Reliant Bancorp, Inc. Reports First Quarter 2021 Results

Reported Net Income of $12.1 million, or Diluted EPS of $0.73

Net Interest Margin Continues to Improve to 4.51%

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 $12.1 million, or $0.73 per diluted common share, for the first quarter of 2021 compared to net income attributable to common shareholders of $12.2 million, or $0.73 per diluted common share, for the fourth quarter of 2020, and a loss of $0.2 million, or $0.02 per diluted common share, for the first quarter of 2020.

DeVan Ard, Jr., Reliant Bancorp's Chairman and CEO stated, “I am very pleased with our first quarter earnings, which were driven by a strong and improving net interest margin, superior asset quality, and good expense control. Nashville’s economy also started showing signs of a robust recovery late in the quarter as evidenced by a significant increase in loan demand.”

Ard continued, “Our team delivered another outstanding quarter. Loan production topped $253.6 million, a 69% increase over the first quarter of 2020, and many of those loans will fund throughout 2021. Deposit growth was also strong. Balances in non-time deposits - checking, savings, and money market deposits - grew 8.1%, or 32.7% annualized, during the first quarter, a tribute to the effort by our team to build lasting relationships with our customers. We also continued to build shareholder value. Our book value and tangible book value per share increased 3.1% and 4.0%, respectively, from the prior quarter, or 12.4% and 16.1%, respectively, when annualized. Reliant's board also voted to increase our cash dividend per share by 20.0%.”

First Quarter Highlights

Dollar Amounts in Thousands, Except Per Share Amounts

Net Interest Income Remains Strong on Continued Core Margin Improvement

The net interest margin increased to 4.51% at March 31, 2021, an increase of 3 basis points from the fourth quarter of 2020 and an increase of 91 basis points from the first quarter of 2020. The linked quarter increase was primarily due to a 5 basis point decrease in our cost of funds. The adjusted net interest margin, which excludes benefits from purchase accounting accretion, was 4.24%, an increase of 15 basis points from the fourth quarter of 2020 and an increase of 78 basis points from the first quarter of 2020.

Ard continued, “Our strong adjusted net income margin in the first quarter follows a similarly strong performance in the prior quarter which reflects the hard work of our team through a challenging season and which we will continue to work on in 2021 as economic conditions begin to look brighter.”

While loan yields remain consistent with the linked quarter at 5.63%, yields from coupon and fees increased 6 basis points from the prior quarter whereas yields related to purchase accounting declined as purchase accounting accretion decreased $244 thousand when compared to the prior quarter.

Cost of funds benefited from prepayment of $16.5 million in Federal Home Loan Bank advances in the fourth quarter of 2020 which contributed to a decrease in cost of borrowed funds of 33 basis points. The cost of deposits remained consistent with the linked quarter at 0.51% despite a reduction in purchase accounting accretion of $635.9 thousand. These low costs can primarily be attributed to our continued success in the execution of our strategic initiatives around attracting and retaining core deposits. At March 31, 2021, customer deposits comprised 89.9% of total deposits compared to 87.8% of total deposits at December 31, 2020, and non-time deposits grew by $143.6 million, or 8.1%, in the same period.

Maintaining a Strong Balance Sheet

Loans remained stable at $2.3 billion. Loan originations during the quarter totaled $253.6 million at a weighted-average coupon rate of 4.21% with a continued focus on credit quality through sound underwriting. These originations were offset with principal payments, including PPP forgiveness payments of $23.6 million. Loans increased $552 thousand from the prior quarter when PPP loans are excluded. Loans increased $658.3 million year-over-year which can largely be attributed to the loan portfolio acquired on April 1, 2020, from First Advantage Bank, which totaled $526.0 million at March 31, 2021. Organic year-over-year loan growth totaled $132.2 million, or 8.2%.

