Highlights for the First Quarter of 2023

Operating earnings¹ of $11.5 million, or $0.68 per diluted common share
Operating earnings¹ increase of 34% compared to the same prior year quarter
Deposit growth of $152.4 million – 15% annualized quarter-over-quarter
Net organic loan and lease growth of $53.0 million - 7% annualized quarter-over-quarter increase²
Credit quality remains solid with nonperforming assets to total assets of 0.11%

KNOXVILLE, Tenn., April 24, 2023 (GLOBE NEWSWIRE) -- SmartFinancial, Inc. ((", SmartFinancial", or the ", Company", , NASDAQ:SMBK), today announced net income of $11.5 million, or $0.68 per diluted common share, for the first quarter of 2023, compared to net income of $8.3 million, or $0.49 per diluted common share, for the first quarter of 2022, and compared to prior quarter net income of $13.0 million, or $0.77 per diluted common share. Operating earnings¹, which excludes securities gains and merger related and restructuring expenses, net of tax adjustments, totaled $11.5 million, or $0.68 per diluted common share, in the first quarter of 2023, compared to $8.6 million, or $0.51 per diluted common share, in the first quarter of 2022, and compared to $12.9 million, or $0.76 per diluted common share, in the fourth quarter of 2022.

Billy Carroll, President & CEO, stated: "I am extremely pleased with our start to 2023, especially considering the volatile banking environment we experienced during the quarter. The stability of our balance sheet and solid earnings performance through such an unpredictable period not only reaffirmed the strength of our company, but also the fortitude of our associates. The loyalty of our client base has been outstanding as demonstrated by our quarterly deposit growth. We look forward to showing that same loyalty back to our clients as we continue to support their future financial needs."

SmartFinancial's Chairman, Miller Welborn, concluded: "We could not be prouder of the grit and determination our associates showed this quarter. The company's solid performance would not have been possible without management's steady stewardship and our associates' calm handling of client relationships. Our continued balance sheet growth with no wholesale fundings or borrowings is a tremendous testament to our effective client focused business model and the professionals in this organization."

Net Interest Income and Net Interest Margin

Net interest income was $36.0 million for the first quarter of 2023, compared to $37.6 million for the prior quarter. Average earning assets totaled $4.43 billion, an increase of $156.8 million from the prior quarter. The increase in average earnings assets was primarily driven by an increase average loans and leases of $108.0 million and average interest-earning cash of $55.3 million. Partially offsetting the increase in average earning assets was a decrease in average securities of $6.4 million. Average interest-bearing liabilities increased $260.5 million from the prior quarter, attributable to an increase in average deposits of $261.9 million, offset by a decrease in average borrowings of $1.5 million.

The tax equivalent net interest margin was 3.31% for the first quarter of 2023, compared to 3.51% for the prior quarter. The tax equivalent net interest margin was negatively impacted by the continued rise in the cost of interest-bearing liabilities from rising Federal Reserve rates and increased pricing competition. The yield on interest-earning assets for the quarter was positively impacted by $1.4 million in deferred fees from the payoff of an acquired loan.

¹ _{Non-GAAP measure. See "Non-GAAP Financial Measures" for more information and see the Non-GAAP reconciliation}

²_{7% annualized organic loan growth based on Q1 '23 net balance loan growth of $53 million divided by Q4 '22 loans of $3.25 billion less a $24.6 million loan participation included in the Q4 '22 loan balance that was subsequently removed on 1/1/23.}

The cost of total deposits for the first quarter of 2023 was 1.56% compared to 0.85% in the prior quarter. The cost of interest-bearing liabilities increased to 2.12% for the first quarter of 2023 compared to 1.27% for the prior quarter. The cost of average interest-bearing deposits was 2.05% for the first quarter of 2023 compared to 1.18% for the prior quarter, an increase of 87 basis points, primarily attributable to both the impact of rising Federal Reserve rates and increased pricing competition.

