SmartFinancial Announces Results for the First Quarter 2024

KNOXVILLE, Tenn., April 22, 2024 (GLOBE NEWSWIRE) — 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 earnings1 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

______________________________
1
Non-GAAP measure. See “Non-GAAP Financial Measures” for more information and see the Non-GAAP reconciliation

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 share1 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.

______________________________
1 Non-GAAP measure. See “Non-GAAP Financial Measures” for more information and see the Non-GAAP reconciliation

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   [email protected]  
   
Ron Gorczynski  
Executive Vice President, Chief Financial Officer  
(865) 437-5724   [email protected]  
   
Media Contact  
Kelley Fowler  
Senior Vice President, Public Relations & Marketing  
(865) 868-0611   [email protected]  
   

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   %  

1Yields 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.
4Current 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.


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