• SmartFinancial Announces Results for the Third Quarter 2023

    来源: Nasdaq GlobeNewswire / 23 10月 2023 17:00:04   America/New_York

    KNOXVILLE, Tenn., Oct. 23, 2023 (GLOBE NEWSWIRE) -- SmartFinancial, Inc. ("SmartFinancial" or the "Company"; NASDAQ: SMBK), today announced net income of $2.1 million, or $0.12 per diluted common share, for the third quarter of 2023, compared to net income of $11.5 million, or $0.68 per diluted common share, for the third quarter of 2022, and compared to prior quarter net income of $8.8 million, or $0.52 per diluted common share. Operating earnings1, which excludes securities gains (losses) and merger related and restructuring expenses, net of tax adjustments, totaled $7.2 million, or $0.43 per diluted common share, in the third quarter of 2023, compared to $11.6 million, or $0.69 per diluted common share, in the third quarter of 2022, and compared to $8.8 million, or $0.52 per diluted common share, in the second quarter of 2023.

    Highlights for the Third Quarter of 2023

    • Operating earnings1 of $7.2 million, or $0.43 per diluted common share
    • Repositioned $159.6 million of available-for-sale securities, moving into higher yielding assets
    • Net organic loan and lease growth of $42 million - 5% annualized quarter-over-quarter increase
    • Credit quality remains solid with nonperforming assets to total assets of 0.12%
    • Deposit growth of $46.9 million – 4.5% annualized quarter-over-quarter increase

    Billy Carroll, President & CEO, stated: “Our Company and employees continue to operate at a high level, providing excellent client service while tactfully navigating a difficult operating landscape.  During September, we strategically took advantage of a balance sheet optimization opportunity, reallocating $160 million from low-yielding investments into higher yielding assets.  We felt it prudent to capitalize on the current rate environment and better position our balance sheet as we look toward 2024.  Our team continues to grow new loan and deposit relationships despite the higher rate headwinds, a testament to their professionalism and reputations within their respective markets.  As our Bank absorbs and moves through the impacts of the recent Fed rate increases, we look forward to continued revenue expansion and remain bullish on our Company outlook.”

    SmartFinancial's Chairman, Miller Welborn, concluded: "The entire SmartBank team worked diligently over the past quarter and, quite frankly, over the entire year to exceed client expectations and drive consistent growth. However, this quarter I was especially pleased that SmartBank was once again honored with the “Top Workplace” designation as voted on by employees for the seventh year in a row! I’m so proud of where we are as a company and extremely optimistic about the future.”

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

    Net Interest Income and Net Interest Margin

    Net interest income was $31.0 million for the third quarter of 2023, compared to $31.6 million for the prior quarter. Average earning assets totaled $4.40 billion, an increase of $58.5 million from the prior quarter. The increase in average earnings assets was primarily driven by an increase in average loans and leases of $52.1 million and average interest-earning cash of $34.2 million, offset by a decrease in average securities of $27.8 million.  Average interest-bearing liabilities increased by $73.5 million from the prior quarter, attributable to an increase in average deposits of $82.1 million, offset by a decrease in average borrowings of $8.6 million.

    The tax equivalent net interest margin was 2.81% for the third quarter of 2023, compared to 2.93% for the prior quarter. The tax equivalent net interest margin was negatively impacted by the continued rise in the cost of interest-bearing liabilities and increased pricing competition.  The yield on loans and leases, excluding loan fees was 5.52% for the third quarter, compared to 5.39% for the prior quarter.

    The cost of total deposits for the third quarter of 2023 was 2.20% compared to 1.89% in the prior quarter. The cost of interest-bearing liabilities increased to 2.89% for the third quarter of 2023 compared to 2.53% for the prior quarter. The cost of average interest-bearing deposits was 2.84% for the third quarter of 2023 compared to 2.46% for the prior quarter, an increase of 38 basis points. The increase in the cost of deposits is due to an increase in interest rates, customer migration to higher rate deposit products and increased competition for deposits.

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

      Three Months Ended   
      Sep Jun Increase 
    Selected Interest Rates and Yields 2023 2023 (Decrease) 
    Yield on loans and leases, excluding loan fees 5.52 %5.39 %0.13 %
    Yield on loans and leases 5.61 %5.51 %0.10 %
    Yield on earning assets, on a fully tax equivalent basis (FTE) 4.99 %4.82 %0.17 %
    Cost of interest-bearing deposits 2.84 %2.46 %0.38 %
    Cost of total deposits 2.20 %1.89 %0.31 %
    Cost of interest-bearing liabilities 2.89 %2.53 %0.36 %
    Net interest margin, FTE 2.81 %2.93 %(0.12)%


    Provision for Credit Losses on Loans and Leases and Credit Quality

    At September 30, 2023, the allowance for credit losses was $33.7 million. The allowance for credit losses to total loans and leases was 1.00% as of September 30, 2023, compared to 0.98% as of June 30, 2023.  