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


	Three Months Ended
	Mar		Dec		Increase
Selected Interest Rates and Yields	2023		2022		(Decrease)
Yield on loans and leases	5.57	%	5.05	%	0.52	%
Yield on earning assets, on a fully tax equivalent basis (FTE)	4.88	%	4.41	%	0.47	%
Cost of interest-bearing deposits	2.05	%	1.18	%	0.87	%
Cost of total deposits	1.56	%	0.85	%	0.71	%
Cost of interest-bearing liabilities	2.12	%	1.27	%	0.85	%
Net interest margin, FTE	3.31	%	3.51	%	(0.20	)%

Provision for Loan and Lease Losses and Credit Quality

At March 31, 2023, the allowance for credit losses was $32.3 million. The allowance for credit losses to total loans and leases was 0.98% as of March 31, 2023, compared to 0.72% as of December 31, 2022. The increase of 26 basis points is primarily the result of the adoption of ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 requires an entity to utilize a new impairment model known as the current expected credit loss ("CECL"). ASU 2016-13 was adopted on January 1, 2023, and resulted in an increase of $8.7 million to the allowance for credit losses.

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


	Three Months Ended
		Mar			Dec
Provision for Loan and Lease Losses Rollforward		2023			2022			Change
Beginning balance	$	23,334		$	22,769		$	565
Adoption of ASU 2016-13		8,655			-			8,655
Adjusted beginning balance		31,989			22,769			9,220
Charge-offs		(315	)		(331	)		16
Recoveries		55			108			(53	)
Net charge-offs		(260	)		(223	)		(37	)
Provision		550			788			(238	)
Ending balance	$	32,279		$	23,334		$	8,945

Allowance for credit losses to total loans and leases, gross		0.98	%		0.72	%		0.26	%

Nonperforming loans and leases as a percentage of total loans and leases was 0.10% as of March 31, 2023, an increase of 1 basis point from the 0.09% reported in the fourth quarter of 2022. 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 0.11% as of March 31, 2023, as compared to 0.10% as of December 31, 2022.

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


	Three Months Ended
		Mar			Dec			Increase
Credit Quality		2023			2022			(Decrease)
Nonaccrual loans and leases	$	3,247		$	2,808		$	439
Loans and leases past due 90 days or more and still accruing		-			143			(143	)
Total nonperforming loans and leases		3,247			2,951			296
Other real estate owned		1,708			1,436			272
Other repossessed assets		66			422			(356	)
Total nonperforming assets	$	5,021		$	4,809		$	212

Nonperforming loans and leases to total loans and leases, gross		0.10	%		0.09	%		0.01	%
Nonperforming assets to total assets		0.11	%		0.10	%		0.01	%

Noninterest Income

Noninterest income decreased $200 thousand to $6.9 million for the first quarter of 2023 compared to $7.1 million for the prior quarter. During the first quarter of 2023, the primary components of the changes in noninterest income were as follows:

Decrease in other, primarily related to decreased fees from capital markets activity.

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


	Three Months Ended
		Mar		Dec		Increase
Noninterest Income		2023		2022		(Decrease)
Service charges on deposit accounts	$	1,445	$	1,477	$	(32	)
Gain (loss) on sale of securities, net		-		144		(144	)
Mortgage banking income		172		77		95
Investment services		1,005		958		47
Insurance commissions		1,259		1,233		26
Interchange and debit card transaction fees		1,383		1,328		55
Other		1,661		1,908		(247	)
Total noninterest income	$	6,925	$	7,125	$	(200	)

Noninterest Expense

Noninterest expense increased $113 thousand to $27.5 million for the first quarter of 2023 compared to $27.4 million for the prior quarter. During the first quarter of 2023, the primary components of the changes in noninterest expense were as follows:

Increase in salaries and employee benefits as a result of higher employee taxes due to seasonality;
Increase in occupancy and equipment as a result of new branch facilities and relocation expenses;
Decrease in professional services, related to lower audit and consulting expenses; and
Decrease in other, related to lower operational cost and decreased fees related to capital markets activity.

