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KNOXVILLE, TN – April 22, 2024 – SmartFinancial, Inc. (“SmartFinancial” or the “Company”; NYSE: SMBK), today announced net income of $9.4 million, or $0.55 per diluted common share, for the first quarter of 2024, compared to net income of $11.5 million, or $0.68 per diluted common share, for the first quarter of 2023, and compared to prior quarter net income of $6.2 million, or $0.37 per diluted common share.  Operating earnings1, which excludes non-recurring income related to the gain on sale of a branch location, net of tax adjustments, totaled $8.4 million, or $0.49 per diluted common share, in the first quarter of 2024, compared to $11.5 million, or $0.68 per diluted common share, in the first quarter of 2023, and compared to $6.9 million, or $0.41 per diluted common share, in the fourth quarter of 2023.

Highlights for the First Quarter of 2024

  • Operating earnings of $8.4 million, or $0.49 per diluted common share
  • Net organic loan and lease growth of $34 million – 4% annualized quarter-over-quarter increase
  • Credit quality remains solid with nonperforming assets to total assets of 0.18%
  • Deposit growth of $126.3 million – 12% annualized quarter-over-quarter increase

Billy Carroll, President & CEO, stated: “Our company started 2024 with nice momentum.  The first quarter was highlighted by continued growth in both loans and deposits, each growing 4% and 12%, respectively, along with expense discipline and focus on operating leverage improvement.  The investments we’ve made over the last few years have positioned us well and with a margin inflection point on the horizon, we remain very bullish.”

SmartFinancial’s Chairman, Miller Welborn, concluded: “Our team continued to make substantial forward progress on our key strategic initiatives in the first quarter. Our associates worked diligently to grow revenue and control expenses, setting the stage for operating leverage gains for the remainder of 2024. Continued commitment to EXCELLENT client service and growing shareholder value remains “top of mind” for our team.”

Net Interest Income and Net Interest Margin

Net interest income was $31.7 million for the first quarter of 2024, compared to $31.5 million for the prior quarter.  Average earning assets totaled $4.50 billion, an increase of $116.4 million from the prior quarter.  The increase in average earnings assets was primarily driven by an increase in average interest-earning cash of $64.0 million, average loans and leases of $49.7 million and average securities of $2.7 million.  Average interest-bearing liabilities increased by $144.2 million from the prior quarter, attributable to an increase in average deposits of $146.3 million, offset by a decrease in average borrowings of $2.2 million.

The tax equivalent net interest margin was 2.85% for the first quarter of 2024, compared to 2.86% for the prior quarter. The tax equivalent net interest margin was negatively impacted by the increased cost of interest-bearing liabilities, coupled with a slower rise on yield on interest-earning assets, quarter-over-quarter. The yield on loans and leases, excluding loan fees, was 5.71% for the first quarter, compared to 5.61% for the prior quarter.

The cost of total deposits for the first quarter of 2024 was 2.52% compared to 2.35% in the prior quarter. The cost of interest-bearing liabilities increased to 3.23% for the first quarter of 2024, compared to 3.07% for the prior quarter. The cost of average interest-bearing deposits was 3.16% for the first quarter of 2024, compared to 3.00% for the prior quarter, an increase of 16 basis points.

The following table presents selected interest rates and yields for the periods indicated:

Three Months Ended

Mar

Dec

Increase

Selected Interest Rates and Yields

2024

2023

(Decrease)

Yield on loans and leases, excluding loan fees

5.71

%

5.61

%

0.10

%

Yield on loans and leases

5.82

%

5.68

%

0.14

%

Yield on earning assets, on a fully tax equivalent basis (FTE)

5.36

%

5.22

%

0.14

%

Cost of interest-bearing deposits

3.16

%

3.00

%

0.16

%

Cost of total deposits

2.52

%

2.35

%

0.17

%

Cost of interest-bearing liabilities

3.23

%

3.07

%

0.16

%

Net interest margin, FTE

2.85

%

2.86

%

(0.01)

%

Provision for Credit Losses on Loans and Leases and Credit Quality

At March 31, 2024, the allowance for credit losses was $34.2 million.  The allowance for credit losses to total loans and leases was 0.98% as of March 31, 2024, compared to 1.02% as of December 31, 2023.

The following table presents detailed information related to the provision for credit losses for the periods indicated (dollars in thousands):

Three Months Ended

Mar

Dec

Provision for Credit Losses on Loans and Leases Rollforward

2024

2023

Change

Beginning balance

$

35,066

$

33,687

$

1,379

Charge-offs

(920)

(424)

(496)

Recoveries

135

302

(167)

Net (charge-offs) recoveries

(785)

(122)

(663)

Provision for credit losses (1)

(78)

1,501

(1,579)

Ending balance

$

34,203

$

35,066

$

(863)

Allowance for credit losses to total loans and leases, gross

0.98

%

1.02

%

(0.04)

%

  1. The current quarter-ended and prior quarter-ended excludes unfunded commitments release of $362 thousand and a provision of $69 thousand, respectively.  At March 31, 2024, the unfunded commitment liability totaled $2.0 million.

