Reliant Bancorp, Inc. Reports Results for Fourth Quarter 2019

Reliant Bancorp, Inc. ("Reliant Bancorp" or the "Company") (Nasdaq: RBNC), the parent company for Reliant Bank ("Reliant" or the "Bank"), reported net income available to common shareholders of $4.1 million, or $0.37 per diluted common share for the fourth quarter of 2019 and net income available to common shareholders of $16.2 million, or $1.44 per common diluted share, for the year ended December 31, 2019, compared to $4.1 million, or $0.36 per diluted common share, for the fourth quarter of 2018 and net income available to common shareholders of $14.1 million, or $1.23 per common diluted share, for the year ended December 31, 2018. Excluding merger-related expense, the Company reported net income available to common shareholders of $5.3 million, or $0.47 per diluted common share, for the fourth quarter of 2019 compared to $4.1 million, or $0.36 per diluted common share, for the fourth quarter of 2018 ("non-GAAP").

DeVan Ard, Jr., Reliant Bancorp's Chairman, President and CEO stated, "This was a transformational quarter for our company. We announced a definitive agreement to acquire First Advantage Bancorp headquartered in Clarksville, Tennessee, successfully closed on a $60 million subordinated debt offering, and completed the previously announced acquisition of Community Bank & Trust."

Ard continued, "Our team delivered another outstanding quarter. Loan production exceeded $216 million, providing good momentum as we start 2020, and customer deposits increased by $77 million, a 28% annualized growth rate. These results reflect the quality of our bankers, the attractiveness of our franchise and the continued strength of our Middle Tennessee and Chattanooga markets."

Quarterly Highlights

Consistent, Sustainable Growth Driven by Strong, In-Market Relationships and Strategic Acquisitions

Loans-held-for-investment increased $59.3 million, or 17.6%, annualized, linked quarter, and by $178.9 million, or 14.5% year-over-year. Fourth quarter 2019 loan production totaled a franchise record of $216.7 million at a weighted average rate of 4.7%.

Total deposits decreased $26.8 million, or 6.7%, annualized, linked quarter, but increased $145.9 million, or 10.1%, year-over-year. The linked quarter decrease primarily was due to a $101.6 million reduction in wholesale funding. Core deposits increased $17.6 million, or 7.5%, linked quarter and $72.5 million, or 8.2%, year-over-year and customer deposits (excludes all wholesale funding) increased by $76.7 million, or 27.5% annualized, linked quarter, and $123.3 million, or 11.5% year-over-year. Ard continued, "The success we've experienced sourcing low cost, core deposits provides significant value to our franchise and will continue to be a strategic focus for our bankers in 2020, allowing us to continue reducing wholesale funding levels and our cost of funds."

On October 23, 2019, the Company announced a definitive agreement to acquire First Advantage Bancorp ("FABK"), the parent of First Advantage Bank, headquartered in Clarksville, Tennessee. As of December 31, 2019, FABK reported approximately $738.0 million of total assets, approximately $646.4 million of loans-held-for-investment and approximately $610.9 million of deposits. The FABK acquisition is expected to close in the second quarter of 2020.

On January 2, 2020, the Company announced the completion of the acquisition of Tennessee Community Bank Holdings, Inc., ("TCB") the parent of Community Bank & Trust ("CBT"), headquartered in Ashland City, Tennessee. At December 31, 2019, CBT reported approximately $252.9 million of total assets, approximately $174.0 million of loans-held-for-investment and approximately $210.1 million of deposits.

On a pro forma basis, the combined companies would have reported total assets of approximately $2.9 billion, loans-held-for-investment of approximately $2.2 billion and deposits of approximately $2.4 billion as of December 31, 2019.