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


	Three Months Ended
		Mar		Dec			Increase
Noninterest Expense		2023		2022			(Decrease)
Salaries and employee benefits	$	16,742	$	16,384		$	358
Occupancy and equipment		3,208		3,015			193
FDIC insurance		541		650			(109	)
Other real estate and loan related expenses		572		517			55
Advertising and marketing		355		308			47
Data processing and technology		2,163		2,097			66
Professional services		807		981			(174	)
Amortization of intangibles		659		688			(29	)
Merger related and restructuring expenses		-		(45	)		45
Other		2,482		2,821			(339	)
Total noninterest expense	$	27,529	$	27,416		$	113

Income Tax Expense

Income tax expense was $3.3 million for the first quarter of 2023, a decrease of $201 thousand, compared to $3.5 million for the prior quarter.

The effective tax rate was 22.44% for the first quarter of 2023 and 21.35% for the prior quarter.

Balance Sheet Trends

Total assets at March 31, 2023 were $4.77 billion compared to $4.64 billion at December 31, 2022. The $132.3 million increase is primarily attributable to increases in securities of $75.4 million, cash and cash equivalents of $40.5 million and loans and leases of $28.2 million. Asset increases were offset by an increase in the allowance for credit losses of $8.9 million, primarily for the one-time adjustment of $8.7 million related to the adoption of ASU 2016-13 on January 1, 2023.

Total liabilities increased to $4.33 billion at March 31, 2023 from $4.21 billion at December 31, 2022. The increase of $121.4 million was primarily from organic deposit growth of $152.4 million, offset by a decrease in borrowings of $25.3 million and other liabilities of $5.8 million, related to a decrease in loan related swaps. The decrease in other liabilities was offset by $3.1 million in additional reserve for unfunded lending commitments related to the adoption of ASU 2016-13.

Shareholders' equity at March 31, 2023 totaled $443.4 million, an increase of $10.9 million, from December 31, 2022. The increase in shareholders' equity was primarily driven by net income of $11.5 million for the three months ended March 31, 2023, and the positive change in accumulated other comprehensive income (loss) of $6.7 million, 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 $1.4 million. Tangible book value per share² was $19.66 at March 31, 2023, compared to $19.09 at December 31, 2022. Tangible common equity¹ as a percentage of tangible assets¹ was 7.17% at March 31, 2023, compared with 7.13% at December 31, 2022.

1 _{Non-GAAP measure. See "Non-GAAP Financial Measures" for more information and see the Non-GAAP reconciliation}

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


	Mar		Dec		Increase
Selected Balance Sheet Information	2023		2022		(Decrease)
Total assets	$	4,769,805	$	4,637,498	$	132,307
Total liabilities		4,326,406		4,205,046		121,360
Total equity		443,399		432,452		10,947
Securities		845,194		769,842		75,352
Loans and leases		3,281,787		3,253,627		28,160
Deposits		4,229,546		4,077,100		152,446
Borrowings		16,546		41,860		(25,314	)

Conference Call Information

SmartFinancial issued this earnings release for the first quarter of 2023 on Monday, April 24, 2023, and will host a conference call on Tuesday, April 25, 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, 320998. A replay of the conference call will be available through June 24, 2023, by dialing (866) 813-9403 or (929) 458-6194 and entering the access code, 383016. 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 the Florida Panhandle. 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-tax pre-provision 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-tax pre-provision 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-tax pre-provision return on average assets is the annualized operating pre-tax pre-provision 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-tax pre-provision 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) a deterioration of the credit rating for U.S. long-term sovereign debt, actions that the U.S. government may take to avoid exceeding the debt ceiling, or uncertainties surrounding the debt ceiling and the federal budget; (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 the recent 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; and (18) other general competitive, economic, political, and market factors, including those affecting our business, operations, pricing, products, or services. These and other factors that could cause results to differ materially from those described in the forward-looking statements can be found in SmartFinancial's most recent annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, in each case filed with or furnished to the Securities and Exchange Commission (the "SEC") and available on the SEC's website (www.sec.gov). Undue reliance should not be placed on forward-looking statements. SmartFinancial disclaims any obligation to update or revise any forward-looking statements contained in this release, which speak only as of the date hereof, whether as a result of new information, future events, or otherwise.