Nonperforming loans and leases as a percentage of total loans and leases was 0.18% as of March 31, 2024, a decrease of 6 basis points from the 0.24% reported in the fourth quarter of 2023.  Total nonperforming assets (which include nonaccrual loans and leases, loans and leases past due 90 days or more and still accruing, other real estate owned and other repossessed assets) as a percentage of total assets was 0.18% as of March 31, 2024, and 0.20% on December 31, 2023.

The following table presents detailed information related to credit quality for the periods indicated (dollars in thousands):

Three Months Ended

Mar

Dec

Increase

Credit Quality

2024

2023

(Decrease)

Nonaccrual loans and leases

$

6,171

$

7,931

$

(1,760)

Loans and leases past due 90 days or more and still accruing

95

170

(75)

Total nonperforming loans and leases

6,266

8,101

(1,835)

Other real estate owned

696

517

179

Other repossessed assets

2,033

1,117

916

Total nonperforming assets

$

8,995

$

9,735

$

(740)

Nonperforming loans and leases to total loans and leases, gross

0.18

%

0.24

%

(0.06)

%

Nonperforming assets to total assets

0.18

%

0.20

%

(0.02)

%

Noninterest Income

Noninterest income increased $801 thousand to $8.4 million for the first quarter of 2024 compared to $7.6 million for the prior quarter.  The current quarter increase was primarily associated with the $1.3 million pre-tax gain on the sale of a former branch building.

The following table presents detailed information related to noninterest income for the periods indicated (dollars in thousands):

Three Months Ended

Mar

Dec

Increase

Noninterest Income

2024

2023

(Decrease)

Service charges on deposit accounts

$

1,612

$

1,673

$

(61)

Mortgage banking income

280

227

53

Investment services

1,380

1,339

41

Insurance commissions

1,103

1,133

(30)

Interchange and debit card transaction fees

1,253

1,370

(117)

Other

2,752

1,837

915

Total noninterest income

$

8,380

$

7,579

$

801

Noninterest Expense

Noninterest expense decreased $1.1 million to $28.6 million for the first quarter of 2024 compared to $29.7 million for the prior quarter. The current quarter decrease was primarily related to a decrease in other noninterest expenses associated with a Community Reinvestment Act donation of a former branch location and accruals in respect of pending litigation in the prior quarter.

The following table presents detailed information related to noninterest expense for the periods indicated (dollars in thousands):

Three Months Ended

Mar

Dec

Increase

Noninterest Expense

2024

2023

(Decrease)

Salaries and employee benefits

$

16,639

$

16,275

$

364

Occupancy and equipment

3,396

3,378

18

FDIC insurance

915

915

Other real estate and loan related expenses

584

781

(197)

Advertising and marketing

302

336

(34)

Data processing and technology

2,465

2,458

7

Professional services

924

1,136

(212)

Amortization of intangibles

612

643

(31)

Merger related and restructuring expenses

Other

2,716

3,773

(1,057)

Total noninterest expense

$

28,553

$

29,695

$

(1,142)

Income Tax Expense

Income tax expense was $2.6 million for the first quarter of 2024, an increase of $990 thousand, compared to $1.6 million for the prior quarter.

The effective tax rate was 21.94% for the first quarter of 2024 and 20.95% for the prior quarter.

Balance Sheet Trends

Total assets at March 31, 2024 were $4.95 billion compared to $4.83 billion at December 31, 2023.  The $125.3 million increase is primarily attributable to increases in cash and cash equivalents of $125.7 million and loans and leases of $33.1  Asset increases were offset by a decrease in securities of $35.1 million.

Total liabilities increased to $4.49 billion at March 31, 2024 from $4.37 billion at December 31, 2023.  The increase of $118.4 million was primarily from organic deposit growth of $126.3 million, offset by a decrease in borrowings of $3.2 million and other liabilities of $4.7 million.

Shareholders’ equity at March 31, 2024, totaled $466.8 million, an increase of $6.9 million, from December 31, 2023.  The increase in shareholders’ equity was primarily driven by net income of $9.4 million for the three months ended March 31, 2024, offset by the negative change of $1.5 million in accumulated other comprehensive income and dividends paid of $1.3 million.  Tangible book value per share was $21.12 at March 31, 2024, compared to $20.76 at December 31, 2023.  Tangible common equity1 as a percentage of tangible assets1 was 7.43% at March 31, 2024, compared with 7.47% at December 31, 2023.

