KNOXVILLE, Tenn., Jan. 22, 2024 (GLOBE NEWSWIRE) -- SmartFinancial, Inc. ((", SmartFinancial", or the ", Company", , NYSE:SMBK), today announced net income of $6.2 million, or $0.37 per diluted common share, for the fourth quarter of 2023, compared to net income of $13.0 million, or $0.77 per diluted common share, for the fourth quarter of 2022, and compared to prior quarter net income of $2.1 million, or $0.12 per diluted common share. Operating earnings¹, which excludes non-recurring expenses related to a Community Reinvestment Act donation of a former branch location and accruals in respect of pending litigation, net of tax adjustments, totaled $6.9 million, or $0.41 per diluted common share, in the fourth quarter of 2023, compared to $12.9 million, or $0.76 per diluted common share, in the fourth quarter of 2022, and compared to $7.2 million, or $0.43 per diluted common share, in the third quarter of 2023.

Highlights for the Fourth Quarter of 2023

Operating earnings¹ of $6.9 million, or $0.41 per diluted common share
Net organic loan and lease growth of $66 million - 8% annualized quarter-over-quarter increase
Credit quality remains solid with nonperforming assets to total assets of 0.20%
Deposit growth of $21.3 million – 2.0% annualized quarter-over-quarter increase
SmartFinancial celebrates successful debut on the New York Stock Exchange
Chief Banking Officer position added in fourth quarter 2023
SmartBank President and CEO elected to Federal Reserve Bank of Atlanta's Board of Directors

Billy Carroll, President & CEO, stated: "Our Company closed 2023 with positive momentum despite persistent operating environment challenges. The fourth quarter was highlighted by continued growth in our balance sheet with loans growing at 8% and deposits growing at 2%, annualized, respectively quarter over quarter. Our operating earnings were bolstered by stabilization of our net interest margin, as well as continued expense control. Despite the headwinds our industry faced during the year, our team responded incredibly well, positioning SmartBank to continue its upward trajectory."

SmartFinancial's Chairman, Miller Welborn, concluded: "We are extremely proud of the entire SmartBank family for its efforts this year. Once again, this year showed that our team's steadfast commitment to clients, even in the face of adversity, continues to be a winning formula. And while our growth in 2023 was good, I am especially pleased with the various operational enhancements we implemented throughout the year. Our associates work tirelessly to make SmartBank better and it's through these initiatives that we improved our organization and ready us for 2024 and beyond. Thank you!"

Net Interest Income and Net Interest Margin

Net interest income was $31.5 million for the fourth quarter of 2023, compared to $31.0 million for the prior quarter. Average earning assets totaled $4.38 billion, a decrease of $17.3 million from the prior quarter. The decrease in average earnings assets was primarily driven by a decrease in average securities of $125.5 million, offset by an increase in average loans and leases of $47.8 million and average interest-earning cash of $60.4 million. Average interest-bearing liabilities increased by $19.7 million from the prior quarter, attributable to an increase in average deposits of $22.5 million, offset by a decrease in average borrowings of $2.8 million.

The tax equivalent net interest margin was 2.86% for the fourth quarter of 2023, compared to 2.81% for the prior quarter. The tax equivalent net interest margin was positively impacted by the increased yield on interest-earning assets coupled with a slower rise in the cost of interest-bearing liabilities, quarter over quarter. The yield on loans and leases, excluding loan fees, was 5.61% for the fourth quarter, compared to 5.52% for the prior quarter.

The cost of total deposits for the fourth quarter of 2023 was 2.35% compared to 2.20% in the prior quarter. The cost of interest-bearing liabilities increased to 3.07% for the fourth quarter of 2023, compared to 2.89% for the prior quarter. The cost of average interest-bearing deposits was 3.00% for the fourth quarter of 2023, compared to 2.84% for the prior quarter, an increase of 16 basis points.