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

      Three Months Ended    
      Sep Jun    
    Provision for Credit Losses on Loans and Leases Rollforward  2023   2023  Change 
    Beginning balance $32,747  $32,279  $468  
    Charge-offs  (417)  (207)  (210) 
    Recoveries  73   255   (182) 
    Net (charge-offs) recoveries  (344)  48   (392) 
    Provision for credit losses (1)  1,284   420   864  
    Ending balance $33,687  $32,747  $940  
               
    Allowance for credit losses to total loans and leases, gross  1.00 % 0.98 % 0.02 %


     (1)The current quarter-ended and prior quarter-ended, excludes unfunded commitments release of $489 thousand and $307 thousand, respectively. At September 30, 2023, the unfunded commitment liability totaled $2.3 million.
       

    Nonperforming loans and leases as a percentage of total loans and leases was 0.12% as of September 30, 2023, an increase of 1 basis point from the 0.11% reported in the second 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 0.12% as of September 30, 2023, and June 30, 2023.

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

      Three Months Ended    
       Sep   Jun  Increase 
    Credit Quality  2023   2023  (Decrease) 
    Nonaccrual loans and leases $3,934  $3,722  $212  
    Loans and leases past due 90 days or more and still accruing  229   -   229  
    Total nonperforming loans and leases  4,163   3,722   441  
    Other real estate owned  1,370   1,708   (338) 
    Other repossessed assets  348   282   66  
    Total nonperforming assets $5,881  $5,712  $169  
                 
    Nonperforming loans and leases to total loans and leases, gross  0.12 % 0.11 % 0.01 %
    Nonperforming assets to total assets  0.12 % 0.12 % - %


    Noninterest Income

    Noninterest income decreased $6.4 million to $691 thousand for the third quarter of 2023 compared to $7.1 million for the prior quarter. The current quarter decrease was associated with a $6.8 million pre-tax loss on the sale of $159.6 million of available for sale securities, moving into higher yielding assets. Excluding the loss on securities, noninterest income increased $362 thousand.

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

      Three Months Ended   
      Sep  Jun  Increase
    Noninterest Income 2023   2023  (Decrease)
    Service charges on deposit accounts $1,736  $1,657  $79 
    Gain (loss) on sale of securities, net  (6,801)  -   (6,801)
    Mortgage banking income  309   332   (23)
    Investment services  1,461   1,300   161 
    Insurance commissions  1,153   1,139   14 
    Interchange and debit card transaction fees  1,357   1,347   10 
    Other  1,476   1,355   121 
    Total noninterest income $691  $7,130  $(6,439)


    Noninterest Expense

    Noninterest expense increased $1.1 million to $28.5 million for the third quarter of 2023 compared to $27.4 million for the prior quarter. The current quarter increase was primarily related to increases in health insurance claims, incentives and additional commission expense associated with higher production from our leasing company, wealth and capital markets teams.

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

      Three Months Ended   
       Sep   Jun  Increase
    Noninterest Expense  2023   2023  (Decrease)
    Salaries and employee benefits $16,785  $15,947  $838 
    Occupancy and equipment  3,547   3,318   229 
    FDIC insurance  825   875   (50)
    Other real estate and loan related expenses  603   441   162 
    Advertising and marketing  346   305   41 
    Data processing and technology  2,378   2,235   143 
    Professional services  735   764   (29)
    Amortization of intangibles  647   675   (28)
    Merger related and restructuring expenses  110   -   110 
    Other  2,540   2,850   (310)
    Total noninterest expense $28,516  $27,410  $1,106 


    Income Tax Expense

    Income tax expense was $319 thousand for the third quarter of 2023, a decrease of $2.0 million, compared to $2.3 million for the prior quarter.

    The effective tax rate was 13.37% for the third quarter of 2023 and 20.98% for the prior quarter. The primary reason for the 7.61% decline in the effective tax rate was due to lower earnings, largely from the $6.8 million pre-tax loss on sale of available-for-sale securities during the quarter.

    Balance Sheet Trends

    Total assets at September 30, 2023 were $4.80 billion compared to $4.64 billion at December 31, 2022. The $159.7 million increase is primarily attributable to increases in loans and leases of $125.4 million, cash and cash equivalents of $133.8 million and other assets of $15.1 million. Asset increases were offset by a decrease in securities of $102.4 million and an increase in the allowance for credit losses of $10.4 million, primarily for the one-time adjustment of $8.7 million related to the adoption of ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit losses on Financial Instruments (“ASU 2016-13”) on January 1, 2023.