The following table presents selected balance sheet information for the periods indicated (dollars in thousands):

Mar

Dec

Increase

Selected Balance Sheet Information

2024

2023

(Decrease)

Total assets

$

4,954,690

$

4,829,387

$

125,303

Total liabilities

4,487,894

4,369,501

118,393

Total equity

466,796

459,886

6,910

Securities

654,516

689,646

(35,130)

Loans and leases

3,477,555

3,444,462

33,093

Deposits

4,394,121

4,267,854

126,267

Borrowings

9,849

13,078

(3,229)

Conference Call Information

SmartFinancial issued this earnings release for the first quarter of 2024 on Monday, April 22, 2024, and will host a conference call on Tuesday, April 23, 2024, at 10:00 a.m. ET.  To access this interactive teleconference, dial (833) 470-1428 or (404) 975-4839 and entering the access code, 060240.  A replay of the conference call will be available through June 22, 2024, by dialing (866) 813-9403 or (929) 458-6194 and entering the access code, 672905.  Conference call materials will be published on the Company’s webpage located at http://www.smartfinancialinc.com/CorporateProfile, at 9:00 a.m. ET prior to the conference call.

About SmartFinancial, Inc.

SmartFinancial, Inc., based in Knoxville, Tennessee, is the bank holding company for SmartBank. SmartBank is a full-service commercial bank founded in 2007, with branches across Tennessee, Alabama, and Florida.  Recruiting the best people, delivering exceptional client service, strategic branching, and a disciplined approach to lending have contributed to SmartBank’s success. More information about SmartFinancial can be found on its website: www.smartfinancialinc.com.

Source

SmartFinancial, Inc.

Investor Contacts

Billy Carroll

President & CEO

(865) 868-0613   billy.carroll@smartbank.com

Ron Gorczynski

Executive Vice President, Chief Financial Officer

(865) 437-5724   ron.gorczynski@smartbank.com

Media Contact

Kelley Fowler

Senior Vice President, Public Relations & Marketing

(865) 868-0611    kelley.fowler@smartbank.com

Non-GAAP Financial Measures

Statements included in this earnings release include measures not recognized under U.S. generally accepted accounting principles (“GAAP”) and therefore are considered non-GAAP financial measures and should be read along with the accompanying tables, which provide a reconciliation of Non-GAAP financial measures to GAAP financial measures. SmartFinancial management uses several Non-GAAP financial measures, including: (i) operating earnings, (ii) operating return on average assets, (iii) operating pre-provision net revenue return on average assets, (iv) operating return on average shareholders’ equity, (v) return on average tangible common equity, (vi) operating return on average tangible common equity, (vii) operating efficiency ratio, (viii) operating noninterest income, (ix) operating pre-provision net revenue earnings, (x) operating noninterest expense, (xi) tangible common equity, (xii) average tangible common equity, (xiii) tangible book value per common share, (xiv) tangible assets; and ratios derived therefrom, in its analysis of the company’s performance. Operating earnings excludes the following from net income: securities gains and losses and merger related and restructuring expenses.  Operating return on average assets is the annualized operating earnings (Non-GAAP) divided by average assets.  Operating pre-provision net revenue return on average assets is the annualized operating pre-provision net revenue income earnings (Non-GAAP) by average assets. Operating return on average shareholders’ equity is the annualized operating earnings (Non-GAAP) divided by average equity. Return on average tangible common equity is the annualized net income divided by average tangible common equity (Non-GAAP). Operating return on average tangible common equity is the annualized operating earnings (Non-GAAP) divided by average tangible common equity (Non-GAAP). The operating efficiency ratio includes an adjustment for taxable equivalent yields and excludes securities gains and losses and merger related and restructuring expenses from the efficiency ratio. Operating noninterest income excludes the following from noninterest income: securities gains and losses.  Operating pre-provision net revenue earnings is net interest income plus operating noninterest income (Non-GAAP) less operating noninterest expense (Non-GAAP).  Operating noninterest interest income and operating noninterest expense exclude non-operating related income and expense items. A detailed reconciliation of these items are available in the Non-GAAP reconciliations. Tangible common equity (Non-GAAP) and average tangible common equity (Non-GAAP) excludes goodwill and other intangible assets from shareholders’ equity and average shareholders’ equity, respectively.  Tangible book value per common share (Non-GAAP) is tangible common equity (Non-GAAP) divided by common shares outstanding.  Tangible assets (Non-GAAP) excludes goodwill and other intangibles from total assets.  Management believes that Non-GAAP financial measures provide additional useful information that allows investors to evaluate the ongoing performance of the company and provide meaningful comparisons to its peers.  Management believes these Non-GAAP financial measures also enhance investors’ ability to compare period-to-period financial results and allow investors and company management to view our operating results excluding the impact of items that are not reflective of the underlying operating performance.  Non-GAAP financial measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider SmartFinancial’s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the company. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition as reported under GAAP.