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

	Three Months Ended
	Dec		Sep		Increase
Selected Interest Rates and Yields	2023		2023		(Decrease)
Yield on loans and leases, excluding loan fees	5.61	%	5.52	%	0.09	%
Yield on loans and leases	5.68	%	5.61	%	0.07	%
Yield on earning assets, on a fully tax equivalent basis (FTE)	5.22	%	4.99	%	0.23	%
Cost of interest-bearing deposits	3.00	%	2.84	%	0.16	%
Cost of total deposits	2.35	%	2.20	%	0.15	%
Cost of interest-bearing liabilities	3.07	%	2.89	%	0.18	%
Net interest margin, FTE	2.86	%	2.81	%	0.05	%

Provision for Credit Losses on Loans and Leases and Credit Quality

At December 31, 2023, the allowance for credit losses was $35.1 million. The allowance for credit losses to total loans and leases was 1.02% as of December 31, 2023, compared to 1.00% as of September 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
		Dec				Sep
Provision for Credit Losses on Loans and Leases Rollforward		2023				2023				Change
Beginning balance	$	33,687			$	32,747			$	940
Charge-offs		(424	)			(417	)			(7	)
Recoveries		302				73				229
Net (charge-offs) recoveries		(122	)			(344	)			222
Provision for credit losses⁽¹⁾		1,501				1,284				217
Ending balance	$	35,066			$	33,687			$	1,379

Allowance for credit losses to total loans and leases, gross		1.02		%		1.00		%		0.02		%

⁽¹⁾The current quarter-ended and prior quarter-ended, excludes unfunded commitments provision of $69 thousand and a release of $489 thousand, respectively. At December 31, 2023, the unfunded commitment liability totaled $2.4 million.

Nonperforming loans and leases as a percentage of total loans and leases was 0.24% as of December 31, 2023, an increase of 12 basis points from the 0.12% reported in the third 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 0.20% as of December 31, 2023, and 0.12% on September 30, 2023.

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

	Three Months Ended
		Dec			Sep			Increase
Credit Quality		2023			2023			(Decrease)
Nonaccrual loans and leases	$	7,931		$	3,934		$	3,997
Loans and leases past due 90 days or more and still accruing		170			229			(59	)
Total nonperforming loans and leases		8,101			4,163			3,938
Other real estate owned		517			1,370			(853	)
Other repossessed assets		1,117			348			769
Total nonperforming assets	$	9,735		$	5,881		$	3,854

Nonperforming loans and leases to total loans and leases, gross		0.24	%		0.12	%		0.12		%
Nonperforming assets to total assets		0.20	%		0.12	%		0.08		%

Noninterest Income

Noninterest income increased $6.9 million to $7.6 million for the fourth quarter of 2023 compared to $691 thousand for the prior quarter. The current quarter increase was associated with the $6.8 million pre-tax loss on the sale of $159.6 million of available for sale securities, moving into higher yielding assets during the prior quarter. Excluding the loss on securities, noninterest income increased $87 thousand quarter over quarter.

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

	Three Months Ended
		Dec		Sep			Increase
Noninterest Income		2023		2023			(Decrease)
Service charges on deposit accounts	$	1,673	$	1,736		$	(63	)
Gain (loss) on sale of securities, net		-		(6,801	)		6,801
Mortgage banking income		227		309			(82	)
Investment services		1,339		1,461			(122	)
Insurance commissions		1,133		1,153			(20	)
Interchange and debit card transaction fees		1,370		1,357			13
Other		1,837		1,476			361
Total noninterest income	$	7,579	$	691		$	6,888

Noninterest Expense

Noninterest expense increased $1.2 million to $29.7 million for the fourth quarter of 2023 compared to $28.5 million for the prior quarter. The current quarter increase was primarily related to an increase in other noninterest expenses associated with a Community Reinvestment Act donation of a former branch location and accruals in respect of pending litigation.

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

	Three Months Ended
		Dec		Sep		Increase
Noninterest Expense		2023		2023		(Decrease)
Salaries and employee benefits	$	16,275	$	16,785	$	(510	)
Occupancy and equipment		3,378		3,547		(169	)
FDIC insurance		915		825		90
Other real estate and loan related expenses		781		603		178
Advertising and marketing		336		346		(10	)
Data processing and technology		2,458		2,378		80
Professional services		1,136		735		401
Amortization of intangibles		643		647		(4	)
Merger related and restructuring expenses		-		110		(110	)
Other		3,773		2,540		1,233
Total noninterest expense	$	29,695	$	28,516	$	1,179

Income Tax Expense

Income tax expense was $1.6 million for the fourth quarter of 2023, an increase of $1.3 million, compared to $319 thousand for the prior quarter.

The effective tax rate was 20.95% for the fourth quarter of 2023 and 13.37% for the prior quarter. The primary reason for the 7.58% increase in the effective tax rate was due to lower earnings in the prior quarter, largely from the $6.8 million pre-tax loss on sale of available-for-sale securities.