    Total liabilities increased to $4.35 billion at September 30, 2023 from $4.21 billion at December 31, 2022. The increase of $145.5 million was primarily from organic deposit growth of $169.4 million, offset by a decrease in borrowings of $27.7 million.

    Shareholders' equity at September 30, 2023 totaled $446.7 million, an increase of $14.2 million, from December 31, 2022. The increase in shareholders' equity was primarily driven by net income of $22.4 million for the nine months ended September 30, 2023, offset by the impact of the adoption of ASU 2016-13 on January 1, 2023, of $6.6 million (net of taxes), and dividends paid of $4.1 million. Tangible book value per share1 was $19.94 at September 30, 2023, compared to $19.09 at December 31, 2022. Tangible common equity1 as a percentage of tangible assets1 was 7.23% at September 30, 2023, compared with 7.13% at December 31, 2022.

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

      Sep Dec Increase
    Selected Balance Sheet Information 2023 2022 (Decrease)
    Total assets $4,797,171  $4,637,498  $159,673 
    Total liabilities  4,350,519   4,205,046   145,473 
    Total equity  446,652   432,452   14,200 
    Securities  667,444   769,842   (102,398)
    Loans and leases  3,378,999   3,253,627   125,372 
    Deposits  4,246,509   4,077,100   169,409 
    Borrowings  14,117   41,860   (27,743)

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

    Conference Call Information

    SmartFinancial issued this earnings release for the third quarter of 2023 on Monday, October 23, 2023, and will host a conference call on Tuesday, October 24, 2023, at 10:00 a.m. ET. To access this interactive teleconference, dial (833) 470-1428 or (404) 975-4839 and entering the access code, 071225. A replay of the conference call will be available through December 23, 2023, by dialing (866) 813-9403 or (929) 458-6194 and entering the access code, 816201. 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, (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 expense excludes the following from noninterest expense: prior year adjustments to salaries, merger related and restructuring expenses and certain franchise tax true-up expenses. 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 (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
     Sep    Jun    Mar    Dec    Sep
     2023 2023 2023 2022 2022
    Assets:                  
    Cash and cash equivalents$400,258  $238,898  $306,934  $266,424  $543,029 
    Securities available-for-sale, at fair value 385,131   540,308   560,418   483,893   519,723 
    Securities held-to-maturity, at amortized cost 282,313   283,564   284,776   285,949   287,104 
    Other investments 13,805   14,396   14,059   15,530   15,528 
    Loans held for sale 2,734   986   3,324   1,752   2,742 
    Loans and leases 3,378,999   3,337,790   3,281,787   3,253,627   3,099,116 
    Less: Allowance for credit losses (33,687)  (32,747)  (32,279)  (23,334)  (22,769)
    Loans and leases, net 3,345,312   3,305,043   3,249,508   3,230,293   3,076,347 
    Premises and equipment, net 92,020   92,351   92,190   92,511   91,944 
    Other real estate owned 1,370   1,708   1,708   1,436   1,226 
    Goodwill and other intangibles, net 107,792   108,439   109,114   109,772   110,460 
    Bank owned life insurance 82,914   82,419   81,938   81,470   81,001 
    Other assets 83,522   77,688   65,836   68,468   67,807 
    Total assets$4,797,171  $4,745,800  $4,769,805  $4,637,498  $4,796,911 
    Liabilities:                   
    Deposits:                   
    Noninterest-bearing demand$923,763  $1,003,432  $989,753  $1,072,449  $1,186,209 
    Interest-bearing demand 993,717   938,758   989,738   965,911   962,901 
    Money market and savings 1,766,409   1,720,202   1,761,847   1,583,481   1,663,355 
    Time deposits 562,620   537,192   488,208   455,259   467,944 
    Total deposits 4,246,509   4,199,584   4,229,546   4,077,100   4,280,409 
    Borrowings 14,117   15,496   16,546   41,860   18,423 
    Subordinated debt 42,078   42,057   42,036   42,015   41,994 
    Other liabilities 47,815   43,816   38,278   44,071   41,374 
    Total liabilities 4,350,519   4,300,953   4,326,406   4,205,046   4,382,200 
    Shareholders' Equity:              
    Common stock 16,995   17,004   17,004   16,901   16,888 
    Additional paid-in capital 295,542   295,296   294,930   294,330   293,907 
    Retained earnings 168,271   167,564   160,085   156,545   144,723 
    Accumulated other comprehensive income (loss) (34,156)  (35,017)  (28,620)  (35,324)  (40,807)
    Total shareholders' equity 446,652   444,847   443,399   432,452   414,711 
    Total liabilities & shareholders' equity$4,797,171  $4,745,800  $4,769,805  $4,637,498  $4,796,911 


