SMBK SmartFinancial Inc

SmartFinancial, Inc. ("SmartFinancial" or the "Company"; NYSE: SMBK), today announced net income of $8.0 million, or $0.48 per diluted common share, for the second quarter of 2024, compared to net income of $8.8 million, or $0.52 per diluted common share, for the second quarter of 2023, and compared to prior quarter net income of $9.4 million, or $0.55 per diluted common share. Operating earnings1, which excludes non-recurring income, net of tax adjustments, totaled $7.8 million, or $0.46 per diluted common share, in the second quarter of 2024, compared to $8.8 million, or $0.52 per diluted common share, in the second quarter of 2023, and compared to $8.4 million, or $0.49 per diluted common share, in the first quarter of 2024.

Highlights for the Second Quarter of 2024

• Operating earnings1 of $7.8 million, or $0.46 per diluted common share
• Net organic loan and lease growth of $97 million with 11% annualized quarter-over-quarter increase
• Quarter-over-quarter net tax equivalent interest margin expansion of 12 basis points to 2.97%
• 10% annualized quarter-over-quarter increase in tangible book value per common share1
• 136,195 shares repurchased at a weighted average price of $21.57
• Credit quality remains solid with nonperforming assets to total assets of 0.20%

___________________________________1 Non-GAAP measure. See “Non-GAAP Financial Measures” for more information and see the Non-GAAP reconciliations

Billy Carroll, President & CEO, stated: “Our Company continued to gain momentum with a very nice second quarter highlighted by solid growth in operating revenue and a 10% annualized increase in tangible book value per share quarter over quarter.  We also took advantage of our liquidity position, growing loans at an 11% quarterly annualized pace.  Margin inflection accelerated during the quarter, and we look forward to seeing that trend continue.  The sales energy around our Company is very strong and our outlook for the second half of 2024 remains bullish as we gain further operating leverage.”

SmartFinancial's Chairman, Miller Welborn, concluded: “The Board of Directors was pleased to see operating leverage expansion and strong loan growth during the second quarter. The Company’s markets continue to provide great organic growth opportunities that we look forward to winning. We continue to strategically progress towards our longer-term financial objectives and this quarter’s margin expansion and expense control is a good demonstration of our team’s ability to execute our plan. We are confident in our team and look forward to continued improvement as the year progresses.”

Net Interest Income and Net Interest Margin

Net interest income was $32.8 million for the second quarter of 2024, compared to $31.7 million for the prior quarter. Average earning assets totaled $4.5 billion for the current and prior quarters. The categories of average earnings assets changed quarter-over-quarter, primarily from an increase in average loans and leases of $46.2 million, offset by a decrease in average securities of $40.8 million and average interest-earning cash of $7.5 million. Average interest-bearing liabilities decreased by $19.8 million from the prior quarter, attributable to a decrease in average deposits of $21.3 million, offset by an increase in average borrowings of $1.4 million.

The tax equivalent net interest margin was 2.97% for the second quarter of 2024, compared to 2.85% for the prior quarter. The tax equivalent net interest margin was positively impacted by the increased yield on interest-earning assets, quarter-over-quarter, coupled with a slower rise on the cost of interest-bearing liabilities, quarter-over-quarter. The yield on loans and leases, excluding loan fees, on a fully tax equivalent basis (“FTE”) was 5.80% for the second quarter, compared to 5.71% for the prior quarter.

The cost of total deposits for the second quarter of 2024 was 2.56% compared to 2.52% in the prior quarter. The cost of interest-bearing liabilities increased to 3.29% for the second quarter of 2024, compared to 3.23% for the prior quarter. The cost of average interest-bearing deposits was 3.23% for the second quarter of 2024, compared to 3.16% for the prior quarter, an increase of 7 basis points.  

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

		Three Months Ended
		Jun			Mar			Increase
Selected Interest Rates and Yields		2024			2024			(Decrease)
Yield on loans and leases, excluding loan fees, FTE		5.80		%	5.71		%	0.09		%
Yield on loans and leases, FTE		5.87		%	5.82		%	0.05		%
Yield on earning assets, FTE		5.52		%	5.36		%	0.16		%
Cost of interest-bearing deposits		3.23		%	3.16		%	0.07		%
Cost of total deposits		2.56		%	2.52		%	0.04		%
Cost of interest-bearing liabilities		3.29		%	3.23		%	0.06		%
Net interest margin, FTE		2.97		%	2.85		%	0.12		%

Provision for Credit Losses on Loans and Leases and Credit Quality

At June 30, 2024, the allowance for credit losses was $34.7 million. The allowance for credit losses to total loans and leases was 0.97% as of June 30, 2024, compared to 0.98% as of March 31, 2024.  