Focus on Stabilizing Net Interest Margin Through Asset Mix Optimization and Pricing Discipline

Net interest margin declined 5 basis points from the linked quarter to 3.46%. The $60 million subordinated debt offering, which closed on December 13, 2019, accounted for 4 basis points of fourth quarter margin contraction and increased fourth quarter cost of funds by 4 basis points. Our yield on earning assets declined by 16 basis point linked quarter, as 45.8% of loans and 21.2% of bonds carry variable interest rates. Loans-held-for-investment were down 11 basis points and securities were down 17 basis points, due partly to our bond rotation strategy and some accelerated premium amortization experienced during the quarter. Our cost of funds decreased 11 basis points, linked quarter, as competition supported higher interest rates on customer deposits even as the cost of wholesale funding decreased by 25 basis points.

Ard stated, "We continued our strategy of optimizing earning asset mix by reducing the securities portfolio by another $37 million and using the proceeds to fund loan growth, picking up between 110 and 120 basis points of yield on the rotation. Securities accounted for 16.5% of average earning assets at the end of the fourth quarter, down from 18.9% in December 2018. We expect that securities will continue to decline as a percentage of earning assets and are targeting 10% to 12% in 2020."

Asset Quality Remains a Hallmark of the Franchise

Credit quality remained strong, as nonperforming loans accounted for 0.29% of total loans-held-for-investment and nonperforming assets accounted for 0.26% of total assets at December 31, 2019. Loans past due 89 days or less accounted for 0.06% of total loans-held-for-investment. Additionally, the Company disposed of two of the three remaining other real estate properties realizing a $166,000 gain and disposed of the remaining property in January 2020. The loan loss reserve was 0.89% of loans-held-for-investment at December 31, 2019 (1.10% when unamortized purchased loan discounts are included), down 2 basis points from September 30, 2019. Provision for loan losses of $405,000 was realized during the fourth quarter of 2019. Net charge-offs for the quarter accounted for 0.03% of total loans-held-for-investment. For the year, the Company recorded net recoveries of $475,000, or 0.03% of total loans-held-for-investment.

Financial Strength Positions Company for Growth and Creates Shareholder Value

Stockholders' equity increased by $4.1 million linked quarter, or 7.4% percent annualized, to $223.8 million at December 31, 2019. Both the Company and Bank continue to meet the criteria to be classified as "Well Capitalized" financial institutions under applicable banking regulations. The Company closed on a $60 million subordinated debt offering on December 13, 2019. The debt carries a fixed coupon of 5.125% for the first five years with a floating coupon rate for the final five years. The Company declared a dividend of $0.10 per share on January 22, 2020, payable on February 14, 2020, a 11.1% increase over the dividend paid for the fourth quarter of 2018, marking the nineteenth consecutive quarter in which a dividend has been declared.

Book value per share increased by $0.35, or 7.1% annualized, to $19.97 linked quarter and by $1.90 or 10.5% year-over-year. Tangible book value per share ("TBVPS") (non-GAAP) increased by $0.37, or 9.8% annualized, to $15.42 linked quarter and by $1.84, or 13.5%, year-over-year.

Conclusion

Ard concluded, "I am proud of what our team accomplished during the fourth quarter and throughout 2019. We are transforming our balance sheet and market footprint through two strategic acquisitions, continuing to deliver balanced and profitable growth and staying focused on building the core franchise to support a profitable future. I want to thank our team for their dedication and hard work in 2019, 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 2019 results on Friday, January 24, 2020, 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/1855/32672. A link to these events can be found on the Company's website at www.reliantbank.com and will be available for 12 months. Related presentation materials will be posted to the "Investor Relations" section of the Company's web site at www.reliantbank.com prior to the call.

About Reliant Bancorp, Inc. and Reliant Bank

Reliant Bancorp, Inc. is a Brentwood, Tennessee-based bank holding company which, through its wholly owned subsidiary Reliant Bank, operates banking centers in Cheatham, Davidson, Hamilton, Hickman, Maury, Montgomery, Robertson, Rutherford, Sumner, and Williamson counties, 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, 2019, Reliant Bancorp had approximately $1.9 billion in total consolidated assets, approximately $1.4 billion in loans and approximately $1.6 billion in deposits. For additional information, locations and hours of operation, please visit www.reliantbank.com.