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

     Three Months Ended  Nine Months Ended
     Sep    Jun    Mar    Dec    Sep    Sep    Sep
     2023 2023 2023 2022 2022 2023 2022
    Interest income:                             
    Loans and leases, including fees$47,539  $45,446  $44,728  $40,082  $35,127  $137,712  $96,300 
    Investment securities:                               
    Taxable 4,335   4,335   3,651   3,337   3,135   12,322   8,463 
    Tax-exempt 356   357   353   797   561   1,066   1,369 
    Federal funds sold and other earning assets 3,045   1,956   4,446   3,098   3,474   9,448   5,389 
    Total interest income 55,275   52,094   53,178   47,314   42,297   160,548   111,521 
    Interest expense:                               
    Deposits 23,433   19,554   16,346   8,844   4,866   59,333   9,384 
    Borrowings 210   339   224   232   97   775   371 
    Subordinated debt 626   626   626   626   626   1,877   1,877 
    Total interest expense 24,269   20,519   17,196   9,702   5,589   61,985   11,632 
    Net interest income 31,006   31,575   35,982   37,612   36,708   98,563   99,889 
    Provision for credit losses 795   113   550   788   974   1,458   3,230 
    Net interest income after provision for credit losses 30,211   31,462   35,432   36,824   35,734   97,105   96,659 
    Noninterest income:                               
    Service charges on deposit accounts 1,736   1,657   1,445   1,477   1,611   4,838   4,376 
    Gain (loss) on sale of securities, net (6,801)        144      (6,801)   
    Mortgage banking 309   332   172   77   170   813   1,475 
    Investment services 1,461   1,300   1,005   958   1,051   3,766   3,186 
    Insurance commissions 1,153   1,139   1,259   1,233   864   3,551   2,363 
    Interchange and debit card transaction fees 1,357   1,347   1,383   1,328   1,356   4,087   4,107 
    Other 1,476   1,355   1,661   1,908   1,198   4,492   5,083 
    Total noninterest income 691   7,130   6,925   7,125   6,250   14,746   20,590 
    Noninterest expense:                               
    Salaries and employee benefits 16,785   15,947   16,742   16,384   16,317   49,474   47,036 
    Occupancy and equipment 3,547   3,318   3,208   3,015   3,167   10,073   9,020 
    FDIC insurance 825   875   541   650   705   2,241   2,022 
    Other real estate and loan related expense 603   441   572   517   565   1,616   1,930 
    Advertising and marketing 346   305   355   308   288   1,006   985 
    Data processing and technology 2,378   2,235   2,163   2,097   1,872   6,777   5,185 
    Professional services 735   764   807   981   822   2,307   2,809 
    Amortization of intangibles 647   675   659   688   650   1,981   1,919 
    Merger related and restructuring expenses 110         (45)  87   110   607 
    Other 2,540   2,850   2,482   2,821   2,757   7,870   7,361 
    Total noninterest expense 28,516   27,410   27,529   27,416   27,230   83,455   78,874 
    Income before income taxes 2,386   11,182   14,828   16,533   14,754   28,396   38,375 
    Income tax expense 319   2,346   3,328   3,529   3,211   5,993   8,357 
    Net income$2,067  $8,836  $11,500  $13,004  $11,543  $22,403  $30,018 
    Earnings per common share:                               
    Basic$0.12  $0.53  $0.69  $0.78  $0.69  $1.33  $1.79 
    Diluted$0.12  $0.52  $0.68  $0.77  $0.68  $1.33  $1.78 
    Weighted average common shares outstanding:                               
    Basic 16,807,548   16,806,389   16,791,406   16,758,706   16,749,255   16,801,840   16,734,298 
    Diluted 16,918,635   16,898,091   16,896,494   16,884,253   16,872,022   16,907,325   16,867,970 


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

     Three Months Ended  
     September 30, 2023 June 30, 2023 September 30, 2022 
     Average           Yield/    Average           Yield/    Average            Yield/ 
     Balance Interest Cost Balance Interest Cost Balance Interest Cost 
    Assets:                                          
    Loans and leases, including fees1$3,360,678  $47,539  5.61 %  $3,308,595  $45,446  5.51 %  $3,037,092  $35,127  4.59 %
    Taxable securities 743,054   4,335  2.31 %   770,275   4,335  2.26 %   720,114   3,135  1.73 %
    Tax-exempt securities2 64,707   451  2.77 %   65,265   452  2.78 %   101,559   732  2.86 %
    Federal funds sold and other earning assets 229,487   3,045  5.26 %   195,266   1,956  4.02 %   587,755   3,474  2.34 %
    Total interest-earning assets 4,397,926   55,370  4.99 %   4,339,401   52,189  4.82 %   4,446,520   42,468  3.79 %
    Noninterest-earning assets 379,456          355,701            362,869           
    Total assets$4,777,382         $4,695,102           $4,809,389           
                                      