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

		Three Months Ended
		Jun				Mar				Increase
Provision for Credit Losses on Loans and Leases Rollforward			2024				2024			(Decrease)
Beginning balance		$	34,203			$	35,066			$	(863	)
Charge-offs			(457	)			(920	)			463
Recoveries			48				135				(87	)
Net (charge-offs) recoveries			(409	)			(785	)			376
Provision for credit losses (1)			896				(78	)			974
Ending balance		$	34,690			$	34,203			$	487
Allowance for credit losses to total loans and leases, gross			0.97		%		0.98		%		(0.01	)	%

(1)

The current quarter-ended and prior quarter-ended excludes unfunded commitments release of $13 thousand and $362 thousand, respectively. At June 30, 2024, the unfunded commitment liability totaled $2.0 million.

Nonperforming loans and leases as a percentage of total loans and leases was 0.19% as of June 30, 2024, an increase of 1 basis point from the 0.18% reported in the first quarter of 2024. 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 0.20% as of June 30, 2024, and 0.18% on March 31, 2024.

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

		Three Months Ended
			Jun				Mar			Increase
Credit Quality			2024				2024			(Decrease)
Nonaccrual loans and leases		$	6,432			$	6,171			$	261
Loans and leases past due 90 days or more and still accruing			210				95				115
Total nonperforming loans and leases			6,642				6,266				376
Other real estate owned			688				696				(8	)
Other repossessed assets			2,645				2,033				612
Total nonperforming assets		$	9,975			$	8,995			$	980
Nonperforming loans and leases to total loans and leases, gross			0.19		%		0.18		%		0.01		%
Nonperforming assets to total assets			0.20		%		0.18		%		0.02		%

Noninterest Income

Noninterest income decreased $776 thousand to $7.6 million for the second quarter of 2024 compared to $8.4 million for the prior quarter. The current quarter decrease was primarily associated with the $1.3 million pre-tax gain on the sale of a former branch building in the prior quarter, offset by a $283 thousand pre-tax gain on the sale of a bank property in the current quarter.  

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

		Three Months Ended
			Jun				Mar			Increase
Noninterest Income			2024				2024			(Decrease)
Service charges on deposit accounts		$	1,692			$	1,612			$	80
Mortgage banking income			348				280				68
Investment services			1,302				1,380				(78	)
Insurance commissions			1,284				1,103				181
Interchange and debit card transaction fees			1,343				1,253				90
Other			1,635				2,752				(1,117	)
Total noninterest income		$	7,604			$	8,380			$	(776	)

Noninterest Expense

Noninterest expense increased $648 thousand to $29.2 million for the second quarter of 2024 compared to $28.6 million for the prior quarter. The current quarter increase was primarily related to an increase in salaries and employee benefits related to incentive accruals for production performance.

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

		Three Months Ended
			Jun				Mar			Increase
Noninterest Expense			2024				2024			(Decrease)
Salaries and employee benefits		$	17,261			$	16,639			$	622
Occupancy and equipment			3,324				3,396				(72	)
FDIC insurance			825				915				(90	)
Other real estate and loan related expenses			538				584				(46	)
Advertising and marketing			295				302				(7	)
Data processing and technology			2,452				2,465				(13	)
Professional services			1,064				924				140
Amortization of intangibles			608				612				(4	)
Other			2,834				2,716				118
Total noninterest expense		$	29,201			$	28,553			$	648

Income Tax Expense

Income tax expense was $2.3 million for the second quarter of 2024, a decrease of $299 thousand, compared to $2.6 million for the prior quarter.

The effective tax rate was 22.56% for the second quarter of 2024 and 21.94% for the prior quarter.

Balance Sheet Trends

Total assets at June 30, 2024 were $4.89 billion compared to $4.83 billion at December 31, 2023. The $61.6 million increase is primarily attributable to increases loans and leases of $129.7 million, offset by a decrease in securities of $59.8 million and cash and cash equivalents of $9.4 million.

Total liabilities increased to $4.42 billion at June 30, 2024 from $4.37 billion at December 31, 2023. The increase of $49.0 million was primarily from organic deposit growth of $48.8 million.

Shareholders' equity at June 30, 2024, totaled $472.5 million, an increase of $12.6 million, from December 31, 2023. The increase in shareholders' equity was primarily driven by net income of $17.4 million for the six months ended June 30, 2024, offset by dividends paid of $2.7 million and repurchase of the Company’s stock of $3.0 million. Tangible book value per share1 was $21.66 at June 30, 2024, compared to $20.76 at December 31, 2023. Tangible common equity1 as a percentage of tangible assets1 was 7.66% at June 30, 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):