Balance Sheet Trends

Total assets at December 31, 2023 were $4.83 billion compared to $4.64 billion at December 31, 2022. The $191.9 million increase is primarily attributable to increases in loans and leases of $190.8 million, cash and cash equivalents of $85.8 million and other assets of $7.5 million. Asset increases were offset by a decrease in securities of $80.2 million and an increase in the allowance for credit losses of $11.7 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 $4.37 billion at December 31, 2023 from $4.21 billion at December 31, 2022. The increase of $164.5 million was primarily from organic deposit growth of $190.8 million, offset by a decrease in borrowings of $28.8 million.

Shareholders' equity at December 31, 2023, totaled $459.9 million, an increase of $27.4 million, from December 31, 2022. The increase in shareholders' equity was primarily driven by net income of $28.6 million for the twelve months ended December 31, 2023, and the positive change of $9.4 million in accumulated other comprehensive income, 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 $5.4 million. Tangible book value per share¹ was $20.76 at December 31, 2023, compared to $19.09 at December 31, 2022. Tangible common equity¹ as a percentage of tangible assets¹ was 7.47% at December 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):

	Dec		Dec		Increase
Selected Balance Sheet Information	2023		2022		(Decrease)
Total assets	$	4,829,387	$	4,637,498	$	191,889
Total liabilities		4,369,501		4,205,046		164,455
Total equity		459,886		432,452		27,434
Securities		689,646		769,842		(80,196	)
Loans and leases		3,444,462		3,253,627		190,835
Deposits		4,267,854		4,077,100		190,754
Borrowings		13,078		41,860		(28,782	)

Board of Directors Declares Dividend

On January 18, 2024, the board of directors of SmartFinancial declared a quarterly cash dividend of $0.08 per share of SmartFinancial common stock payable on February 20, 2024, to shareholders of record as of the close of business on February 2, 2024.

Conference Call Information

SmartFinancial issued this earnings release for the fourth quarter of 2023 on Monday, January 22, 2024, and will host a conference call on Tuesday, January 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, 197280. A replay of the conference call will be available through March 14, 2024, by dialing (866) 813-9403 or (929) 458-6194 and entering the access code, 371589. Conference call materials will be published on the Company's webpage located at http://www.smartfinancialinc.com/CorporateProfile, at 9:00 a.m. ET prior to the conference call.

About SmartFinancial, Inc.

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


Source
SmartFinancial, Inc.

Investor Contacts
Billy Carroll
President & CEO
(865) 868-0613 billy.carroll@smartbank.com

Ron Gorczynski
Executive Vice President, Chief Financial Officer
(865) 437-5724 ron.gorczynski@smartbank.com

Media Contact
Kelley Fowler
Senior Vice President, Public Relations & Marketing
(865) 868-0611 kelley.fowler@smartbank.com

Non-GAAP Financial Measures

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

Forward-Looking Statements

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

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)

	Ending Balances
	Dec			Sep			Jun			Mar			Dec
	2023			2023			2023			2023			2022
Assets:
Cash and cash equivalents	$	352,271		$	400,258		$	238,898		$	306,934		$	266,424
Securities available-for-sale, at fair value		408,410			385,131			540,308			560,418			483,893
Securities held-to-maturity, at amortized cost		281,236			282,313			283,564			284,776			285,949
Other investments		13,662			13,805			14,396			14,059			15,530
Loans held for sale		4,418			2,734			986			3,324			1,752
Loans and leases		3,444,462			3,378,999			3,337,790			3,281,787			3,253,627
Less: Allowance for credit losses		(35,066	)		(33,687	)		(32,747	)		(32,279	)		(23,334	)
Loans and leases, net		3,409,396			3,345,312			3,305,043			3,249,508			3,230,293
Premises and equipment, net		92,963			92,020			92,351			92,190			92,511
Other real estate owned		517			1,370			1,708			1,708			1,436
Goodwill and other intangibles, net		107,148			107,792			108,439			109,114			109,772
Bank owned life insurance		83,434			82,914			82,419			81,938			81,470
Other assets		75,932			83,522			77,688			65,836			68,468
Total assets	$	4,829,387		$	4,797,171		$	4,745,800		$	4,769,805		$	4,637,498
Liabilities:
Deposits:
Noninterest-bearing demand	$	898,044		$	923,763		$	1,003,432		$	989,753		$	1,072,449
Interest-bearing demand		1,006,915			993,717			938,758			989,738			965,911
Money market and savings		1,812,427			1,766,409			1,720,202			1,761,847			1,583,481
Time deposits		550,468			562,620			537,192			488,208			455,259
Total deposits		4,267,854			4,246,509			4,199,584			4,229,546			4,077,100
Borrowings		13,078			14,117			15,496			16,546			41,860
Subordinated debt		42,099			42,078			42,057			42,036			42,015
Other liabilities		46,470			47,815			43,816			38,278			44,071
Total liabilities		4,369,501			4,350,519			4,300,953			4,326,406			4,205,046
Shareholders' Equity:
Common stock		16,989			16,995			17,004			17,004			16,901
Additional paid-in capital		295,699			295,542			295,296			294,930			294,330
Retained earnings		173,105			168,271			167,564			160,085			156,545
Accumulated other comprehensive income (loss)		(25,907	)		(34,156	)		(35,017	)		(28,620	)		(35,324	)
Total shareholders' equity		459,886			446,652			444,847			443,399			432,452
Total liabilities & shareholders' equity	$	4,829,387		$	4,797,171		$	4,745,800		$	4,769,805		$	4,637,498

