Reliant Bancorp, Inc. Reports Fourth Quarter 2020 Results

Net Income Per Diluted Common Share of $0.73, Up 97.3% Compared to Q4 2019

Net Interest Margin Remains Strong at 4.48%

BRENTWOOD, Tenn.–(BUSINESS WIRE)–$RBNC–Reliant Bancorp, Inc. (“Reliant Bancorp” or the “Company”) (Nasdaq: RBNC), parent company of Reliant Bank (the “Bank”), reported net income attributable to common shareholders of $12.2 million, or $0.73 per diluted common share, for the fourth quarter of 2020 compared to net income attributable to common shareholders of $11.5 million, or $0.69 per diluted common share, for the third quarter of 2020, and $4.1 million, or $0.37 per diluted common share, for the fourth quarter of 2019. Excluding the impact of prior period merger-related income and expenses, adjusted net income per diluted common share increased 4.3% from the third quarter of 2020 and 55.3% from the fourth quarter of 2019.

DeVan Ard Jr., Reliant Bancorp’s Chairman and CEO stated, “Regardless of the challenges that were part of 2020, we have successfully remained focused on servicing our customers and upholding our credit quality while continuing to invest in growth organically as well as through two successful acquisitions in 2020, which propelled us to total consolidated assets in excess of $3.0 billion. We continued to improve in the fourth quarter with our return on average assets and return on average equity increasing to 1.60% and 15.48%, respectively, compared to 1.54% and 15.32%, respectively, in the third quarter of 2020. Our credit quality continues to be a source of strength as evidenced by a decrease in nonperforming assets of 4.6% compared to the prior quarter. We provided additional reserves for potential COVID-19-related risks, but at a lower level than in the prior two quarters.”

Ard continued, “Our team delivered another outstanding quarter with an increase in non-time deposits of $158.2 million, or 39% when annualized, and early completion of expense related projects should provide strong momentum into 2021. These results reflect the focus of our team to build shareholder value while serving our customers and our community.”

Quarterly Highlights

Net Interest Income Remains Strong on Continued Core Margin Improvement

The net interest margin decreased to 4.48% at December 31, 2020, a 6 basis point decrease when compared to the prior quarter. The net interest margin decrease was primarily due to a 10 basis point decrease in our yield on loans held for investment and was partially offset by a 7 basis point decrease in our cost of funds. The decrease in loan yield can partially be attributed to a $0.8 million decline in purchase accounting accretion as compared to the prior quarter. The adjusted net interest margin, which excludes purchase accounting accretion, was 4.09%, an increase of 11 basis points when compared to the prior quarter. The decrease in cost of funds is primarily attributed to a decrease in wholesale deposit rates of 35 basis points which is partially offset by $253 thousand in penalties from prepayment of $16.5 million in Federal Home Loan Bank advances. The decrease in cost of deposits can primarily be attributed to our continued success in execution of our strategic initiatives around attracting and retaining core deposits and the general market rate decline. At December 31, 2020, customer deposits comprised 87.8% of total deposits compared to 85.2% of total deposits at September 30, 2020, and non-time deposits grew by $158.2 million, or 9.7%, in the same period. In addition, $0.7 million of purchase accounting accretion was realized in interest expense during the fourth quarter of 2020 for acquired certificates of deposit and Federal Home Loan Bank advances.

Our continued focus on improving the earning-asset mix also contributed to margin expansion, as average loans held for investment increased to 83.2% of average earning assets at December 31, 2020, compared to 78.3% at December 31, 2019.

Maintaining a Strong Balance Sheet

Loans remained stable at $2.3 billion. Loan originations during the quarter totaled $170.0 million at a weighted-average coupon rate of 4.39% with a continued focus on credit quality through sound underwriting. Loans increased $890.8 million year-over-year inclusive of the acquired loan portfolios from both First Advantage Bank and Community Bank & Trust, which totaled $582.2 million and $128.4 million, respectively at December 31, 2020. Organic year-over-year loan growth totaled $180.3 million, or 12.8%.