		Jun				Dec				Increase
Selected Balance Sheet Information		2024				2023				(Decrease)
Total assets		$	4,891,009			$	4,829,387			$	61,622
Total liabilities			4,418,544				4,369,501				49,043
Total equity			472,465				459,886				12,579
Securities			629,817				689,646				(59,829	)
Loans and leases			3,574,158				3,444,462				129,696
Deposits			4,316,656				4,267,854				48,802
Borrowings			12,732				13,078				(346	)

Conference Call Information

SmartFinancial issued this earnings release for the second quarter of 2024 on Monday, July 22, 2024, and will host a conference call on Tuesday, July 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, 533803. A replay of the conference call will be available through August 22, 2024, by dialing (866) 813-9403 or (929) 458-6194 and entering the access code, 897395. 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 (“Non-GAAP”) 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 and ratios derived therefrom in its analysis of the Company's performance, including:

	(i)	Operating earnings
	(ii)	Operating noninterest income
	(iii)	Operating noninterest expense
	(iv)	Operating pre-provision net revenue (“PPNR”) earnings
	(v)	Tangible common equity
	(vi)	Average tangible common equity
	(vii)	Tangible book value per common share
	(viii)	Tangible assets

Operating earnings, operating noninterest income, operating noninterest expense and operating PPNR exclude non-operating related income and expense items, respectively. Tangible common equity and average tangible common equity excludes goodwill and other intangible assets from shareholders' equity and average shareholders' equity, respectively. Tangible book value per common share is tangible common equity divided by common shares outstanding. Tangible assets excludes goodwill and other intangibles from total assets. A detailed reconciliation of these items and ratios derived therefrom is available in the Non-GAAP reconciliations.

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 also believes these Non-GAAP financial measures 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)	our ability to anticipate interest rate changes and manage interest rate risk (including the impact of higher interest rates on macroeconomic conditions, competition, and the cost of doing business and the impact of prolonged elevated interest rates on our financial projections, models and guidance);
	(9)	increased technology and cybersecurity risks, including generative artificial intelligence risks;
	(10)	credit risk associated with our lending activities;
	(11)	changes in loan demand, real estate values, or competition;
	(12)	developments in our mortgage banking business, including loan modifications, general demand, and the effects of judicial or regulatory requirements or guidance;
	(13)	changes in accounting principles, policies, or guidelines;
	(14)	changes in applicable laws, rules, or regulations;
	(15)	adverse results from current or future litigation, regulatory examinations or other legal and/or regulatory actions;
	(16)	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;
	(17)	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;
	(18)	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
	(19)	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 SubsidiaryCondensed Consolidated Financial Information - (unaudited)(dollars in thousands)

	Ending Balances
	Jun				Mar				Dec				Sep				Jun
	2024				2024				2023				2023				2023
Assets:
Cash and cash equivalents	$	342,835			$	477,941			$	352,271			$	400,258			$	238,898
Securities available-for-sale, at fair value		500,821				474,347				408,410				385,131				540,308
Securities held-to-maturity, at amortized cost		128,996				180,169				281,236				282,313				283,564
Other investments		13,780				13,718				13,662				13,805				14,396
Loans held for sale		3,103				4,861				4,418				2,734				986
Loans and leases		3,574,158				3,477,555				3,444,462				3,378,999				3,337,790
Less: Allowance for credit losses		(34,690	)			(34,203	)			(35,066	)			(33,687	)			(32,747	)
Loans and leases, net		3,539,468				3,443,352				3,409,396				3,345,312				3,305,043
Premises and equipment, net		91,315				92,694				92,963				92,020				92,351
Other real estate owned		688				696				517				1,370				1,708
Goodwill and other intangibles, net		105,929				106,537				107,148				107,792				108,439
Bank owned life insurance		84,483				83,957				83,434				82,914				82,419
Other assets		79,591				76,418				75,932				83,522				77,688
Total assets	$	4,891,009			$	4,954,690			$	4,829,387			$	4,797,171			$	4,745,800
Liabilities:
Deposits:
Noninterest-bearing demand	$	903,300			$	907,254			$	898,044			$	923,763			$	1,003,432
Interest-bearing demand		988,057				996,298				1,006,915				993,717				938,758
Money market and savings		1,901,281				1,952,410				1,812,427				1,766,409				1,720,202
Time deposits		524,018				538,159				550,468				562,620				537,192
Total deposits		4,316,656				4,394,121				4,267,854				4,246,509				4,199,584
Borrowings		12,732				9,849				13,078				14,117				15,496
Subordinated debt		42,142				42,120				42,099				42,078				42,057
Other liabilities		47,014				41,804				46,470				47,815				43,816
Total liabilities		4,418,544				4,487,894				4,369,501				4,350,519				4,300,953
Shareholders' Equity:
Common stock		16,926				17,057				16,989				16,995				17,004
Additional paid-in capital		293,586				296,061				295,699				295,542				295,296
Retained earnings		187,751				181,103				173,105				168,271				167,564
Accumulated other comprehensive loss		(25,798	)			(27,425	)			(25,907	)			(34,156	)			(35,017	)
Total shareholders' equity		472,465				466,796				459,886				446,652				444,847
Total liabilities & shareholders' equity	$	4,891,009			$	4,954,690			$	4,829,387			$	4,797,171			$	4,745,800