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands except share and per share data)

	Three Months Ended												Year Ended
	Dec		Sep			Jun		Mar		Dec			Dec			Dec
	2023		2023			2023		2023		2022			2023			2022
Interest income:
Loans and leases, including fees	$	48,767	$	47,539		$	45,446	$	44,728	$	40,082		$	186,479		$	136,381
Investment securities:
Taxable		4,344		4,335			4,335		3,651		3,337			16,665			11,799
Tax-exempt		352		356			357		353		797			1,418			2,166
Federal funds sold and other earning assets		4,032		3,045			1,956		4,446		3,098			13,481			8,488
Total interest income		57,495		55,275			52,094		53,178		47,314			218,043			158,834
Interest expense:
Deposits		24,926		23,433			19,554		16,346		8,844			84,260			18,228
Borrowings		162		210			339		224		232			936			602
Subordinated debt		890		626			626		626		626			2,767			2,503
Total interest expense		25,978		24,269			20,519		17,196		9,702			87,963			21,333
Net interest income		31,517		31,006			31,575		35,982		37,612			130,080			137,501
Provision for credit losses		1,571		795			113		550		788			3,029			4,018
Net interest income after provision for credit losses		29,946		30,211			31,462		35,432		36,824			127,051			133,483
Noninterest income:
Service charges on deposit accounts		1,673		1,736			1,657		1,445		1,477			6,511			5,853
Gain (loss) on sale of securities, net		—		(6,801	)		—		—		144			(6,801	)		144
Mortgage banking		227		309			332		172		77			1,040			1,552
Investment services		1,339		1,461			1,300		1,005		958			5,105			4,144
Insurance commissions		1,133		1,153			1,139		1,259		1,233			4,684			3,595
Interchange and debit card transaction fees		1,370		1,357			1,347		1,383		1,328			5,457			5,435
Other		1,837		1,476			1,355		1,661		1,908			6,329			6,992
Total noninterest income		7,579		691			7,130		6,925		7,125			22,325			27,715
Noninterest expense:
Salaries and employee benefits		16,275		16,785			15,947		16,742		16,384			65,749			63,420
Occupancy and equipment		3,378		3,547			3,318		3,208		3,015			13,451			12,034
FDIC insurance		915		825			875		541		650			3,156			2,672
Other real estate and loan related expense		781		603			441		572		517			2,397			2,446
Advertising and marketing		336		346			305		355		308			1,342			1,293
Data processing and technology		2,458		2,378			2,235		2,163		2,097			9,235			7,283
Professional services		1,136		735			764		807		981			3,443			3,790
Amortization of intangibles		643		647			675		659		688			2,624			2,607
Merger related and restructuring expenses		—		110			—		—		(45	)		110			562
Other		3,773		2,540			2,850		2,482		2,821			11,643			10,183
Total noninterest expense		29,695		28,516			27,410		27,529		27,416			113,150			106,290
Income before income taxes		7,830		2,386			11,182		14,828		16,533			36,226			54,908
Income tax expense		1,640		319			2,346		3,328		3,529			7,633			11,886
Net income	$	6,190	$	2,067		$	8,836	$	11,500	$	13,004		$	28,593		$	43,022
Earnings per common share:
Basic	$	0.37	$	0.12		$	0.53	$	0.69	$	0.78		$	1.70		$	2.57
Diluted	$	0.37	$	0.12		$	0.52	$	0.68	$	0.77		$	1.69		$	2.55
Weighted average common shares outstanding:
Basic		16,814,647		16,807,548			16,806,389		16,791,406		16,758,706			16,805,068			16,740,450
Diluted		16,918,234		16,918,635			16,898,091		16,896,494		16,884,253			16,911,185			16,871,369