Forward-Looking Statements

This news release may contain statements that are based on management’s current estimates or expectations of future events or future results, and that may be deemed to constitute forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995.  These statements are not historical in nature and can generally be identified by such words as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “may,” “estimate,” and similar expressions. All forward-looking statements are subject to risks, uncertainties, and other factors that may cause the actual results of SmartFinancial to differ materially from future results expressed or implied by such forward-looking statements. Such risks, uncertainties, and other factors include, among others, (1) risks associated with our growth strategy, including a failure to implement our growth plans or an inability to manage our growth effectively; (2) claims and litigation arising from our business activities and from the companies we acquire, which may relate to contractual issues, environmental laws, fiduciary responsibility, and other matters; (3) the risk that cost savings and revenue synergies from recently completed acquisitions may not be realized or may take longer than anticipated to realize; (4) disruption from recently completed acquisitions with customer, supplier, employee, or other business relationships; (5) our ability to successfully integrate the businesses acquired as part of previous acquisitions with the business of SmartBank; (6) changes in management’s plans for the future; (7) prevailing, or changes in, economic or political conditions, particularly in our market areas, including the effects of declines in the real estate market, high unemployment rates, inflationary pressures, elevated interest rates and slowdowns in economic growth, as well as the financial stress on borrowers as a result of the foregoing; (8) increased technology and cybersecurity risks, including generative artificial intelligence risks; (9) credit risk associated with our lending activities; (10) changes in loan demand, real estate values, or competition; (11) developments in our mortgage banking business, including loan modifications, general demand, and the effects of judicial or regulatory requirements or guidance; (12) changes in accounting principles, policies, or guidelines; (13) changes in applicable laws, rules, or regulations; (14) adverse results from current or future litigation, regulatory examinations or other legal and/or regulatory actions, including as a result of the Company’s participation in and execution of government programs related to the COVID-19 pandemic and related variants; (15) potential impacts of adverse developments in the banking industry highlighted by high-profile bank failures, including impacts on customer confidence, deposit outflows, liquidity and the regulatory response thereto; (16) significant turbulence or a disruption in the capital or financial markets and the effect of a fall in stock market prices on our investment securities; (17) the effects of war or other conflicts including the impacts related to or resulting from Russia’s military action in Ukraine or the conflict in Israel and surrounding areas; and (18) other general competitive, economic, political, and market factors, including those affecting our business, operations, pricing, products, or services. These and other factors that could cause results to differ materially from those described in the forward-looking statements can be found in SmartFinancial’s most recent annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, in each case filed with or furnished to the Securities and Exchange Commission (the “SEC”) and available on the SEC’s website (www.sec.gov). Undue reliance should not be placed on forward-looking statements.  SmartFinancial 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.

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information – (unaudited)

(dollars in thousands)

Ending Balances

Mar

Dec

Sep

Jun

Mar

2024

2023

2023

2023

2023

Assets:

Cash and cash equivalents

$

477,941

$

352,271

$

400,258

$

238,898

$

306,934

Securities available-for-sale, at fair value

474,347

408,410

385,131

540,308

560,418

Securities held-to-maturity, at amortized cost

180,169

281,236

282,313

283,564

284,776

Other investments

13,718

13,662

13,805

14,396

14,059

Loans held for sale

4,861

4,418

2,734

986

3,324

Loans and leases

3,477,555

3,444,462

3,378,999

3,337,790

3,281,787

Less: Allowance for credit losses

(34,203)

(35,066)

(33,687)

(32,747)

(32,279)

Loans and leases, net

3,443,352

3,409,396

3,345,312

3,305,043

3,249,508

Premises and equipment, net

92,694

92,963

92,020

92,351

92,190

Other real estate owned

696

517

1,370

1,708

1,708

Goodwill and other intangibles, net

106,537

107,148

107,792

108,439

109,114

Bank owned life insurance

83,957

83,434

82,914

82,419

81,938

Other assets

76,418

75,932

83,522

77,688

65,836

Total assets

$

4,954,690

$

4,829,387

$

4,797,171

$

4,745,800

$

4,769,805

Liabilities:

Deposits:

Noninterest-bearing demand

$

907,254

$

898,044

$

923,763

$

1,003,432

$

989,753

Interest-bearing demand

996,298

1,006,915

993,717

938,758

989,738

Money market and savings

1,952,410

1,812,427

1,766,409

1,720,202

1,761,847

Time deposits

538,159

550,468

562,620

537,192

488,208

Total deposits

4,394,121

4,267,854

4,246,509

4,199,584

4,229,546

Borrowings

9,849

13,078

14,117

15,496

16,546

Subordinated debt

42,120

42,099

42,078

42,057

42,036

Other liabilities

41,804

46,470

47,815

43,816

38,278

Total liabilities

4,487,894

4,369,501

4,350,519

4,300,953

4,326,406

Shareholders’ Equity:

Common stock

17,057

16,989

16,995

17,004

17,004

Additional paid-in capital

296,061

295,699

295,542

295,296

294,930

Retained earnings

181,103

173,105

168,271

167,564

160,085

Accumulated other comprehensive income (loss)