SmartFinancial, Inc. and SubsidiaryCondensed Consolidated Financial Information - (unaudited)(dollars in thousands except share and per share data)

	Three Months Ended																				Six Months Ended
	Jun				Mar				Dec				Sep				Jun				Jun				Jun
	2024				2024				2023				2023				2023				2024				2023
Interest income:
Loans and leases, including fees	$	50,853			$	50,020			$	48,767			$	47,539			$	45,446			$	100,873			$	90,173
Investment securities:
Taxable		5,320				4,548				4,344				4,335				4,335				9,869				7,986
Tax-exempt		353				352				352				356				357				705				709
Federal funds sold and other earning assets		4,759				4,863				4,032				3,045				1,956				9,620				6,405
Total interest income		61,285				59,783				57,495				55,275				52,094				121,067				105,273
Interest expense:
Deposits		27,439				27,035				24,926				23,433				19,554				54,474				35,900
Borrowings		148				128				162				210				339				276				564
Subordinated debt		884				899				890				626				626				1,782				1,252
Total interest expense		28,471				28,062				25,978				24,269				20,519				56,532				37,716
Net interest income		32,814				31,721				31,517				31,006				31,575				64,535				67,557
Provision for credit losses		883				(440	)			1,571				795				113				443				663
Net interest income after provision for credit losses		31,931				32,161				29,946				30,211				31,462				64,092				66,894
Noninterest income:
Service charges on deposit accounts		1,692				1,612				1,673				1,736				1,657				3,304				3,102
Loss on sale of securities, net		—				—				—				(6,801	)			—				—				—
Mortgage banking		348				280				227				309				332				628				504
Investment services		1,302				1,380				1,339				1,461				1,300				2,682				2,305
Insurance commissions		1,284				1,103				1,133				1,153				1,139				2,387				2,398
Interchange and debit card transaction fees		1,343				1,253				1,370				1,357				1,347				2,596				2,730
Other		1,635				2,752				1,837				1,476				1,355				4,387				3,016
Total noninterest income		7,604				8,380				7,579				691				7,130				15,984				14,055
Noninterest expense:
Salaries and employee benefits		17,261				16,639				16,275				16,785				15,947				33,900				32,689
Occupancy and equipment		3,324				3,396				3,378				3,547				3,318				6,720				6,526
FDIC insurance		825				915				915				825				875				1,740				1,416
Other real estate and loan related expense		538				584				781				603				441				1,123				1,013
Advertising and marketing		295				302				336				346				305				597				660
Data processing and technology		2,452				2,465				2,458				2,378				2,235				4,916				4,398
Professional services		1,064				924				1,136				735				764				1,989				1,572
Amortization of intangibles		608				612				643				647				675				1,220				1,334
Merger related and restructuring expenses		—				—				—				110				—				—				—
Other		2,834				2,716				3,773				2,540				2,850				5,549				5,331
Total noninterest expense		29,201				28,553				29,695				28,516				27,410				57,754				54,939
Income before income taxes		10,334				11,988				7,830				2,386				11,182				22,322				26,010
Income tax expense		2,331				2,630				1,640				319				2,346				4,962				5,674
Net income	$	8,003			$	9,358			$	6,190			$	2,067			$	8,836			$	17,360			$	20,336
Earnings per common share:
Basic	$	0.48			$	0.56			$	0.37			$	0.12			$	0.53			$	1.03			$	1.21
Diluted	$	0.48			$	0.55			$	0.37			$	0.12			$	0.52			$	1.03			$	1.20
Weighted average common shares outstanding:
Basic		16,770,819				16,849,735				16,814,647				16,807,548				16,806,389				16,810,277				16,798,939
Diluted		16,850,250				16,925,408				16,918,234				16,918,635				16,898,091				16,887,374				16,897,444

SmartFinancial, Inc. and SubsidiaryCondensed Consolidated Financial Information - (unaudited)(dollars in thousands)YIELD ANALYSIS