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)

YIELD ANALYSIS

	Three Months Ended
	December 31, 2023						September 30, 2023						December 31, 2022
	Average				Yield/		Average				Yield/		Average				Yield/
	Balance		Interest		Cost		Balance		Interest		Cost		Balance		Interest		Cost
Assets:
Loans and leases, including fees¹	$	3,408,430	$	48,767	5.68	%	$	3,360,678	$	47,539	5.61	%	$	3,150,493	$	40,082	5.05	%
Taxable securities		618,511		4,344	2.79	%		743,054		4,335	2.31	%		701,787		3,337	1.89	%
Tax-exempt securities²		63,767		445	2.77	%		64,707		451	2.77	%		93,721		958	4.06	%
Federal funds sold and other earning assets		289,896		4,032	5.52	%		229,487		3,045	5.26	%		322,970		3,098	3.81	%
Total interest-earning assets		4,380,604		57,588	5.22	%		4,397,926		55,370	4.99	%		4,268,971		47,475	4.41	%
Noninterest-earning assets		386,202						379,456						372,864
Total assets	$	4,766,806					$	4,777,382					$	4,641,835

Liabilities and Shareholders' Equity:
Interest-bearing demand deposits	$	974,637		5,631	2.29	%	$	969,122		5,463	2.24	%	$	924,320		3,141	1.35	%
Money market and savings deposits		1,764,826		14,556	3.27	%		1,753,671		13,744	3.11	%		1,587,688		4,855	1.21	%
Time deposits		556,996		4,739	3.38	%		551,191		4,226	3.04	%		459,996		848	0.73	%
Total interest-bearing deposits		3,296,459		24,926	3.00	%		3,273,984		23,433	2.84	%		2,972,004		8,844	1.18	%
Borrowings		13,420		162	4.79	%		16,228		210	5.13	%		18,309		232	5.03	%
Subordinated debt		42,087		890	8.39	%		42,065		626	5.90	%		42,002		626	5.91	%
Total interest-bearing liabilities		3,351,966		25,978	3.07	%		3,332,277		24,269	2.89	%		3,032,315		9,702	1.27	%
Noninterest-bearing deposits		915,259						951,179						1,146,374
Other liabilities		50,055						48,494						43,109
Total liabilities		4,317,280						4,331,950						4,221,798
Shareholders' equity		449,526						445,432						420,037
Total liabilities and shareholders' equity	$	4,766,806					$	4,777,382					$	4,641,835

Net interest income, taxable equivalent			$	31,610					$	31,101					$	37,773
Interest rate spread					2.14	%					2.11	%					3.14	%
Tax equivalent net interest margin					2.86	%					2.81	%					3.51	%

Percentage of average interest-earning assets to average interest-bearing liabilities					130.69	%					131.98	%					140.78	%
Percentage of average equity to average assets					9.43	%					9.32	%					9.05	%

¹ Includes average balance of $2.3 million, $2.7 million, and $3.3 million in PPP loans for the quarters ended December 31, 2023, September 30, 2023, and December 31, 2022, respectively.

²Yields computed on tax-exempt instruments on a tax equivalent basis include $94 thousand, $95 thousand, and $161 thousand of taxable equivalent income for the quarters ended December 31, 2023, September 30, 2023, and December 31, 2022, respectively.