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)


	Ending Balances
	Mar			Dec			Sep			Jun			Mar
	2023			2022			2022			2022			2022
Assets:
Cash and cash equivalents	$	306,934		$	266,424		$	543,029		$	654,945		$	763,968
Securities available-for-sale, at fair value		560,418			483,893			519,723			524,864			540,483
Securities held-to-maturity, at amortized cost		284,776			285,949			287,104			288,363			289,532
Other investments		14,059			15,530			15,528			16,569			16,499
Loans held for sale		3,324			1,752			2,742			1,707			5,894
Loans and leases		3,281,787			3,253,627			3,099,116			2,994,074			2,806,026
Less: Allowance for loan and lease losses		(32,279	)		(23,334	)		(22,769	)		(21,938	)		(20,078	)
Loans and leases, net		3,249,508			3,230,293			3,076,347			2,972,136			2,785,948
Premises and equipment, net		92,190			92,511			91,944			89,950			84,793
Other real estate owned		1,708			1,436			1,226			1,612			1,612
Goodwill and other intangibles, net		109,114			109,772			110,460			104,582			105,215
Bank owned life insurance		81,938			81,470			81,001			80,537			80,074
Other assets		65,836			68,468			67,807			52,848			44,561
Total assets	$	4,769,805		$	4,637,498		$	4,796,911		$	4,788,113		$	4,718,579
Liabilities:
Deposits:
Noninterest-bearing demand	$	989,753		$	1,072,449		$	1,186,209		$	1,162,843		$	1,093,933
Interest-bearing demand		989,738			965,911			962,901			999,893			975,272
Money market and savings		1,761,847			1,583,481			1,663,355			1,607,714			1,573,101
Time deposits		488,208			455,259			467,944			511,182			549,047
Total deposits		4,229,546			4,077,100			4,280,409			4,281,632			4,191,353
Borrowings		16,546			41,860			18,423			12,549			36,713
Subordinated debt		42,036			42,015			41,994			41,973			41,952
Other liabilities		38,278			44,071			41,374			31,532			28,519
Total liabilities		4,326,406			4,205,046			4,382,200			4,367,686			4,298,537
Shareholders' Equity:
Common stock		17,004			16,901			16,888			16,898			16,893
Additional paid-in capital		294,930			294,330			293,907			293,815			293,376
Retained earnings		160,085			156,545			144,723			134,362			125,329
Accumulated other comprehensive income (loss)		(28,620	)		(35,324	)		(40,807	)		(24,648	)		(15,556	)
Total shareholders' equity		443,399			432,452			414,711			420,427			420,042
Total liabilities & shareholders' equity	$	4,769,805		$	4,637,498		$	4,796,911		$	4,788,113		$	4,718,579

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands except share and per share data)


	Three Months Ended
	Mar		Dec			Sep		Jun		Mar
	2023		2022			2022		2022		2022
Interest income:
Loans and leases, including fees	$	44,728	$	40,082		$	35,127	$	31,530	$	29,643
Investment securities:
Taxable		3,651		3,337			3,135		2,908		2,418
Tax-exempt		353		797			561		441		368
Federal funds sold and other earning assets		4,446		3,098			3,474		1,430		486
Total interest income		53,178		47,314			42,297		36,309		32,915
Interest expense:
Deposits		16,346		8,844			4,866		2,504		2,014
Borrowings		224		232			97		117		157
Subordinated debt		626		626			626		626		626
Total interest expense		17,196		9,702			5,589		3,247		2,797
Net interest income		35,982		37,612			36,708		33,062		30,118
Provision for loan and lease losses		550		788			974		1,250		1,006
Net interest income after provision for loan and lease losses		35,432		36,824			35,734		31,812		29,112
Noninterest income:
Service charges on deposit accounts		1,445		1,477			1,611		1,446		1,319
Gain (loss) on sale of securities, net		—		144			—		—		—
Mortgage banking		172		77			170		471		834
Investment services		1,005		958			1,051		1,065		1,070
Insurance commissions		1,259		1,233			864		598		901
Interchange and debit card transaction fees		1,383		1,328			1,356		1,467		1,284
Other		1,661		1,908			1,198		2,182		1,703
Total noninterest income		6,925		7,125			6,250		7,229		7,111
Noninterest expense:
Salaries and employee benefits		16,742		16,384			16,317		15,673		15,046
Occupancy and equipment		3,208		3,015			3,167		2,793		3,059
FDIC insurance		541		650			705		676		641
Other real estate and loan related expense		572		517			565		636		729
Advertising and marketing		355		308			288		327		369
Data processing and technology		2,163		2,097			1,872		1,728		1,586
Professional services		807		981			822		745		1,242
Amortization of intangibles		659		688			650		633		637
Merger related and restructuring expenses		—		(45	)		87		81		439
Other		2,482		2,821			2,757		2,634		1,970
Total noninterest expense		27,529		27,416			27,230		25,926		25,718
Income before income taxes		14,828		16,533			14,754		13,115		10,505
Income tax expense		3,328		3,529			3,211		2,900		2,246
Net income	$	11,500	$	13,004		$	11,543	$	10,215	$	8,259
Earnings per common share:
Basic	$	0.69	$	0.78		$	0.69	$	0.61	$	0.49
Diluted	$	0.68	$	0.77		$	0.68	$	0.61	$	0.49
Weighted average common shares outstanding:
Basic		16,791,406		16,758,706			16,749,255		16,734,930		16,718,371
Diluted		16,896,494		16,884,253			16,872,022		16,867,774		16,858,288