	Three Months Ended
	June 30, 2024											March 31, 2024											June 30, 2023
	Average								Yield/			Average								Yield/			Average								Yield/
	Balance				Interest				Cost			Balance				Interest				Cost			Balance				Interest				Cost
Assets:
Loans and leases, including fees1	$	3,504,265			$	51,110			5.87		%	$	3,458,109			$	50,020			5.82		%	$	3,308,595			$	45,446			5.51		%
Taxable securities		580,517				5,320			3.69		%		620,805				4,548			2.95		%		770,275				4,335			2.26		%
Tax-exempt securities2		63,690				447			2.82		%		64,161				445			2.79		%		65,265				452			2.78		%
Federal funds sold and other earning assets		346,459				4,759			5.52		%		353,913				4,863			5.53		%		195,266				1,956			4.02		%
Total interest-earning assets		4,494,931				61,636			5.52		%		4,496,988				59,876			5.36		%		4,339,401				52,189			4.82		%
Noninterest-earning assets		383,697											380,231											355,701
Total assets	$	4,878,628										$	4,877,219										$	4,695,102
Liabilities and Shareholders’ Equity:
Interest-bearing demand deposits	$	983,433				5,950			2.43		%	$	996,147				6,060			2.45		%	$	950,227				4,892			2.06		%
Money market and savings deposits		1,909,125				16,529			3.48		%		1,904,855				16,149			3.41		%		1,737,303				11,785			2.72		%
Time deposits		528,985				4,960			3.77		%		541,792				4,826			3.58		%		504,350				2,877			2.29		%
Total interest-bearing deposits		3,421,543				27,439			3.23		%		3,442,794				27,035			3.16		%		3,191,880				19,554			2.46		%
Borrowings		12,684				148			4.69		%		11,245				128			4.58		%		24,845				339			5.47		%
Subordinated debt		42,129				884			8.44		%		42,107				899			8.59		%		42,044				626			5.97		%
Total interest-bearing liabilities		3,476,356				28,471			3.29		%		3,496,146				28,062			3.23		%		3,258,769				20,519			2.53		%
Noninterest-bearing deposits		888,693											872,840											951,381
Other liabilities		47,208											47,085											40,669
Total liabilities		4,412,257											4,416,071											4,250,819
Shareholders' equity		466,371											461,148											444,283
Total liabilities and shareholders' equity	$	4,878,628										$	4,877,219										$	4,695,102
Net interest income, taxable equivalent					$	33,165										$	31,814										$	31,670
Interest rate spread									2.22		%									2.13		%									2.30		%
Tax equivalent net interest margin									2.97		%									2.85		%									2.93		%
Percentage of average interest-earning assets to average interest-bearing liabilities									129.30		%									128.63		%									133.16		%
Percentage of average equity to average assets									9.56		%									9.46		%									9.46		%

1 Yields computed on tax-exempt loans on a tax equivalent basis include $257 thousand, $0 thousand, and $0 thousand of taxable equivalent income for the quarters ended June 30, 2024, March 31, 2024, and June 30, 2023, respectively.

2 Yields computed on tax-exempt instruments on a tax equivalent basis include $94 thousand, $93 thousand, and $95 thousand of taxable equivalent income for the quarters ended June 30, 2024, March 31, 2024, and June 30, 2023, respectively.  

SmartFinancial, Inc. and SubsidiaryCondensed Consolidated Financial Information - (unaudited)(dollars in thousands)YIELD ANALYSIS

	Six Months Ended
	June 30, 2024												June 30, 2023
	Average								Yield/				Average									Yield/
	Balance				Interest				Cost				Balance				Interest					Cost
Assets:
Loans and leases, including fees1	$	3,481,187			$	101,130				5.84		%	$	3,283,662			$	90,173				5.54		%
Taxable securities		600,661				9,869				3.30		%		747,037				7,986				2.16		%
Tax-exempt securities2		63,925				892				2.81		%		65,405				897				2.77		%
Federal funds sold and other earning assets		350,186				9,620				5.52		%		286,254				6,405				4.51		%
Total interest-earning assets		4,495,959				121,511				5.44		%		4,382,358				105,461				4.85		%
Noninterest-earning assets		381,964												357,837
Total assets	$	4,877,923											$	4,740,195
Liabilities and Shareholders’ Equity:
Interest-bearing demand deposits	$	989,790				12,010				2.44		%	$	947,196				9,119				1.94		%
Money market and savings deposits		1,906,990				32,677				3.45		%		1,778,650				22,168				2.51		%
Time deposits		535,389				9,787				3.68		%		486,952				4,613				1.91		%
Total interest-bearing deposits		3,432,169				54,474				3.19		%		3,212,798				35,900				2.25		%
Borrowings		11,964				276				4.64		%		20,874				564				5.45		%
Subordinated debt		42,118				1,782				8.51		%		42,033				1,252				6.01		%
Total interest-bearing liabilities		3,486,251				56,532				3.26		%		3,275,705				37,716				2.32		%
Noninterest-bearing deposits		880,767												983,348
Other liabilities		47,146												42,777
Total liabilities		4,414,164												4,301,830
Shareholders' equity		463,759												438,365
Total liabilities and shareholders' equity	$	4,877,923											$	4,740,195
Net interest income, taxable equivalent					$	64,979											$	67,745
Interest rate spread										2.17		%										2.53		%
Tax equivalent net interest margin										2.91		%										3.12		%
Percentage of average interest-earning assets to average interest-bearing liabilities										128.96		%										133.78		%
Percentage of average equity to average assets										9.51		%										9.25		%

1Yields computed on tax-exempt loans on a tax equivalent basis included $257 thousand and $0 thousand of taxable equivalent income for the six months ended June 30, 2024, and 2023, respectively.