Deposits increased $13.7 million from the linked quarter and $994.8 million year-over-year. Noninterest-bearing deposits increased $36.4 million from the linked quarter. Year-over-year deposit growth can be attributed primarily to acquired deposit portfolios from both First Advantage Bank and Community Bank & Trust, which totaled $554.1 million and $217.0 million, respectively, at December 31, 2020. Organic year-over-year deposit growth totaled $223.7 million, or 14.1%. Ard stated, “Our team continues to attract and retain deposits in a difficult environment, fulfilling one of our strategic goals and helping us to better serve the community’s credit needs.”

Asset Quality Remains Stable and Capital Well Positioned

Credit quality remains strong. Nonperforming loans held for investment accounted for 0.26% of total loans held for investment and nonperforming assets accounted for 0.31% of total assets at December 31, 2020. The allowance for loan loss was 0.90% of loans (1.62% including unaccreted purchased loan discounts) at December 31, 2020. A $950 thousand provision was recognized during the quarter driven primarily by risk factors related to the coronavirus (COVID-19) pandemic. The acquired loan portfolios are reserved for through fair value marks that consider both credit quality and changes in interest rates.

Shareholders’ equity increased $14.9 million from the linked quarter to $322.0 million at December 31, 2020, mainly due to current quarter net income. Both the Company and the Bank continue to meet the criteria to be classified as “Well Capitalized” under applicable banking regulations. Tangible book value per common share increased from the linked quarter by $0.74, or 5.1%, to $15.39 at December 31, 2020.

Conclusion

Ard concluded, “I am proud of what our team accomplished in the fourth quarter and throughout a challenging 2020. We have significantly increased our balance sheet through two strategic acquisitions as well as through executing our strategy to create organic growth. I want to thank our team for their ability to come together as ‘one bank’ to serve our community 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 2020 results on Friday, January 22, 2021, 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/1855/39390. A link to these events can be found on the Company’s website (https://www.reliantbank.com) under the tab titled “Investor Relations.”

Following the live broadcast, a webcast replay will be available on the Company’s website (https://www.reliantbank.com) under the tab titled “Investor Relations” followed by the tab titled “News & Market Information” followed by the tab titled “Event Calendar” followed by the tab titled “Past Events” and will be available for 12 months.

About Reliant Bancorp, Inc. and Reliant Bank

Reliant Bancorp, Inc. is a Brentwood, Tennessee-based financial holding company which, through its wholly owned subsidiary Reliant Bank, operates banking centers in 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, 2020, Reliant Bancorp had approximately $3.0 billion in total consolidated assets, approximately $2.3 billion in loans held for investment and approximately $2.6 billion in deposits. For additional information, locations and hours of operation, please visit www.reliantbank.com.

Financial Measures

This release contains certain financial measures that are not measures recognized under generally accepted accounting principles (“GAAP”) and, therefore, are considered non-GAAP financial measures. Members of Company management use these non-GAAP financial measures in their analysis of the Company’s performance, financial condition, and efficiency of operations. Management of the Company believes that these non-GAAP financial measures provide a greater understanding of ongoing operations, enhance comparability of results with prior periods, and demonstrate the effects of significant gains and charges in the periods presented. Management of the Company also believes that investors find these non-GAAP financial measures useful as they assist investors in understanding underlying operating performance identifying and analyzing ongoing operating trends. However, the non-GAAP financial measures discussed herein should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which the non-GAAP financial measures discussed herein are calculated may differ from the manner in which measures with similar names are calculated by other companies. You should understand how other companies calculate their financial measures similar to, or with names similar to, the non-GAAP financial measures we have discussed herein when comparing such non-GAAP financial measures.