(27,425)

(25,907)

(34,156)

(35,017)

(28,620)

Total shareholders’ equity

466,796

459,886

446,652

444,847

443,399

Total liabilities & shareholders’ equity

$

4,954,690

$

4,829,387

$

4,797,171

$

4,745,800

$

4,769,805

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information – (unaudited)

(dollars in thousands except share and per share data)

Three Months Ended

Mar

Dec

Sep

Jun

Mar

2024

2023

2023

2023

2023

Interest income:

Loans and leases, including fees

$

50,020

$

48,767

$

47,539

$

45,446

$

44,728

Investment securities:

Taxable

4,548

4,344

4,335

4,335

3,651

Tax-exempt

352

352

356

357

353

Federal funds sold and other earning assets

4,863

4,032

3,045

1,956

4,446

Total interest income

59,783

57,495

55,275

52,094

53,178

Interest expense:

Deposits

27,035

24,926

23,433

19,554

16,346

Borrowings

128

162

210

339

224

Subordinated debt

899

890

626

626

626

Total interest expense

28,062

25,978

24,269

20,519

17,196

Net interest income

31,721

31,517

31,006

31,575

35,982

Provision for credit losses

(440)

1,571

795

113

550

Net interest income after provision for credit losses

32,161

29,946

30,211

31,462

35,432

Noninterest income:

Service charges on deposit accounts

1,612

1,673

1,736

1,657

1,445

Gain (loss) on sale of securities, net

(6,801)

Mortgage banking

280

227

309

332

172

Investment services

1,380

1,339

1,461

1,300

1,005

Insurance commissions

1,103

1,133

1,153

1,139

1,259

Interchange and debit card transaction fees

1,253

1,370

1,357

1,347

1,383

Other

2,752

1,837

1,476

1,355

1,661

Total noninterest income

8,380

7,579

691

7,130

6,925

Noninterest expense:

Salaries and employee benefits

16,639

16,275

16,785

15,947

16,742

Occupancy and equipment

3,396

3,378

3,547

3,318

3,208

FDIC insurance

915

915

825

875

541

Other real estate and loan related expense

584

781

603

441

572

Advertising and marketing

302

336

346

305

355

Data processing and technology

2,465

2,458

2,378

2,235

2,163

Professional services

924

1,136

735

764

807

Amortization of intangibles

612

643

647

675

659

Merger related and restructuring expenses

110

Other

2,716

3,773

2,540

2,850

2,482

Total noninterest expense

28,553

29,695

28,516

27,410

27,529

Income before income taxes

11,988

7,830

2,386

11,182

14,828

Income tax expense

2,630

1,640

319

2,346

3,328

Net income

$

9,358

$

6,190

$

2,067

$

8,836

$

11,500

Earnings per common share:

Basic

$

0.56

$

0.37

$

0.12

$

0.53

$

0.69

Diluted

$

0.55

$

0.37

$

0.12

$

0.52

$

0.68

Weighted average common shares outstanding:

Basic

16,849,735

16,814,647

16,807,548

16,806,389

16,791,406

Diluted

16,925,408

16,918,234

16,918,635

16,898,091

16,896,494

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information – (unaudited)

(dollars in thousands)

YIELD ANALYSIS

Three Months Ended

March 31, 2024

December 31, 2023

March 31, 2023

Average

Yield/

Average

Yield/

Average

Yield/

Balance

Interest

Cost

Balance

Interest

Cost

Balance

Interest

Cost

Assets:

Loans and leases, including fees

$

3,458,109

$

50,020

5.82

%

$

3,408,430

$

48,767

5.68

%

$

3,258,452

$

44,728

5.57

%

Taxable securities

620,805

4,548

2.95

%

618,511

4,344

2.79

%

723,540

3,651

2.05

%

Tax-exempt securities1

64,161

445

2.79

%

63,767

445

2.77

%

65,547

447

2.77

%

Federal funds sold and other earning assets

353,913

4,863

5.53

%

289,896

4,032

5.52

%

378,253

4,446

4.77

%

Total interest-earning assets

4,496,988

59,876

5.36

%

4,380,604

57,588

5.22

%

4,425,792

53,272

4.88

%

Noninterest-earning assets

380,231

386,202

359,996

Total assets

$

4,877,219

$

4,766,806

$

4,785,788

Liabilities and Shareholders’ Equity:

Interest-bearing demand deposits

$

996,147

6,060

2.45

%

$

974,637

5,631

2.29

%

$

944,132

4,227

1.82

%

Money market and savings deposits

1,904,855

16,149

3.41

%

1,764,826

14,556

3.27

%

1,820,455

10,381

2.31

%

Time deposits

541,792

4,826

3.58

%

556,996

4,739

3.38

%

469,361

1,738

1.50

%

Total interest-bearing deposits

3,442,794

27,035

3.16

%

3,296,459

24,926

3.00

%

3,233,948

16,346

2.05

%

Borrowings

11,245

128

4.58

%

13,420

162

4.79

%

16,858

224

5.39

%

Subordinated debt

42,107

899

8.59

%

42,087

890

8.39

%

42,022

626

6.04

%

Total interest-bearing liabilities

3,496,146

28,062

3.23

%

3,351,966

25,978

3.07

%

3,292,828

17,196

2.12

%

Noninterest-bearing deposits

872,840

915,259

1,015,670

Other liabilities

47,085

50,055

44,908

Total liabilities

4,416,071

4,317,280

4,353,406

Shareholders’ equity

461,148

449,526

432,382

Total liabilities and shareholders’ equity

$

4,877,219

$

4,766,806

$

4,785,788

Net interest income, taxable equivalent

$

31,814

$

31,610

$

36,076

Interest rate spread

2.13

%

2.14

%

2.76

%

Tax equivalent net interest margin

2.85

%

2.86

%

3.31

%

Percentage of average interest-earning assets to average interest-bearing liabilities

128.63

%

130.69

%

134.41

%

Percentage of average equity to average assets

9.46

%

9.43

%

9.03

%

1 Yields computed on tax-exempt instruments on a tax equivalent basis include $93 thousand, $94 thousand, and $94 thousand of taxable equivalent income for the quarters ended March 31, 2024, December 31, 2023, and March 31, 2023, respectively.

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information – (unaudited)

(dollars in thousands)

As of and for The Three Months Ended

Mar

Dec

Sep

Jun

Mar

2024

2023

2023

2023

2023

Composition of Loans and Leases:

Commercial real estate:

Owner occupied

$

804,557

$

798,416

$

776,402

$

769,978

$

764,166

Non-owner occupied

938,648

940,789

890,774

871,779

871,368

Commercial real estate, total

1,743,205

1,739,205

1,667,176

1,641,757

1,635,534

Commercial & industrial

667,903

645,918

617,115

594,427

571,153

Construction & land development

321,860

327,185

373,068

394,742

386,253

Consumer real estate

659,209

649,867

638,518

624,828

606,343

Leases

71,909

68,752

68,538

66,401

67,701

Consumer and other

13,469

13,535

14,584

15,635

14,803

Total loans and leases

$

3,477,555

$

3,444,462

$

3,378,999

$

3,337,790

$

3,281,787

Asset Quality and Additional Loan Data:

Nonperforming loans and leases

$

6,266

$

8,101

$

4,163

$

3,722

$

3,247

Other real estate owned

696

517

1,370

1,708

1,708

Other repossessed assets

2,033

1,117

348

282

66

Total nonperforming assets

$

8,995

$

9,735

$

5,881

$

5,712

$

5,021

Modified loans and leases1 not included in nonperforming loans and leases

$

4,413

$

4,245

$

2,376

$

657

$

97

Net charge-offs to average loans and leases (annualized)

0.09

%

0.04

%

0.04

%

(0.01)

%

0.03

%

Allowance for credit losses to loans and leases

0.98

%

1.02

%

1.00

%

0.98

%

0.98

%

Nonperforming loans and leases to total loans and leases, gross

0.18

%

0.24

%

0.12

%

0.11

%

0.10

%

Nonperforming assets to total assets

0.18

%

0.20

%

0.12

%

0.12

%

0.11

%

Capital Ratios:

Equity to Assets

9.42

%

9.52

%

9.31

%

9.37

%

9.30

%

Tangible common equity to tangible assets (Non-GAAP)2

7.43

%

7.47

%

7.23

%

7.25

%

7.17

%

SmartFinancial, Inc.3

Tier 1 leverage

8.23

%

8.27

%

8.13

%

8.24

%

7.91

%

Common equity Tier 1

10.20

%

10.16

%

10.07

%

10.12

%

9.95

%

Tier 1 capital

10.20

%

10.16

%

10.07

%

10.12

%

9.95

%

Total capital

11.85

%

11.80

%

11.90

%

11.94

%

11.77

%

SmartBank

 

Estimated4

Tier 1 leverage

9.07

%

9.18

%

9.00

%

9.18

%

8.87

%

Common equity Tier 1

11.23

%

11.26

%

11.15

%

11.27

%

11.15

%

Tier 1 capital

11.23

%

11.26

%

11.15

%

11.27

%

11.15

%

Total capital

12.00

%

12.02

%

11.87

%

11.97

%

11.85

%

1Borrowers that have experienced financial difficulty.

2Total common equity less intangibles divided by total assets less intangibles.  See reconciliation of Non-GAAP measures.

3All periods presented are estimated.