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)

YIELD ANALYSIS


	Three Months Ended
	March 31, 2023						December 31, 2022						March 31, 2022
	Average				Yield/		Average				Yield/		Average				Yield/
	Balance		Interest		Cost		Balance		Interest		Cost		Balance		Interest		Cost
Assets:
Loans and leases, including fees¹	$	3,258,452	$	44,728	5.57	%	$	3,150,493	$	40,082	5.05	%	$	2,728,096	$	29,643	4.41	%
Taxable securities		723,540		3,651	2.05	%		701,787		3,337	1.89	%		612,980		2,418	1.60	%
Tax-exempt securities²		65,547		447	2.77	%		93,721		958	4.06	%		105,516		533	2.05	%
Federal funds sold and other earning assets		378,253		4,446	4.77	%		322,970		3,098	3.81	%		775,834		486	0.25	%
Total interest-earning assets		4,425,792		53,272	4.88	%		4,268,971		47,475	4.41	%		4,222,426		33,080	3.18	%
Noninterest-earning assets		359,996						372,864						381,807
Total assets	$	4,785,788					$	4,641,835					$	4,604,233

Liabilities and Shareholders' Equity:
Interest-bearing demand deposits	$	944,132		4,227	1.82	%	$	924,320		3,141	1.35	%	$	921,835		446	0.20	%
Money market and savings deposits		1,820,455		10,381	2.31	%		1,587,688		4,855	1.21	%		1,523,188		859	0.23	%
Time deposits		469,361		1,738	1.50	%		459,996		848	0.73	%		561,207		709	0.51	%
Total interest-bearing deposits		3,233,948		16,346	2.05	%		2,972,004		8,844	1.18	%		3,006,230		2,014	0.27	%
Borrowings		16,858		224	5.39	%		18,309		232	5.03	%		69,769		157	0.91	%
Subordinated debt		42,022		626	6.04	%		42,002		626	5.90	%		41,938		626	6.05	%
Total interest-bearing liabilities		3,292,828		17,196	2.12	%		3,032,315		9,702	1.27	%		3,117,937		2,797	0.36	%
Noninterest-bearing deposits		1,015,670						1,146,374						1,028,298
Other liabilities		44,908						43,109						30,053
Total liabilities		4,353,406						4,221,798						4,176,288
Shareholders' equity		432,382						420,037						427,945
Total liabilities and shareholders' equity	$	4,785,788					$	4,641,835					$	4,604,233

Net interest income, taxable equivalent			$	36,076					$	37,773					$	30,283
Interest rate spread					2.76	%					3.14	%					2.82	%
Tax equivalent net interest margin					3.31	%					3.51	%					2.91	%

Percentage of average interest-earning assets to average interest-bearing liabilities					134.41	%					140.78	%					135.42	%
Percentage of average equity to average assets					9.03	%					9.05	%					9.29	%

¹ Includes average balance of $3.1 million, $3.3 million, and $54.0 million in PPP loans for the quarters ended March 31, 2023, December 31, 2022, and March 31, 2022, respectively.