    Liabilities and Shareholders’ Equity:                                          
    Interest-bearing demand deposits$969,122   5,463  2.24 %  $950,227   4,892  2.06 %  $966,437   1,956  0.80 %
    Money market and savings deposits 1,753,671   13,744  3.11 %   1,737,303   11,785  2.72 %   1,632,510   2,298  0.56 %
    Time deposits 551,191   4,226  3.04 %   504,350   2,877  2.29 %   501,919   612  0.48 %
    Total interest-bearing deposits 3,273,984   23,433  2.84 %   3,191,880   19,554  2.46 %   3,100,866   4,866  0.62 %
    Borrowings 16,228   210  5.13 %   24,845   339  5.47 %   13,141   97  2.93 %
    Subordinated debt 42,065   626  5.90 %   42,044   626  5.97 %   41,980   626  5.91 %
    Total interest-bearing liabilities 3,332,277   24,269  2.89 %   3,258,769   20,519  2.53 %   3,155,987   5,589  0.70 %
    Noninterest-bearing deposits 951,179          951,381            1,192,813           
    Other liabilities 48,494          40,669            35,224           
    Total liabilities 4,331,950          4,250,819            4,384,024           
    Shareholders' equity 445,432          444,283            425,365           
    Total liabilities and shareholders' equity$4,777,382         $4,695,102           $4,809,389           
                                      
    Net interest income, taxable equivalent    $31,101          $31,670           $36,879      
    Interest rate spread        2.11 %            2.30 %            3.09 %  
    Tax equivalent net interest margin        2.81 %            2.93 %            3.29 %  
                                      
    Percentage of average interest-earning assets to average interest-bearing liabilities        131.98 %            133.16 %            140.89 %  
    Percentage of average equity to average assets        9.32 %            9.46 %            8.84 %  

    1 Includes average balance of $2.7 million, $2.9 million, and $22.0 million in PPP loans for the quarters ended September 30, 2023, June 30, 2023, and September 30, 2022, respectively.  
    2 Yields computed on tax-exempt instruments on a tax equivalent basis include $95 thousand, $95 thousand, and $171 thousand of taxable equivalent income for the quarters ended September 30, 2023, June 30, 2023, and September 30, 2022, respectively.


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

     Nine Months Ended
     September 30, 2023 September 30, 2022 
     Average           Yield/    Average           Yield/    
     Balance Interest Cost Balance Interest Cost 
    Assets:                             
    Loans and leases, including fees1$3,309,616  $137,712   5.56 %  $2,880,444  $96,300  4.47 %  
    Taxable securities 745,694   12,322   2.21 %   683,926   8,463  1.65 %  
    Tax-exempt securities2 65,170   1,349   2.77 %   102,872   1,873  2.43 %  
    Federal funds sold and other earning assets 267,124   9,448   4.73 %   663,400   5,389  1.09 %  
    Total interest-earning assets 4,387,604   160,831   4.90 %   4,330,642   112,025  3.46 %  
    Noninterest-earning assets 365,123           373,081           
    Total assets$4,752,727          $4,703,723           
                            
    Liabilities and Shareholders’ Equity:                             
    Interest-bearing demand deposits$954,585   14,583   2.04 %  $952,523   3,137  0.44 %  
    Money market and savings deposits 1,770,232   35,912   2.71 %   1,572,287   4,282  0.36 %  
    Time deposits 508,600   8,838   2.32 %   531,419   1,965  0.49 %  
    Total interest-bearing deposits 3,233,417   59,333   2.45 %   3,056,229   9,384  0.41 %  
    Borrowings 19,309   775   5.37 %   37,933   371  1.31 %  
    Subordinated debt 42,044   1,877   5.97 %   41,959   1,877  5.98 %  
    Total interest-bearing liabilities 3,294,770   61,985   2.52 %   3,136,121   11,632  0.50 %  
    Noninterest-bearing deposits 972,507           1,111,854          
    Other liabilities 44,703           31,412          
    Total liabilities 4,311,980           4,279,387          
    Shareholders' equity 440,747           424,336          
    Total liabilities and shareholders' equity$4,752,727          $4,703,723          
                            
    Net interest income, taxable equivalent    $98,846           $100,393     
    Interest rate spread         2.39 %            2.96 %  
    Tax equivalent net interest margin         3.01 %            3.10 %  
                            
    Percentage of average interest-earning assets to average interest-bearing liabilities         133.17 %            138.09 %  
    Percentage of average equity to average assets         9.27 %            9.02 %  

    1 Includes average balance of $2.9 million and $36.6 million in PPP loans for the nine months ended September 30, 2023, and 2022, respectively.
    2 Yields computed on tax-exempt instruments on a tax equivalent basis include $283 thousand and $504 thousand of taxable equivalent income for the nine months ended September 30, 2023, and 2022, respectively.


