 2013 to 329 this year. The strategy utilizes direct mail and a new internal sales approach which focuses heavily on customer referrals. Called “Tell-A-Friend”, when customers send business to Reliant both the existing and new customer receive a free gift. Our capital ratios improved in the first quarter due to retention of earnings, and we continue to be well above regulatory guidelines for a “well capitalized” bank.
On Monday, April 28 we announced the signing of a definitive agreement to merge with Commerce Union Bank, based in Springfield, Tennessee, which will create a Middle Tennessee bank with approximately $655 million in total assets, $514 million in loans, $512 in deposits and $75 million in total equity based on March 31, 2014 financial data. The merger is both a financially and strategically attractive combination as the combined scale should provide an opportunity to achieve increased profitability while also expanding the geographic footprint and diversifying the business mix of the bank. The principal office of the combined bank will be in Brentwood, Tennessee, and, on a pro forma basis, the bank is anticipated to have a top 15 deposit market share in the Nashville MSA, with seven branch locations and two loan production offices in Davidson, Robertson, Sumner and Williamson Counties. The merger is expected to close in the third quarter of 2014, subject to approval by the shareholders of both organizations, regulatory approvals, and the satisfaction of other customary closing conditions.
I would be remiss if I did not thank all of you for your support and your banking business. Please think of us first for your banking needs, whether a savings account for a child or grandchild, a mortgage for your home, or a business or construction loan. And, remember to download our mobile app, which now gives you the ability to deposit checks through your smart phone. Over 350 of our customers are now using mobile deposit. We hope you will stop by any of our four offices and let our team show you what “Clearly Better” banking is all about.
DeVan D. Ard, Jr. Farzin Ferdowsi
President and CEO Chairman of the Board