²Yields computed on tax-exempt instruments on a tax equivalent basis include $94 thousand, $161 thousand, and $165 thousand of taxable equivalent income for the quarters ended March 31, 2023, December 31, 2022, and March 31, 2022, respectively.

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)


	As of and for The Three Months Ended
	Mar			Dec			Sep			Jun			Mar
	2023			2022			2022			2022			2022
Composition of Loans and Leases:
Commercial real estate:
owner occupied	$	764,166		$	765,041		$	714,734		$	684,250		$	612,675
non-owner occupied		871,368			862,720			822,317			850,338			863,181
Commercial real estate, total		1,635,534			1,627,761			1,537,051			1,534,588			1,475,856
Commercial & industrial		571,153			551,867			514,280			483,588			461,153
Construction & land development		386,253			402,501			405,007			364,368			314,654
Consumer real estate		606,343			587,977			562,408			533,582			483,229
Leases		67,701			67,427			64,798			63,264			59,892
Consumer and other		14,803			16,094			15,572			14,684			11,242
Total loans and leases	$	3,281,787		$	3,253,627		$	3,099,116		$	2,994,074		$	2,806,026

Asset Quality and Additional Loan Data:
Nonperforming loans and leases	$	3,247		$	2,951		$	3,379		$	3,413		$	3,342
Other real estate owned		1,708			1,436			1,226			1,612			1,612
Other repossessed assets		66			422			—			17			27
Total nonperforming assets	$	5,021		$	4,809		$	4,605		$	5,042		$	4,981
Restructured loans and leases not included in nonperforming loans and leases	$	97		$	101		$	108		$	678		$	625
Net charge-offs to average loans and leases (annualized)		0.03	%		0.03	%		0.02	%		(0.09	)%		0.04	%
Allowance for loan and leases losses to loans and leases		0.98	%		0.72	%		0.73	%		0.73	%		0.72	%
Nonperforming loans and leases to total loans and leases, gross		0.10	%		0.09	%		0.11	%		0.11	%		0.12	%
Nonperforming assets to total assets		0.11	%		0.10	%		0.10	%		0.11	%		0.11	%
Acquired loan and lease fair value discount balance	$	—		$	13,128		$	14,465		$	14,737		$	14,913
Accretion income on acquired loans and leases		—			1,396			148			225			389
PPP net fees deferred balance		114			122			140			301			972
PPP net fees recognized		8			17			163			669			1,066

Capital Ratios:
Equity to Assets		9.30	%		9.33	%		8.65	%		8.78	%		8.90	%
Tangible common equity to tangible assets (Non-GAAP)¹		7.17	%		7.13	%		6.49	%		6.74	%		6.82	%

SmartFinancial, Inc.²
Tier 1 leverage		7.91	%		7.95	%		7.40	%		7.48	%		7.41	%
Common equity Tier 1		9.91	%		9.65	%		9.65	%		9.95	%		10.30	%
Tier 1 capital		9.91	%		9.65	%		9.65	%		9.95	%		10.30	%
Total capital		11.73	%		11.40	%		11.44	%		11.80	%		12.22	%

SmartBank		Estimated³
Tier 1 leverage		8.87	%		8.90	%		8.27	%		8.33	%		8.24	%
Common equity Tier 1		11.12	%		10.82	%		10.78	%		11.08	%		11.46	%
Tier 1 capital		11.12	%		10.82	%		10.78	%		11.08	%		11.46	%
Total capital		11.81	%		11.44	%		11.41	%		11.72	%		12.08	%