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

     As of and for The Three Months Ended  
     Sep    Jun    Mar    Dec    Sep 
     2023 2023 2023 2022 2022 
    Composition of Loans and Leases:                      
    Commercial real estate:                      
    Owner occupied$776,402  $769,978  $764,166  $765,041  $714,734  
    Non-owner occupied 890,774   871,779   871,368   862,720   822,317  
    Commercial real estate, total 1,667,176   1,641,757   1,635,534   1,627,761   1,537,051  
    Commercial & industrial 617,115   594,427   571,153   551,867   514,280  
    Construction & land development 373,068   394,742   386,253   402,501   405,007  
    Consumer real estate 638,518   624,828   606,343   587,977   562,408  
    Leases 68,538   66,401   67,701   67,427   64,798  
    Consumer and other 14,584   15,635   14,803   16,094   15,572  
    Total loans and leases$3,378,999  $3,337,790  $3,281,787  $3,253,627  $3,099,116  
                        
    Asset Quality and Additional Loan Data:                      
    Nonperforming loans and leases$4,163  $3,722  $3,247  $2,951  $3,379  
    Other real estate owned 1,370   1,708   1,708   1,436   1,226  
    Other repossessed assets 348   282   66   422     
    Total nonperforming assets$5,881  $5,712  $5,021  $4,809  $4,605  
    Restructured loans and leases not included in nonperforming loans and leases$2,376  $657  $97  $101  $108  
    Net charge-offs to average loans and leases (annualized) 0.04 %   (0.01)%   0.03 %   0.03 %   0.02 %
    Allowance for credit losses to loans and leases 1.00 %   0.98 %   0.98 %   0.72 %   0.73 %
    Nonperforming loans and leases to total loans and leases, gross 0.12 %   0.11 %   0.10 %   0.09 %   0.11 %
    Nonperforming assets to total assets 0.12 %   0.12 %   0.11 %   0.10 %   0.10 %
    Acquired loan and lease fair value discount balance$  $  $  $13,128  $14,465  
    Accretion income on acquired loans and leases          1,396   148  
    PPP net fees deferred balance 94   104   114   122   140  
    PPP net fees recognized 10   10   8   17   163  
                        
    Capital Ratios:                      
    Equity to Assets 9.31 %   9.37 %   9.30 %   9.33 %   8.65 %
    Tangible common equity to tangible assets (Non-GAAP)1 7.23 %   7.25 %   7.17 %   7.13 %   6.49 %
                        
    SmartFinancial, Inc.2                      
    Tier 1 leverage 8.13 %   8.24 %   7.91 %   7.95 %   7.40 %
    Common equity Tier 1 10.01 %   10.12 %   9.95 %   9.65 %   9.65 %
    Tier 1 capital 10.01 %   10.12 %   9.95 %   9.65 %   9.65 %
    Total capital 11.83 %   11.94 %   11.77 %   11.40 %   11.44 %
                        
    SmartBank Estimated3                   
    Tier 1 leverage 9.00 %   9.18 %   8.87 %   8.90 %   8.27 %
    Common equity Tier 1 11.13 %   11.27 %   11.15 %   10.82 %   10.78 %
    Tier 1 capital 11.13 %   11.27 %   11.15 %   10.82 %   10.78 %
    Total capital 11.85 %   11.97 %   11.85 %   11.44 %   11.41 %

    1Total common equity less intangibles divided by total assets less intangibles. See reconciliation of Non-GAAP measures.
    2All periods presented are estimated.
    3 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 As of and for The 
     Three Months Ended     Nine Months Ended  
     Sep    Jun    Mar    Dec    Sep    Sep    Sep 
     2023 2023 2023 2022 2022 2023 2022 
    Selected Performance Ratios (Annualized):                                   
    Return on average assets 0.17 % 0.75 % 0.97 % 1.11 % 0.95 % 0.63 % 0.85 %
    Return on average shareholders' equity 1.84 % 7.98 % 10.79 % 12.28 % 10.77 % 6.80 % 9.46 %
    Return on average tangible common equity¹ 2.43 % 10.57 % 14.45 % 16.65 % 14.36 % 9.02 % 12.60 %
    Noninterest income / average assets 0.06 % 0.61 % 0.59 % 0.61 % 0.52 % 0.41 % 0.59 %
    Noninterest expense / average assets 2.37 % 2.34 % 2.33 % 2.34 % 2.25 % 2.35 % 2.24 %
    Efficiency ratio 89.96 % 70.82 % 64.16 % 61.28 % 63.39 % 73.65 % 65.47 %
                                 