4 Current period capital ratios are estimated as of the date of this earnings release.

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information – (unaudited)

(dollars in thousands except share and per share data)

As of and for The

Three Months Ended

Mar

Dec

Sep

Jun

Mar

2024

2023

2023

2023

2023

Selected Performance Ratios (Annualized):

Return on average assets

0.77

%

0.52

%

0.17

%

0.75

%

0.97

%

Return on average shareholders’ equity

8.16

%

5.46

%

1.84

%

7.98

%

10.79

%

Return on average tangible common equity¹

10.62

%

7.18

%

2.43

%

10.57

%

14.45

%

Noninterest income / average assets

0.69

%

0.63

%

0.06

%

0.61

%

0.59

%

Noninterest expense / average assets

2.35

%

2.47

%

2.37

%

2.34

%

2.33

%

Efficiency ratio

71.20

%

75.95

%

89.96

%

70.82

%

64.16

%

Operating Selected Performance Ratios (Annualized):

Operating return on average assets1

0.69

%

0.57

%

0.60

%

0.75

%

0.97

%

Operating PPNR return on average assets1

0.84

%

0.86

%

0.84

%

0.96

%

1.30

%

Operating return on average shareholders’ equity1

7.29

%

6.07

%

6.41

%

7.98

%

10.79

%

Operating return on average tangible common equity1

9.49

%

7.98

%

8.46

%

10.57

%

14.45

%

Operating efficiency ratio1

73.50

%

73.41

%

73.60

%

70.64

%

64.02

%

Operating noninterest income / average assets1

0.58

%

0.63

%

0.62

%

0.61

%

0.59

%

Operating noninterest expense / average assets1

2.35

%

2.39

%

2.36

%

2.34

%

2.33

%

Selected Interest Rates and Yields:

Yield on loans and leases, excluding loan fees

5.71

%

5.61

%

5.52

%

5.39

%

5.20

%

Yield on loans and leases

5.82

%

5.68

%

5.61

%

5.51

%

5.57

%

Yield on earning assets, FTE

5.36

%

5.22

%

4.99

%

4.82

%

4.88

%

Cost of interest-bearing deposits

3.16

%

3.00

%

2.84

%

2.46

%

2.05

%

Cost of total deposits

2.52

%

2.35

%

2.20

%

1.89

%

1.56

%

Cost of interest-bearing liabilities

3.23

%

3.07

%

2.89

%

2.53

%

2.12

%

Net interest margin, FTE

2.85

%

2.86

%

2.81

%

2.93

%

3.31

%

Per Common Share:

Net income, basic

$

0.56

$

0.37

$

0.12

$

0.53

$

0.69

Net income, diluted

0.55

0.37

0.12

0.52

0.68

Operating earnings, basic¹

0.50

0.41

0.43

0.53

0.69

Operating earnings, diluted¹

0.49

0.41

0.43

0.52

0.68

Book value

27.37

27.07

26.28

26.16

26.08

Tangible book value¹

21.12

20.76

19.94

19.78

19.66

Common shares outstanding

17,056,704

16,988,879

16,994,543

17,004,092

17,004,092

¹Non-GAAP measure. See reconciliation of Non-GAAP measures.

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information – (unaudited)

(dollars in thousands)

NON-GAAP RECONCILIATIONS

Three Months Ended

Mar

Dec

Sep

Jun

Mar

2024

2023

2023

2023

2023

Operating Earnings:

Net income (GAAP)

$

9,358

$

6,190

$

2,067

$

8,836

$

11,500

Noninterest income:

Securities (gains) losses, net

6,801

Gain on sale of former branch building

(1,346)

Noninterest expenses:

Donation of a former branch location

250

Accruals for pending litigation

675

Merger related and restructuring expenses

110

Income taxes:

Income tax effect of adjustments

348

(239)

(1,785)

Operating earnings (Non-GAAP)

$

8,360

$

6,876

$

7,193

$

8,836

$

11,500

Operating earnings per common share (Non-GAAP):

Basic

$

0.50

$

0.41

$

0.43

$

0.53

$

0.69

Diluted

0.49

0.41

0.43

0.52

0.68

Operating Noninterest Income:

Noninterest income (GAAP)

$

8,380

$

7,579

$

691

$

7,130

$

6,925

Securities (gains) losses, net

6,801

Gain on sale of former branch building

(1,346)

Operating noninterest income (Non-GAAP)

$

7,034

$

7,579

$

7,492

$

7,130

$

6,925

Operating noninterest income (Non-GAAP)/average assets1

0.58

%

0.63

%

0.62

%

0.61

%

0.59

%

Operating Noninterest Expense:

Noninterest expense (GAAP)

$

28,553

$

29,695

$

28,516

$

27,410

$

27,529

Donation of a former branch location

(250)

Accruals for pending litigation

(675)

Merger related and restructuring expenses

(110)

Operating noninterest expense (Non-GAAP)