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)

YIELD ANALYSIS

	Year Ended
	December 31, 2023							December 31, 2022
	Average				Yield/			Average				Yield/
	Balance		Interest		Cost			Balance		Interest		Cost
Assets:
Loans and leases, including fees¹	$	3,334,523	$	186,479		5.59	%	$	2,948,511	$	136,381	4.63	%
Taxable securities		713,637		16,665		2.34	%		688,428		11,799	1.71	%
Tax-exempt securities²		64,816		1,795		2.77	%		100,566		2,831	2.82	%
Federal funds sold and other earning assets		272,864		13,481		4.94	%		577,593		8,488	1.47	%
Total interest-earning assets		4,385,840		218,420		4.98	%		4,315,098		159,499	3.70	%
Noninterest-earning assets		370,436							373,026
Total assets	$	4,756,276						$	4,688,124

Liabilities and Shareholders' Equity:
Interest-bearing demand deposits	$	959,639		20,214		2.11	%	$	945,414		6,278	0.66	%
Money market and savings deposits		1,768,869		50,468		2.85	%		1,576,170		9,137	0.58	%
Time deposits		520,799		13,578		2.61	%		513,416		2,813	0.55	%
Total interest-bearing deposits		3,249,307		84,260		2.59	%		3,035,000		18,228	0.60	%
Borrowings		17,824		936		5.25	%		32,986		602	1.83	%
Subordinated debt		42,055		2,767		6.58	%		41,970		2,503	5.96	%
Total interest-bearing liabilities		3,309,186		87,963		2.66	%		3,109,956		21,333	0.69	%
Noninterest-bearing deposits		958,078							1,120,555
Other liabilities		46,052							34,361
Total liabilities		4,313,316							4,264,872
Shareholders' equity		442,960							423,252
Total liabilities and shareholders' equity	$	4,756,276						$	4,688,124

Net interest income, taxable equivalent			$	130,457						$	138,166
Interest rate spread						2.32	%					3.01	%
Tax equivalent net interest margin						2.97	%					3.20	%

Percentage of average interest-earning assets to average interest-bearing liabilities						132.54	%					138.75	%
Percentage of average equity to average assets						9.31	%					9.03	%

¹Includes average balance of $2.8 million and $14.1 million in PPP loans for the year ended December 31, 2023, and 2022, respectively.

²Yields computed on tax-exempt instruments on a tax equivalent basis include $377 thousand and $665 thousand of taxable equivalent income for the year ended December 31, 2023, and 2022, respectively.

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)

	As of and for The Three Months Ended
	Dec			Sep			Jun				Mar			Dec
	2023			2023			2023				2023			2022
Composition of Loans and Leases:
Commercial real estate:
Owner occupied	$	798,416		$	776,402		$	769,978			$	764,166		$	765,041
Non-owner occupied		940,789			890,774			871,779				871,368			862,720
Commercial real estate, total		1,739,205			1,667,176			1,641,757				1,635,534			1,627,761
Commercial & industrial		645,918			617,115			594,427				571,153			551,867
Construction & land development		327,185			373,068			394,742				386,253			402,501
Consumer real estate		649,867			638,518			624,828				606,343			587,977
Leases		68,752			68,538			66,401				67,701			67,427
Consumer and other		13,535			14,584			15,635				14,803			16,094
Total loans and leases	$	3,444,462		$	3,378,999		$	3,337,790			$	3,281,787		$	3,253,627

Asset Quality and Additional Loan Data:
Nonperforming loans and leases	$	8,101		$	4,163		$	3,722			$	3,247		$	2,951
Other real estate owned		517			1,370			1,708				1,708			1,436
Other repossessed assets		1,117			348			282				66			422
Total nonperforming assets	$	9,735		$	5,881		$	5,712			$	5,021		$	4,809
Restructured loans and leases not included in nonperforming loans and leases	$	4,245		$	2,376		$	657			$	97		$	101
Net charge-offs to average loans and leases (annualized)		0.04	%		0.04	%		(0.01	)	%		0.03	%		0.03	%
Allowance for credit losses to loans and leases		1.02	%		1.00	%		0.98		%		0.98	%		0.72	%
Nonperforming loans and leases to total loans and leases, gross		0.24	%		0.12	%		0.11		%		0.10	%		0.09	%
Nonperforming assets to total assets		0.20	%		0.12	%		0.12		%		0.11	%		0.10	%
Acquired loan and lease fair value discount balance	$	—		$	—		$	—			$	—		$	13,128
Accretion income on acquired loans and leases		—			—			—				—			1,396
PPP net fees deferred balance		84			94			104				114			122
PPP net fees recognized		10			10			10				8			17

Capital Ratios:
Equity to Assets		9.52	%		9.31	%		9.37		%		9.30	%		9.33	%
Tangible common equity to tangible assets (Non-GAAP)¹		7.47	%		7.23	%		7.25		%		7.17	%		7.13	%