Deposits increased $33.7 million from the linked quarter and $890.1 million year-over-year. Noninterest-bearing deposits increased $3.5 million from the linked quarter. Year-over-year deposit growth can be attributed primarily to the acquired deposit portfolio from First Advantage Bank which totaled $509.2 million at March 31, 2021. Organic year-over-year deposit growth totaled $380.8 million, or 22.1%. Ard stated, “Our team continues to attract and retain low cost deposits in a competitive 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

Our credit quality continues to be a source of strength with net recoveries in the first quarter and criticized assets to total loans of 0.90%. Nonperforming loans held for investment accounted for 0.27% of total loans held for investment and nonperforming assets accounted for 0.32% of total assets at March 31, 2021. The allowance for loan loss was 0.91% of loans (1.56% including unaccreted purchased loan discounts) at March 31, 2021. There was no provision recognized during the quarter as net charge-offs were in a recovery position for the quarter and larger provisions were recorded in prior quarters related to uncertainty surrounding the 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 $9.7 million from the linked quarter to $331.7 million at March 31, 2021, 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. Our current level of tangible common equity to tangible assets of 8.90% positions us for further growth opportunities and allows us to execute our heightened cash dividend in the near term.

Conclusion

Ard concluded, “I am proud of what our team accomplished in the first quarter as well as their resiliency and dedication to serve our community. We continue to see increased demand in the loan pipeline as we move into the second quarter and we are optimistic about our market and financial positions as we continue to build a bright future for Reliant Bank.”

Conference Call Information

The Company will hold a conference call to discuss first quarter 2021 results on Friday, April 23, 2021, at 9:00 a.m. CDT, and the earnings conference call will be broadcast live over the Internet at https://www.webcaster4.com/Webcast/Page/1855/40669. 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 March 31, 2021, Reliant Bancorp had approximately $3.1 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 and 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 margin (NIM),” “adjusted net income,” “adjusted diluted earnings per share (EPS),” “adjusted annualized return on average assets (ROAA),” “adjusted annualized return on average equity (ROAE),” “adjusted annualized return on average tangible common equity (ROATCE),” “adjusted pre-tax pre-provision income,” “tangible common equity to tangible assets (TCE/TA),” “tangible book value per share,” “allowance for loan losses plus unaccreted purchased loan discounts to total loans,” “bank segment adjusted net income,” and “bank segment adjusted efficiency ratio.”

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 improving economic conditions, the Company’s growth opportunities, the Company’s ability to pay the increased cash dividend, increased demand in the loan pipeline, and management’s optimism about the Company’s market and financial positions. 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 effects of the coronavirus (COVID-19) pandemic, including (i) the magnitude and duration of the pandemic and its impact on general economic and financial market conditions and on our business, results of operations, and financial condition and that of our customers, (ii) actions taken by governments, businesses and individuals in response to the coronavirus (COVID-19) pandemic, (iii) the pace of recovery when the coronavirus (COVID-19) pandemic subsides, and (iv) the speed with which coronavirus (COVID-19) vaccines can be widely distributed, those vaccines’ efficacy against the virus and public acceptance of the vaccines, (2) the possibility that our asset quality could decline or that we experience greater loan losses than anticipated, (3) increased levels of other real estate, primarily as a result of foreclosures, (4) the impact of liquidity needs on our results of operations and financial condition, (5) competition from financial institutions and other financial service providers, (6) the effect of interest rate increases on the cost of deposits, (7) unanticipated weakness in loan demand or loan pricing, (8) greater than anticipated adverse conditions in the national economy or local economies in which we operate, including in Middle Tennessee, (9) lack of strategic growth opportunities or our failure to execute on available opportunities, (10) deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses, (11) economic crises and associated credit issues in industries most impacted by the coronavirus (COVID-19) pandemic, including the hotel and retail sectors, (12) the ability to grow and retain low-cost core deposits and retain large, uninsured deposits, (13) our ability to effectively manage problem credits, (14) our ability to successfully implement efficiency initiatives on time and with the results projected, (15) our ability to successfully develop and market new products and technology, (16) the impact of negative developments in the financial industry and United States and global capital and credit markets, (17) our ability to retain the services of key personnel, (18) our ability to adapt to technological changes, (19) risks associated with litigation, including reputational and financial risks and the applicability of insurance coverage, (20) 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, (21) changes in state and federal laws, rules, regulations, or policies applicable to banks or bank or financial holding companies, including regulatory or legislative developments, (22) 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, (23) the risk of successful integration of the businesses the Company has recently acquired, and (24) 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.

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