2Yields computed on tax-exempt instruments on a tax equivalent basis included $187 thousand and $188 thousand of taxable equivalent income for the six months ended June 30, 2024, and 2023, respectively.

SmartFinancial, Inc. and SubsidiaryCondensed Consolidated Financial Information - (unaudited)(dollars in thousands)

	As of and for The Three Months Ended
	Jun				Mar				Dec				Sep				Jun
	2024				2024				2023				2023				2023
Composition of Loans and Leases:
Commercial real estate:
Owner occupied	$	829,085			$	804,557			$	798,416			$	776,402			$	769,978
Non-owner occupied		986,278				938,648				940,789				890,774				871,779
Commercial real estate, total		1,815,363				1,743,205				1,739,205				1,667,176				1,641,757
Commercial & industrial		701,460				667,903				645,918				617,115				594,427
Construction & land development		294,575				321,860				327,185				373,068				394,742
Consumer real estate		678,331				659,209				649,867				638,518				624,828
Leases		70,299				71,909				68,752				68,538				66,401
Consumer and other		14,130				13,469				13,535				14,584				15,635
Total loans and leases	$	3,574,158			$	3,477,555			$	3,444,462			$	3,378,999			$	3,337,790
Asset Quality and Additional Loan Data:
Nonperforming loans and leases	$	6,642			$	6,266			$	8,101			$	4,163			$	3,722
Other real estate owned		688				696				517				1,370				1,708
Other repossessed assets		2,645				2,033				1,117				348				282
Total nonperforming assets	$	9,975			$	8,995			$	9,735			$	5,881			$	5,712
Modified loans and leases1 not included in nonperforming loans and leases	$	4,241			$	4,413			$	4,245			$	2,376			$	657
Net charge-offs to average loans and leases (annualized)		0.05		%		0.09		%		0.04		%		0.04		%		(0.01	)	%
Allowance for credit losses to loans and leases		0.97		%		0.98		%		1.02		%		1.00		%		0.98		%
Nonperforming loans and leases to total loans and leases, gross		0.19		%		0.18		%		0.24		%		0.12		%		0.11		%
Nonperforming assets to total assets		0.20		%		0.18		%		0.20		%		0.12		%		0.12		%
Capital Ratios:
Equity to Assets		9.66		%		9.42		%		9.52		%		9.31		%		9.37		%
Tangible common equity to tangible assets (Non-GAAP)2		7.66		%		7.43		%		7.47		%		7.23		%		7.25		%
SmartFinancial, Inc.3
Tier 1 leverage		8.32		%		8.23		%		8.27		%		8.13		%		8.24		%
Common equity Tier 1		10.06		%		10.20		%		10.14		%		10.07		%		10.12		%
Tier 1 capital		10.06		%		10.20		%		10.14		%		10.07		%		10.12		%
Total capital		11.68		%		11.85		%		11.78		%		11.90		%		11.94		%
SmartBank		Estimated4
Tier 1 leverage		9.11		%		9.07		%		9.18		%		9.00		%		9.18		%
Common equity Tier 1		11.02		%		11.23		%		11.26		%		11.15		%		11.27		%
Tier 1 capital		11.02		%		11.23		%		11.26		%		11.15		%		11.27		%
Total capital		11.79		%		12.00		%		12.02		%		11.87		%		11.97		%

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 SubsidiaryCondensed Consolidated Financial Information - (unaudited)(dollars in thousands except share and per share data)