The non-GAAP measures in this release include “adjusted net interest income,” “adjusted net interest margin,” “adjusted net income attributable to common shareholders,” “average return on average assets,” “average return on average shareholders’ equity,” “average tangible shareholders’ equity,” “return on average tangible common equity” (ROATCE), “adjusted ROATCE,” “tangible assets,” “tangible equity,” “tangible book value per common share” (TBVPS), “adjusted operating income,” “core bank efficiency ratio,” and “adjusted loan loss allowance.”

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 statements made during 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 Company upholding its credit quality, the Company’s credit quality remaining strong and being a source of strength, the Company having strong momentum as it enters 2021, and management’s optimism about the Company’s future. 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 global health and economic crisis precipitated by the coronavirus (COVID-19) pandemic, (2) actions taken by governments, businesses and individuals in response to the coronavirus (COVID-19) pandemic, (3) the pace of recovery when the coronavirus (COVID-19) pandemic subsides, (4) the possible recurrence of the coronavirus (COVID-19), (5) changes in political conditions or the legislative or regulatory environment, including governmental initiatives affecting the financial services industry such as, but not limited to, the Coronavirus Aid, Relief, and Economic Security Act (or CARES) Act), (6) the possibility that our asset quality could decline or that we experience greater loan losses than anticipated, (7) increased levels of other real estate, primarily as a result of foreclosures, (8) the impact of liquidity needs on our results of operations and financial condition, (9) competition from financial institutions and other financial service providers, (10) the effect of interest rate increases on the cost of deposits, (11) unanticipated weakness in loan demand or loan pricing, (12) greater than anticipated adverse conditions in the national economy or local economies in which we operate, including in Middle Tennessee, (13) lack of strategic growth opportunities or our failure to execute on available opportunities, (14) deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses, (15) economic crises and associated credit issues in industries most impacted by the coronavirus (COVID-19) pandemic, including the restaurant, hospitality and retail sectors, (16) the ability to grow and retain low-cost core deposits and retain large, uninsured deposits, (17) our ability to effectively manage problem credits, (18) our ability to successfully implement efficiency initiatives on time and with the results projected, (19) our ability to successfully develop and market new products and technology, (20) the impact of negative developments in the financial industry and United States and global capital and credit markets, (21) our ability to retain the services of key personnel, (22) our ability to adapt to technological changes, (23) risks associated with litigation, including reputational and financial risks and the applicability of insurance coverage, (24) the vulnerability of the Bank’s computer and information technology systems and networks, and the systems and networks of third parties with whom the Company or the Bank contract, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss, and other security breaches and interruptions, (25) changes in state and federal laws, rules, regulations, or policies applicable to banks or bank or financial holding companies, including regulatory or legislative developments, (26) adverse impacts (including costs, fines, reputational harm, or other negative effects) from current or future litigation, regulatory examinations, or other legal and/or regulatory actions, (27) the risk that expected cost savings and revenue synergies from (a) the merger of the Company and Tennessee Community Bank Holdings, Inc. (“TCB Holdings”) (the “TCB Holdings Transaction”) or (b) the merger of the Company and First Advantage Bancorp (“FABK”) (the “FABK Transaction” and, together with the TCB Holdings Transaction, collectively, the “Transactions”), may not be realized or may take longer than anticipated to be realized, (28) the effect of the Transactions on our 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, (29) the risk that the businesses and operations of TCB Holdings 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, (30) the amount of costs, fees, expenses, and charges related to the Transactions, including those arising as a result of unexpected factors or events, (31) reputational risk associated with and the reaction of our customers, suppliers, employees, or other business partners to the Transactions, (32) the risk associated with Company management’s attention being diverted away from the day-to-day business and operations of the Company to the integration of the Transactions, and (33) 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.

This information is preliminary and based on company data available at the time of presentation.

This information is preliminary and based on company data available at the time of presentation.

Contacts

DeVan Ard, Jr., Chairman and CEO, Reliant Bancorp, Inc. (615.221.2087)

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