SmartFinancial, Inc.²
Tier 1 leverage		8.27	%		8.13	%		8.24		%		7.91	%		7.95	%
Common equity Tier 1		10.21	%		10.07	%		10.12		%		9.95	%		9.65	%
Tier 1 capital		10.21	%		10.07	%		10.12		%		9.95	%		9.65	%
Total capital		11.86	%		11.90	%		11.94		%		11.77	%		11.40	%

SmartBank		Estimated³
Tier 1 leverage		9.18	%		9.00	%		9.18		%		8.87	%		8.90	%
Common equity Tier 1		11.29	%		11.15	%		11.27		%		11.15	%		10.82	%
Tier 1 capital		11.29	%		11.15	%		11.27		%		11.15	%		10.82	%
Total capital		12.04	%		11.87	%		11.97		%		11.85	%		11.44	%

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															Year Ended
	Dec			Sep			Jun			Mar			Dec			Dec			Dec
	2023			2023			2023			2023			2022			2023			2022
Selected Performance Ratios (Annualized):
Return on average assets		0.52	%		0.17	%		0.75	%		0.97	%		1.11	%		0.60	%		0.92	%
Return on average shareholders' equity		5.46	%		1.84	%		7.98	%		10.79	%		12.28	%		6.45	%		10.16	%
Return on average tangible common equity¹		7.18	%		2.43	%		10.57	%		14.45	%		16.65	%		8.55	%		13.60	%
Noninterest income / average assets		0.63	%		0.06	%		0.61	%		0.59	%		0.61	%		0.47	%		0.59	%
Noninterest expense / average assets		2.47	%		2.37	%		2.34	%		2.33	%		2.34	%		2.38	%		2.27	%
Efficiency ratio		75.95	%		89.96	%		70.82	%		64.16	%		61.28	%		74.24	%		64.33	%

Operating Selected Performance Ratios (Annualized):
Operating return on average assets¹		0.57	%		0.60	%		0.75	%		0.97	%		1.10	%		0.72	%		0.92	%
Operating PPNR return on average assets¹		0.86	%		0.84	%		0.96	%		1.30	%		1.46	%		0.99	%		1.27	%
Operating return on average shareholders' equity¹		6.07	%		6.41	%		7.98	%		10.79	%		12.15	%		7.77	%		10.24	%
Operating return on average tangible common equity¹		7.98	%		8.46	%		10.57	%		14.45	%		16.47	%		10.29	%		13.69	%
Operating efficiency ratio¹		73.41	%		73.60	%		70.64	%		64.02	%		61.36	%		70.26	%		63.79	%
Operating noninterest income / average assets¹		0.63	%		0.62	%		0.61	%		0.59	%		0.60	%		0.61	%		0.59	%
Operating noninterest expense / average assets¹		2.39	%		2.36	%		2.34	%		2.33	%		2.35	%		2.36	%		2.26	%

Selected Interest Rates and Yields:
Yield on loans and leases, excluding loan fees		5.61	%		5.52	%		5.39	%		5.20	%		4.99	%		5.43	%		4.41	%
Yield on loans and leases		5.68	%		5.61	%		5.51	%		5.57	%		5.05	%		5.59	%		4.63	%
Yield on earning assets, FTE		5.22	%		4.99	%		4.82	%		4.88	%		4.41	%		4.98	%		3.70	%
Cost of interest-bearing deposits		3.00	%		2.84	%		2.46	%		2.05	%		1.18	%		2.59	%		0.60	%
Cost of total deposits		2.35	%		2.20	%		1.89	%		1.56	%		0.85	%		2.00	%		0.44	%
Cost of interest-bearing liabilities		3.07	%		2.89	%		2.53	%		2.12	%		1.27	%		2.66	%		0.69	%
Net interest margin, FTE		2.86	%		2.81	%		2.93	%		3.31	%		3.51	%		2.97	%		3.20	%

Per Common Share:
Net income, basic	$	0.37		$	0.12		$	0.53		$	0.69		$	0.78		$	1.70		$	2.57
Net income, diluted		0.37			0.12			0.52			0.68			0.77			1.69			2.55
Operating earnings, basic¹		0.41			0.43			0.53			0.69			0.77			2.05			2.59
Operating earnings, diluted¹		0.41			0.43			0.52			0.68			0.76			2.03			2.57
Book value		27.07			26.28			26.16			26.08			25.59			27.07			25.59
Tangible book value¹		20.76			19.94			19.78			19.66			19.09			20.76			19.09
Common shares outstanding		16,988,879			16,994,543			17,004,092			17,004,092			16,900,805			16,988,879			16,900,805