    Operating Selected Performance Ratios (Annualized):                                   
    Operating return on average assets1 0.60 % 0.75 % 0.97 % 1.10 % 0.96 % 0.77 % 0.87 %
    Operating PPNR return on average assets1 0.84 % 0.96 % 1.30 % 1.46 % 1.30 % 1.03 % 1.20 %
    Operating return on average shareholders' equity1 6.41 % 7.98 % 10.79 % 12.15 % 10.83 % 8.35 % 9.60 %
    Operating return on average tangible common equity1 8.46 % 10.57 % 14.45 % 16.47 % 14.44 % 11.09 % 12.78 %
    Operating efficiency ratio1 73.60 % 70.64 % 64.02 % 61.36 % 62.93 % 69.23 % 64.69 %
    Operating noninterest income / average assets1 0.62 % 0.61 % 0.59 % 0.60 % 0.52 % 0.61 % 0.59 %
    Operating noninterest expense / average assets1 2.36 % 2.34 % 2.33 % 2.35 % 2.24 % 2.34 % 2.22 %
                                 
    Selected Interest Rates and Yields:                                   
    Yield on loans and leases, excluding loan fees 5.52 % 5.39 % 5.20 % 4.99 % 4.50 % 5.37 % 4.31 %
    Yield on loans and leases 5.61 % 5.51 % 5.57 % 5.05 % 4.59 % 5.56 % 4.47 %
    Yield on earning assets, FTE 4.99 % 4.82 % 4.88 % 4.41 % 3.79 % 4.90 % 3.46 %
    Cost of interest-bearing deposits 2.84 % 2.46 % 2.05 % 1.18 % 0.62 % 2.45 % 0.41 %
    Cost of total deposits 2.20 % 1.89 % 1.56 % 0.85 % 0.45 % 1.89 % 0.30 %
    Cost of interest-bearing liabilities 2.89 % 2.53 % 2.12 % 1.27 % 0.70 % 2.52 % 0.50 %
    Net interest margin, FTE 2.81 % 2.93 % 3.31 % 3.51 % 3.29 % 3.01 % 3.10 %
                                 
    Per Common Share:                                   
    Net income, basic$0.12  $0.53  $0.69  $0.78  $0.69  $1.33  $1.79  
    Net income, diluted 0.12   0.52   0.68   0.77   0.68   1.33   1.78  
    Operating earnings, basic¹ 0.43   0.53   0.69   0.77   0.69   1.64   1.82  
    Operating earnings, diluted¹ 0.43   0.52   0.68   0.76   0.69   1.63   1.81  
    Book value 26.28   26.16   26.08   25.59   24.56   26.28   24.56  
    Tangible book value¹ 19.94   19.78   19.66   19.09   18.02   19.94   18.02  
    Common shares outstanding 16,994,543   17,004,092   17,004,092   16,900,805   16,887,555   16,994,543   16,887,555  

    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  Nine Months Ended  
     Sep    Jun    Mar    Dec    Sep    Sep    Sep 
     2023 2023 2023 2022 2022 2023 2022 
    Operating Earnings:                          
    Net income (GAAP)$2,067  $8,836  $11,500  $13,004  $11,543  $22,403  $30,018  
    Noninterest income:                            
    Securities (gains) losses, net 6,801         (144)     6,801     
    Noninterest expenses:                     
    Merger related and restructuring expenses 110         (45)  87   110   607  
    Income taxes:                     
    Income tax effect of adjustments (1,785)        49   (22)  (1,785)  (157) 
    Operating earnings (Non-GAAP)$7,193  $8,836  $11,500  $12,864  $11,608  $27,529  $30,468  
    Operating earnings per common share (Non-GAAP):                            
    Basic$0.43  $0.53  $0.69  $0.77  $0.69  $1.64  $1.82  
    Diluted 0.43   0.52   0.68   0.76   0.69   1.63   1.81  
                          
    Operating Noninterest Income:                            
    Noninterest income (GAAP)$691  $7,130  $6,925  $7,125  $6,250  $14,746  $20,590  
    Securities (gains) losses, net 6,801         (144)     6,801     
    Operating noninterest income (Non-GAAP)$7,492  $7,130  $6,925  $6,981  $6,250  $21,547  $20,590  
    Operating noninterest income (Non-GAAP)/average assets1 0.62 % 0.61 %   0.59 %   0.60 %   0.52 % 0.61 % 0.59 %
                          