$

28,553

$

28,770

$

28,406

$

27,410

$

27,529

Operating noninterest expense (Non-GAAP)/average assets2

2.35

%

2.39

%

2.36

%

2.34

%

2.33

%

Operating Pre-provision Net revenue (“PPNR”) Earnings:

Net interest income (GAAP)

$

31,721

$

31,517

$

31,006

$

31,575

$

35,982

Operating noninterest income (Non-GAAP)

7,034

7,579

7,492

7,130

6,925

Operating noninterest expense (Non-GAAP)

(28,553)

(28,770)

(28,406)

(27,410)

(27,529)

Operating PPNR earnings (Non-GAAP)

$

10,202

$

10,326

$

10,092

$

11,295

$

15,378

Non-GAAP Return Ratios:

Operating return on average assets (Non-GAAP)3

0.69

%

0.57

%

0.60

%

0.75

%

0.97

%

Operating PPNR return on average assets (Non-GAAP)4

0.84

%

0.86

%

0.84

%

0.96

%

1.30

%

Return on average tangible common equity (Non-GAAP)5

10.62

%

7.18

%

2.43

%

10.57

%

14.45

%

Operating return on average shareholders’ equity (Non-GAAP)6

7.29

%

6.07

%

6.41

%

7.98

%

10.79

%

Operating return on average tangible common equity (Non-GAAP)7

9.49

%

7.98

%

8.46

%

10.57

%

14.45

%

Operating Efficiency Ratio:

Efficiency ratio (GAAP)

71.20

%

75.95

%

89.96

%

70.82

%

64.16

%

Adjustment for taxable equivalent yields

(0.17)

%

(0.18)

%

(0.27)

%

(0.18)

%

(0.14)

%

Adjustment for securities gains (losses)

%

%

(15.89)

%

%

%

Adjustment for sale of branch location

2.46

%

%

%

%

%

Adjustment for donation of a former branch location

%

(0.64)

%

%

%

%

Adjustment for accruals for pending litigation

%

(1.72)

%

%

%

%

Adjustment for merger related income and costs

%

%

(0.20)

%

%

%

Operating efficiency ratio (Non-GAAP)

73.50

%

73.41

%

73.60

%

70.64

%

64.02

%

1Operating noninterest income (Non-GAAP) is annualized and divided by average assets.

2Operating noninterest expense (Non-GAAP) is annualized and divided by average assets.

3Operating return on average assets (Non-GAAP) is the annualized operating earnings (Non-GAAP) divided by average assets.

4Operating PPNR return on average assets (Non-GAAP) is the annualized operating PPNR earnings (Non-GAAP) divided by average assets.   

5Return on average tangible common equity (Non-GAAP) is the annualized net income divided by average tangible common equity (Non-GAAP).

6Operating return on average shareholders’ equity (Non-GAAP) is the annualized operating earnings (Non-GAAP) divided by average equity.

7Operating return on average tangible common equity (Non-GAAP) is the annualized operating earnings (Non-GAAP) divided by average tangible common equity (Non-GAAP).

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information – (unaudited)

(dollars in thousands)

NON-GAAP RECONCILIATIONS

Three Months Ended

Mar

Dec

Sep

Jun

Mar

2024

2023

2023

2023

2023

Tangible Common Equity:

Shareholders’ equity (GAAP)

$

466,796

$

459,886

$

446,652

$

444,847

$

443,399

Less goodwill and other intangible assets

106,537

107,148

107,792

108,439

109,114

Tangible common equity (Non-GAAP)

$

360,259

$

352,738

$

338,860

$

336,408

$

334,285

Average Tangible Common Equity:

Average shareholders’ equity (GAAP)

$

461,148

$

449,526

$

445,432

$

444,283

$

432,382

Less average goodwill and other intangible assets

106,920

107,551

108,194

108,851

109,537

Average tangible common equity (Non-GAAP)

$

354,228

$

341,975

$

337,238

$

335,432

$

322,845

Tangible Book Value per Common Share:

Book value per common share (GAAP)

$

27.37

$

27.07

$

26.28

$

26.16

$

26.08

Adjustment due to goodwill and other intangible assets

(6.25)

(6.31)

(6.34)

(6.38)

(6.42)

Tangible book value per common share (Non-GAAP)1

$

21.12

$

20.76

$

19.94

$

19.78

$

19.66

Tangible Common Equity to Tangible Assets:

Total Assets (GAAP)

$

4,954,690

$

4,829,387

$

4,797,171

$

4,745,800

$

4,769,805

Less goodwill and other intangibles

106,537

107,148

107,792

108,439

109,114

Tangible Assets (Non-GAAP)

$

4,848,153

$

4,722,239

$

4,689,379

$

4,637,361

$

4,660,691

Tangible common equity to tangible assets (Non-GAAP)

7.43%

7.47%

7.23%

7.25%

7.17%

1Tangible book value per share (Non-GAAP) is computed by dividing total shareholders’ equity, less goodwill and other intangible assets, by common shares outstanding.