	As of and for The																				As of and for The
	Three Months Ended																				Six Months Ended
	Jun				Mar				Dec				Sep				Jun				Jun				June
	2024				2024				2023				2023				2023				2024				2023
Selected Performance Ratios (Annualized):
Return on average assets		0.66		%		0.77		%		0.52		%		0.17		%		0.75		%		0.72		%		0.87		%
Return on average shareholders' equity		6.90		%		8.16		%		5.46		%		1.84		%		7.98		%		7.53		%		9.36		%
Return on average tangible common equity¹		8.94		%		10.63		%		7.18		%		2.43		%		10.57		%		9.77		%		12.46		%
Noninterest income / average assets		0.63		%		0.69		%		0.63		%		0.06		%		0.61		%		0.66		%		0.60		%
Noninterest expense / average assets		2.41		%		2.35		%		2.47		%		2.37		%		2.34		%		2.38		%		2.34		%
Efficiency ratio		72.25		%		71.20		%		75.95		%		89.96		%		70.82		%		71.73		%		67.32		%
Operating Selected Performance Ratios (Annualized):
Operating return on average assets1		0.64		%		0.69		%		0.57		%		0.60		%		0.75		%		0.67		%		0.87		%
Operating PPNR return on average assets1		0.90		%		0.84		%		0.86		%		0.84		%		0.96		%		0.87		%		1.13		%
Operating return on average shareholders' equity1		6.72		%		7.29		%		6.07		%		6.41		%		7.98		%		7.00		%		9.36		%
Operating return on average tangible common equity1		8.70		%		9.49		%		7.98		%		8.46		%		10.57		%		9.09		%		12.46		%
Operating efficiency ratio1		72.13		%		73.50		%		73.41		%		73.60		%		70.64		%		72.81		%		67.16		%
Operating noninterest income / average assets1		0.60		%		0.58		%		0.63		%		0.62		%		0.61		%		0.59		%		0.60		%
Operating noninterest expense / average assets1		2.41		%		2.35		%		2.39		%		2.36		%		2.34		%		2.38		%		2.34		%
Selected Interest Rates and Yields:
Yield on loans and leases, excluding loan fees, FTE		5.80		%		5.71		%		5.61		%		5.52		%		5.39		%		5.76		%		5.30		%
Yield on loans and leases, FTE		5.87		%		5.82		%		5.68		%		5.61		%		5.51		%		5.84		%		5.54		%
Yield on earning assets, FTE		5.52		%		5.36		%		5.22		%		4.99		%		4.82		%		5.44		%		4.85		%
Cost of interest-bearing deposits		3.23		%		3.16		%		3.00		%		2.84		%		2.46		%		3.19		%		2.25		%
Cost of total deposits		2.56		%		2.52		%		2.35		%		2.20		%		1.89		%		2.54		%		1.73		%
Cost of interest-bearing liabilities		3.29		%		3.23		%		3.07		%		2.89		%		2.53		%		3.26		%		2.32		%
Net interest margin, FTE		2.97		%		2.85		%		2.86		%		2.81		%		2.93		%		2.91		%		3.12		%
Per Common Share:
Net income, basic	$	0.48			$	0.56			$	0.37			$	0.12			$	0.53			$	1.03			$	1.21
Net income, diluted		0.48				0.55				0.37				0.12				0.52				1.03				1.20
Operating earnings, basic¹		0.47				0.50				0.41				0.43				0.53				0.96				1.21
Operating earnings, diluted¹		0.46				0.49				0.41				0.43				0.52				0.96				1.20
Book value		27.91				27.37				27.07				26.28				26.16				27.91				26.16
Tangible book value¹		21.66				21.12				20.76				19.94				19.78				21.66				19.78
Common shares outstanding		16,925,902				17,056,704				16,988,879				16,994,543				17,004,092				16,925,902				17,004,092

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

SmartFinancial, Inc. and SubsidiaryCondensed Consolidated Financial Information - (unaudited)(dollars in thousands)NON-GAAP RECONCILIATIONS