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
	Three Months Ended
	Mar			Dec			Sep			Jun			Mar
	2023			2022			2022			2022			2022
Selected Performance Ratios (Annualized):
Return on average assets		0.97	%		1.11	%		0.95	%		0.87	%		0.73	%
Return on average shareholders' equity		10.79	%		12.28	%		10.77	%		9.76	%		7.83	%
Return on average tangible common equity¹		14.45	%		16.65	%		14.36	%		13.02	%		10.39	%
Noninterest income / average assets		0.59	%		0.61	%		0.52	%		0.62	%		0.63	%
Noninterest expense / average assets		2.33	%		2.34	%		2.25	%		2.21	%		2.27	%
Efficiency ratio		64.16	%		61.28	%		63.39	%		64.35	%		69.08	%

Operating Selected Performance Ratios (Annualized):
Operating return on average assets¹		0.97	%		1.10	%		0.96	%		0.88	%		0.76	%
Operating PTPP return on average assets¹		1.30	%		1.46	%		1.30	%		1.23	%		1.05	%
Operating return on average shareholders' equity¹		10.79	%		12.15	%		10.83	%		9.82	%		8.14	%
Operating return on average tangible common equity¹		14.45	%		16.47	%		14.44	%		13.09	%		10.80	%
Operating efficiency ratio¹		64.02	%		61.36	%		62.93	%		63.88	%		67.60	%
Operating noninterest income / average assets¹		0.59	%		0.60	%		0.52	%		0.62	%		0.63	%
Operating noninterest expense / average assets¹		2.33	%		2.35	%		2.24	%		2.21	%		2.23	%

Selected Interest Rates and Yields:
Yield on loans and leases		5.57	%		5.05	%		4.59	%		4.40	%		4.41	%
Yield on earning assets, FTE		4.88	%		4.41	%		3.79	%		3.39	%		3.18	%
Cost of interest-bearing deposits		2.05	%		1.18	%		0.62	%		0.33	%		0.27	%
Cost of total deposits		1.56	%		0.85	%		0.45	%		0.24	%		0.20	%
Cost of interest-bearing liabilities		2.12	%		1.27	%		0.70	%		0.42	%		0.36	%
Net interest margin, FTE		3.31	%		3.51	%		3.29	%		3.08	%		2.91	%

Per Common Share:
Net income, basic	$	0.69		$	0.78		$	0.69		$	0.61		$	0.49
Net income, diluted		0.68			0.77			0.68			0.61			0.49
Operating earnings, basic¹		0.69			0.77			0.69			0.61			0.51
Operating earnings, diluted¹		0.68			0.76			0.69			0.61			0.51
Book value		26.08			25.59			24.56			24.88			24.86
Tangible book value¹		19.66			19.09			18.02			18.69			18.64
Common shares outstanding		17,004,092			16,900,805			16,887,555			16,898,405			16,893,282

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

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)

NON-GAAP RECONCILIATIONS


	Three Months Ended
	Mar			Dec			Sep			Jun			Mar
	2023			2022			2022			2022			2021
Operating Earnings:
Net income (GAAP)	$	11,500		$	13,004		$	11,543		$	10,215		$	8,259
Noninterest income:
Securities gains (losses), net		—			(144	)		—			—			—
Noninterest expenses:
Merger related and restructuring expenses		—			(45	)		87			81			439
Income taxes:
Income tax effect of adjustments		—			49			(22	)		(21	)		(113	)
Operating earnings (Non-GAAP)	$	11,500		$	12,864		$	11,608		$	10,275		$	8,585
Operating earnings per common share (Non-GAAP):
Basic	$	0.69		$	0.77		$	0.69		$	0.61		$	0.51
Diluted		0.68			0.76			0.69			0.61			0.51

Operating Noninterest Income:
Noninterest income (GAAP)	$	6,925		$	7,125		$	6,250		$	7,229		$	7,111
Securities gains (losses), net		—			(144	)		—			—			—
Operating noninterest income (Non-GAAP)	$	6,925		$	6,981		$	6,250		$	7,229		$	7,111
Operating noninterest income (Non-GAAP)/average assets¹		0.59	%		0.60	%		0.52	%		0.62	%		0.63	%