Non-GAAP Financial Measures

This document contains non-GAAP financial measures. The non-GAAP measures in this release include "adjusted net interest margin," "adjusted net income attributable to common shareholders and related impact," "average tangible stockholders' equity," "ROATCE," "adjusted ROATCE," "tangible assets," tangible equity," "TBVPS," "efficiency ratio (subsidiary bank only excluding mortgage segment)," and "adjusted loan loss reserve." 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.

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 in 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 benefits of a strategic acquisition, the bond portfolio and non-core funding, future balance sheet growth and acquisition opportunities. 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 possibility that our asset quality could decline or that we experience greater loan losses than anticipated, (2) increased levels of other real estate, primarily as a result of foreclosures, (3) the impact of liquidity needs on our results of operations and financial condition, (4) competition from financial institutions and other financial service providers, (5) the effect of interest rate increases on the cost of deposits, (6) unanticipated weakness in loan demand or loan pricing, (7) lack of strategic growth opportunities or our failure to execute on those opportunities, (8) deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses, (9) the ability to grow and retain low-cost core deposits and retain large, uninsured deposits, (10) our ability to effectively manage problem credits, (11) our ability to successfully implement efficiency initiatives on time and in amounts projected, (12) our ability to successfully develop and market new products and technology, (13) the impact of negative developments in the financial industry and U.S. and global capital and credit markets, (14) our ability to retain the services of key personnel, (15) our ability to adapt to technological changes, (16) risks associated with litigation, including the applicability of insurance coverage, (17) the vulnerability of the Bank's network and online banking portals, and the systems of parties with whom the Company and the Bank contract, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss, and other security breaches, (18) changes in state and federal laws, rules, regulations, or policies applicable to banks or bank or financial holding companies, including regulatory or legislative developments, (19) adverse results (including costs, fines, reputational harm, and/or other negative effects) from current or future litigation, regulatory examinations, or other legal and/or regulatory actions, (20) the risk that expected cost savings and revenue synergies from (i) the merger of the Company and TCB (the "TCB Holdings Transaction") or (ii) the proposed merger between the Company and FABK (the "First Advantage Transaction" and, together with the TCB Holdings Transaction, collectively, the "Transactions"), may not be realized or may take longer than anticipated to be realized, (21) the ability to meet expectations regarding the timing and completion of the First Advantage Transaction and the accounting and tax treatment of the Transactions, (22) the effect of the announcement, pendency, or completion of the Transactions on 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, (23) the risk that the businesses and operations of TCB 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, (24) the occurrence of any event, change, or other circumstances that could give rise to the termination of the definitive merger agreement for the First Advantage Transaction, (25) the amount of costs, fees, expenses, and charges related to the Transactions, including those arising as a result of unexpected factors or events, (26) the ability to obtain the shareholder and governmental approvals required for the First Advantage Transaction, (27) reputational risk associated with and the reaction of the parties' customers, suppliers, employees, or other business partners to the Transactions, (28) the failure of any of the conditions to the closing of the First Advantage Transaction to be satisfied, or any unexpected delay in closing the First Advantage Transaction, (29) the dilution caused by the Company's issuance of additional shares of its common stock in the Transactions, (30) the Company's ability to simultaneously execute on two separate business combination transactions, (31) the risk associated with Company management's attention being diverted away from the day-to-day business and operations of the Company to the completion of the Transactions, and (32) 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.

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

⁽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⁾ 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:

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.

⁽¹⁾ Not a recognized measure under generally accepted accounting principles (GAAP).
⁽²⁾ Amount includes tax equivalent adjustment to quantify the tax equivalent net interest income.
⁽³⁾ Data has been annualized.

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