	Three Months Ended																				Six Months Ended
	Jun				Mar				Dec				Sep				Jun				Jun				June
	2024				2024				2023				2023				2023				2024				2023
Operating Earnings:
Net income (GAAP)	$	8,003			$	9,358			$	6,190			$	2,067			$	8,836			$	17,360			$	20,336
Noninterest income:
Securities (gains) losses, net		—				—				—				6,801				—				—				—
Gain on sale of former branch building		(283	)			(1,346	)			—				—				—				(1,629	)			—
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		73				348				(239	)			(1,785	)			—				421				—
Operating earnings (Non-GAAP)	$	7,793			$	8,360			$	6,876			$	7,193			$	8,836			$	16,152			$	20,336
Operating earnings per common share (Non-GAAP):
Basic	$	0.47			$	0.50			$	0.41			$	0.43			$	0.53			$	0.96			$	1.21
Diluted		0.46				0.49				0.41				0.43				0.52				0.96				1.20
Operating Noninterest Income:
Noninterest income (GAAP)	$	7,604			$	8,380			$	7,579			$	691			$	7,130			$	15,984			$	14,055
Securities (gains) losses, net		—				—				—				6,801				—				—				—
Gain on sale of former branch building		(283	)			(1,346	)			—				—				—				(1,629	)			—
Operating noninterest income (Non-GAAP)	$	7,321			$	7,034			$	7,579			$	7,492			$	7,130			$	14,355			$	14,055
Operating noninterest income (Non-GAAP)/average assets1		0.60		%		0.58		%		0.63		%		0.62		%		0.61		%		0.59		%		0.60		%
Operating Noninterest Expense:
Noninterest expense (GAAP)	$	29,201			$	28,553			$	29,695			$	28,516			$	27,410			$	57,754			$	54,939
Donation of a former branch location		—				—				(250	)			—				—				—				—
Accruals for pending litigation		—				—				(675	)			—				—				—				—
Merger related and restructuring expenses		—				—				—				(110	)			—				—				—
Operating noninterest expense (Non-GAAP)	$	29,201			$	28,553			$	28,770			$	28,406			$	27,410			$	57,754			$	54,939
Operating noninterest expense (Non-GAAP)/average assets2		2.41		%		2.35		%		2.39		%		2.36		%		2.34		%		2.38		%		2.34		%
Operating Pre-provision Net revenue ("PPNR") Earnings:
Net interest income (GAAP)	$	32,814			$	31,721			$	31,517			$	31,006			$	31,575			$	64,535			$	67,557
Operating noninterest income (Non-GAAP)		7,321				7,034				7,579				7,492				7,130				14,355				14,055
Operating noninterest expense (Non-GAAP)		(29,201	)			(28,553	)			(28,770	)			(28,406	)			(27,410	)			(57,754	)			(54,939	)
Operating PPNR earnings (Non-GAAP)	$	10,934			$	10,202			$	10,326			$	10,092			$	11,295			$	21,136			$	26,673
Non-GAAP Return Ratios:
Operating return on average assets (Non-GAAP)3		0.64		%		0.69		%		0.57		%		0.60		%		0.75		%		0.67		%		0.87		%
Operating PPNR return on average assets (Non-GAAP)4		0.90		%		0.84		%		0.86		%		0.84		%		0.96		%		0.87		%		1.13		%
Return on average tangible common equity (Non-GAAP)5		8.94		%		10.62		%		7.18		%		2.43		%		10.57		%		9.77		%		12.46		%
Operating return on average shareholders' equity (Non-GAAP)6		6.72		%		7.29		%		6.07		%		6.41		%		7.98		%		7.00		%		9.36		%
Operating return on average tangible common equity (Non-GAAP)7		8.70		%		9.49		%		7.98		%		8.46		%		10.57		%		9.09		%		12.46		%
Operating Efficiency Ratio:
Efficiency ratio (GAAP)		72.25		%		71.20		%		75.95		%		89.96		%		70.82		%		71.73		%		67.32		%
Adjustment for taxable equivalent yields		(0.63	)	%		(0.17	)	%		(0.18	)	%		(0.27	)	%		(0.18	)	%		(0.40	)	%		(0.16	)	%
Adjustment for securities gains (losses)		—		%		—		%		—		%		(15.89	)	%		—		%		—		%		—		%
Adjustment for sale of branch location		0.51		%		2.46		%		—		%		—		%		—		%		1.48		%		—		%
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)		72.13		%		73.50		%		73.41		%		73.60		%		70.64		%		72.81		%		67.16		%

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 SubsidiaryCondensed Consolidated Financial Information - (unaudited)(dollars in thousands)NON-GAAP RECONCILIATIONS

	Three Months Ended
	Jun				Mar				Dec				Sep				Jun
	2024				2024				2023				2023				2023
Tangible Common Equity:
Shareholders' equity (GAAP)	$	472,465			$	466,796			$	459,886			$	446,652			$	444,847
Less goodwill and other intangible assets		105,929				106,537				107,148				107,792				108,439
Tangible common equity (Non-GAAP)	$	366,536			$	360,259			$	352,738			$	338,860			$	336,408
Average Tangible Common Equity:
Average shareholders' equity (GAAP)	$	466,371			$	461,148			$	449,526			$	445,432			$	444,283
Less average goodwill and other intangible assets		106,301				106,920				107,551				108,194				108,851
Average tangible common equity (Non-GAAP)	$	360,070			$	354,228			$	341,975			$	337,238			$	335,432
Tangible Book Value per Common Share:
Book value per common share (GAAP)	$	27.91			$	27.37			$	27.07			$	26.28			$	26.16
Adjustment due to goodwill and other intangible assets		(6.25	)			(6.25	)			(6.31	)			(6.34	)			(6.38	)
Tangible book value per common share (Non-GAAP)1	$	21.66			$	21.12			$	20.76			$	19.94			$	19.78
Tangible Common Equity to Tangible Assets:
Total Assets (GAAP)	$	4,891,009			$	4,954,690			$	4,829,387			$	4,797,171			$	4,745,800
Less goodwill and other intangibles		105,929				106,537				107,148				107,792				108,439
Tangible Assets (Non-GAAP)	$	4,785,080			$	4,848,153			$	4,722,239			$	4,689,379			$	4,637,361
Tangible common equity to tangible assets (Non-GAAP)		7.66	%			7.43	%			7.47	%			7.23	%			7.25	%

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