Operating Noninterest Expense:
Noninterest expense (GAAP)	$	27,529		$	27,416		$	27,230		$	25,926		$	25,718
Merger related and restructuring expenses		—			45			(87	)		(81	)		(439	)
Operating noninterest expense (Non-GAAP)	$	27,529		$	27,461		$	27,143		$	25,845		$	25,279
Operating noninterest expense (Non-GAAP)/average assets²		2.33	%		2.35	%		2.24	%		2.21	%		2.23	%

Operating Pre-tax Pre-provision ("PTPP") Earnings:
Net interest income (GAAP)	$	35,982		$	37,612		$	36,708		$	33,062		$	30,118
Operating noninterest income (Non-GAAP)		6,925			6,981			6,250			7,229			7,111
Operating noninterest expense (Non-GAAP)		(27,529	)		(27,461	)		(27,143	)		(25,845	)		(25,279	)
Operating PTPP earnings (Non-GAAP)	$	15,378		$	17,132		$	15,815		$	14,446		$	11,950

Non-GAAP Return Ratios:
Operating return on average assets (Non-GAAP)³		0.97	%		1.10	%		0.96	%		0.88	%		0.76	%
Operating PTPP return on average assets (Non-GAAP)⁴		1.30	%		1.46	%		1.30	%		1.23	%		1.05	%
Return on average tangible common equity (Non-GAAP)⁵		14.45	%		16.65	%		14.36	%		13.02	%		10.39	%
Operating return on average shareholders' equity (Non-GAAP)⁶		10.79	%		12.15	%		10.83	%		9.82	%		8.14	%
Operating return on average tangible common equity (Non-GAAP)⁷		14.45	%		16.47	%		14.44	%		13.09	%		10.80	%

Operating Efficiency Ratio:
Efficiency ratio (GAAP)		64.16	%		61.28	%		63.39	%		64.35	%		69.08	%
Adjustment for taxable equivalent yields		(0.14	)%		(0.22	)%		(0.25	)%		(0.27	)%		(0.31	)%
Adjustment for securities gains (losses)		—	%		(0.20	)%		—	%		—	%		—	%
Adjustment for merger related income and costs		—	%		0.50	%		(0.21	)%		(0.20	)%		(1.17	)%
Operating efficiency ratio (Non-GAAP)		64.02	%		61.36	%		62.93	%		63.88	%		67.60	%

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

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

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

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

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)

NON-GAAP RECONCILIATIONS


	Three Months Ended
	Mar			Dec			Sep			Jun			Mar
	2023			2022			2022			2022			2021
Tangible Common Equity:
Shareholders' equity (GAAP)	$	443,399		$	432,452		$	414,711		$	420,427		$	420,042
Less goodwill and other intangible assets		109,114			109,772			110,460			104,582			105,215
Tangible common equity (Non-GAAP)	$	334,285		$	322,680		$	304,251		$	315,845		$	314,827

Average Tangible Common Equity:
Average shareholders' equity (GAAP)	$	432,382		$	420,037		$	425,365		$	419,726		$	427,945
Less average goodwill and other intangible assets		109,537			110,206			106,483			104,986			105,617
Average tangible common equity (Non-GAAP)	$	322,845		$	309,831		$	318,882		$	314,740		$	322,328

Tangible Book Value per Common Share:
Book value per common share (GAAP)	$	26.08		$	25.59		$	24.56		$	24.88		$	24.86
Adjustment due to goodwill and other intangible assets		(6.42	)		(6.50	)		(6.54	)		(6.19	)		(6.23	)
Tangible book value per common share (Non-GAAP)¹	$	19.66		$	19.09		$	18.02		$	18.69		$	18.64

Tangible Common Equity to Tangible Assets:
Total Assets	$	4,769,805		$	4,637,498		$	4,796,911		$	4,788,113		$	4,718,579
Less goodwill and other intangibles		109,114			109,772			110,460			104,582			105,215
Tangible Assets (Non-GAAP):	$	4,660,691		$	4,527,726		$	4,686,451		$	4,683,531		$	4,613,364
Tangible common equity to tangible assets (Non-GAAP)		7.17	%		7.13	%		6.49	%		6.74	%		6.82	%

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.

SmartFinancial Announces Results for the First Quarter 2023