    Operating Noninterest Expense:                            
    Noninterest expense (GAAP)$28,516  $27,410  $27,529  $27,416  $27,230  $83,455  $78,874  
    Merger related and restructuring expenses (110)        45   (87)  (110)  (607) 
    Operating noninterest expense (Non-GAAP)$28,406  $27,410  $27,529  $27,461  $27,143  $83,345  $78,267  
    Operating noninterest expense (Non-GAAP)/average assets2 2.36 % 2.34 %   2.33 %   2.35 %   2.24 % 2.34 % 2.22 %
                          
    Operating Pre-provision Net revenue ("PPNR") Earnings:                     
    Net interest income (GAAP)$31,006  $31,575  $35,982  $37,612  $36,708  $98,563  $99,889  
    Operating noninterest income (Non-GAAP) 7,492   7,130   6,925   6,981   6,250   21,547   20,590  
    Operating noninterest expense (Non-GAAP) (28,406)  (27,410)  (27,529)  (27,461)  (27,143)  (83,345)  (78,267) 
    Operating PPNR earnings (Non-GAAP)$10,092  $11,295  $15,378  $17,132  $15,815  $36,765  $42,212  
                          
    Non-GAAP Return Ratios:                            
    Operating return on average assets (Non-GAAP)3 0.60 % 0.75 % 0.97 % 1.10 % 0.96 % 0.77 % 0.87 %
    Operating PPNR return on average assets (Non-GAAP)4 0.84 % 0.96 % 1.30 % 1.46 % 1.30 % 1.03 % 1.20 %
    Return on average tangible common equity (Non-GAAP)5 2.43 % 10.57 % 14.45 % 16.65 % 14.36 % 9.02 % 12.60 %
    Operating return on average shareholders' equity (Non-GAAP)6 6.41 % 7.98 % 10.79 % 12.15 % 10.83 % 8.35 % 9.60 %
    Operating return on average tangible common equity (Non-GAAP)7 8.46 % 10.57 % 14.45 % 16.47 % 14.44 % 11.09 % 12.78 %
                          
    Operating Efficiency Ratio:                            
    Efficiency ratio (GAAP) 89.96 % 70.82 % 64.16 % 61.28 % 63.39 % 73.65 % 65.47 %
    Adjustment for taxable equivalent yields (0.27)% (0.18)% (0.14)% (0.22)% (0.25)% (0.18)% (0.28)%
    Adjustment for securities (gains) losses 15.89 %  %  % (0.20)%  % 4.17 %  %
    Adjustment for merger related income and costs (31.98)%  %  % 0.50 % (0.21)% (8.41)% (0.50)%
    Operating efficiency ratio (Non-GAAP) 73.60 % 70.64 % 64.02 % 61.36 % 62.93 % 69.23 % 64.69 %

    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  Nine Months Ended
     Sep    Jun    Mar    Dec    Sep Sep    Sep
     2023 2023 2023 2022 2022 2023 2022
    Tangible Common Equity:                         
    Shareholders' equity (GAAP)$446,652  $444,847  $443,399  $432,452  $414,711  $446,652  $414,711 
    Less goodwill and other intangible assets 107,792   108,439   109,114   109,772   110,460   107,792   110,460 
    Tangible common equity (Non-GAAP)$338,860  $336,408  $334,285  $322,680  $304,251  $338,860  $304,251 
                         
    Average Tangible Common Equity:                           
    Average shareholders' equity (GAAP)$445,432  $444,283  $432,382  $420,037  $425,365  $440,747  $424,336 
    Less average goodwill and other intangible assets 108,194   108,851   109,537   110,206   106,483   108,856   105,698 
    Average tangible common equity (Non-GAAP)$337,238  $335,432  $322,845  $309,831  $318,882  $331,891  $318,638 
                         
    Tangible Book Value per Common Share:                    
    Book value per common share (GAAP)$26.28  $26.16  $26.08  $25.59  $24.56  $26.28  $24.56 
    Adjustment due to goodwill and other intangible assets (6.34)  (6.38)  (6.42)  (6.50)  (6.54)  (6.34)  (6.54)
    Tangible book value per common share (Non-GAAP)1$19.94  $19.78  $19.66  $19.09  $18.02  $19.94  $18.02 
                         
    Tangible Common Equity to Tangible Assets:                    
    Total Assets (GAAP)$4,797,171  $4,745,800  $4,769,805  $4,637,498  $4,796,911  $4,797,171  $4,796,911 
    Less goodwill and other intangibles 107,792   108,439   109,114   109,772   110,460   107,792   110,460 
    Tangible Assets (Non-GAAP)$4,689,379  $4,637,361  $4,660,691  $4,527,726  $4,686,451  $4,689,379  $4,686,451 
    Tangible common equity to tangible assets (Non-GAAP) 7.23%  7.25%  7.17%  7.13%  6.49%  7.23%  6.49%

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


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