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																				Year Ended
	Dec				Sep				Jun				Mar				Dec				Dec				Dec
	2023				2023				2023				2022				2022				2023				2022
Operating Earnings:
Net income (GAAP)	$	6,190			$	2,067			$	8,836			$	11,500			$	13,004			$	28,593			$	43,022
Noninterest income:
Securities (gains) losses, net		—				6,801				—				—				(144	)			6,801				(144	)
Noninterest expenses:
Donation of a former branch location		250				—				—				—				—				250				—
Accruals for pending litigation		675				—				—				—				—				675				—
Merger related and restructuring expenses		—				110				—				—				(45	)			110				562
Income taxes:
Income tax effect of adjustments		(239	)			(1,785	)			—				—				49				(2,024	)			(108	)
Operating earnings (Non-GAAP)	$	6,876			$	7,193			$	8,836			$	11,500			$	12,864			$	34,405			$	43,332
Operating earnings per common share (Non-GAAP):
Basic	$	0.41			$	0.43			$	0.53			$	0.69			$	0.77			$	2.05			$	2.59
Diluted		0.41				0.43				0.52				0.68				0.76				2.03				2.57

Operating Noninterest Income:
Noninterest income (GAAP)	$	7,579			$	691			$	7,130			$	6,925			$	7,125			$	22,325			$	27,715
Securities (gains) losses, net		—				6,801				—				—				(144	)			6,801				(144	)
Operating noninterest income (Non-GAAP)	$	7,579			$	7,492			$	7,130			$	6,925			$	6,981			$	29,126			$	27,571
Operating noninterest income (Non-GAAP)/average assets¹		0.63		%		0.62		%		0.61		%		0.59		%		0.60		%		0.61		%		0.59		%

Operating Noninterest Expense:
Noninterest expense (GAAP)	$	29,695			$	28,516			$	27,410			$	27,529			$	27,416			$	113,150			$	106,290
Donation of a former branch location		(250	)			—				—				—				—				(250	)			—
Accruals for pending litigation		(675	)			—				—				—				—				(675	)			—
Merger related and restructuring expenses		—				(110	)			—				—				45				(110	)			(562	)
Operating noninterest expense (Non-GAAP)	$	28,770			$	28,406			$	27,410			$	27,529			$	27,461			$	112,115			$	105,728
Operating noninterest expense (Non-GAAP)/average assets²		2.39		%		2.36		%		2.34		%		2.33		%		2.35		%		2.36		%		2.26		%

Operating Pre-provision Net revenue ("PPNR") Earnings:
Net interest income (GAAP)	$	31,517			$	31,006			$	31,575			$	35,982			$	37,612			$	130,080			$	137,501
Operating noninterest income (Non-GAAP)		7,579				7,492				7,130				6,925				6,981				29,126				27,571
Operating noninterest expense (Non-GAAP)		(28,770	)			(28,406	)			(27,410	)			(27,529	)			(27,461	)			(112,115	)			(105,728	)
Operating PPNR earnings (Non-GAAP)	$	10,326			$	10,092			$	11,295			$	15,378			$	17,132			$	47,091			$	59,344

Non-GAAP Return Ratios:
Operating return on average assets (Non-GAAP)³		0.57		%		0.60		%		0.75		%		0.97		%		1.10		%		0.72		%		0.92		%
Operating PPNR return on average assets (Non-GAAP)⁴		0.86		%		0.84		%		0.96		%		1.30		%		1.46		%		0.99		%		1.27		%
Return on average tangible common equity (Non-GAAP)⁵		7.18		%		2.43		%		10.57		%		14.45		%		16.65		%		8.55		%		13.60		%
Operating return on average shareholders' equity (Non-GAAP)⁶		6.07		%		6.41		%		7.98		%		10.79		%		12.15		%		7.77		%		10.24		%
Operating return on average tangible common equity (Non-GAAP)⁷		7.98		%		8.46		%		10.57		%		14.45		%		16.47		%		10.29		%		13.69		%

Operating Efficiency Ratio:
Efficiency ratio (GAAP)		75.95		%		89.96		%		70.82		%		64.16		%		61.28		%		74.24		%		64.33		%
Adjustment for taxable equivalent yields		(0.18	)	%		(0.27	)	%		(0.18	)	%		(0.14	)	%		(0.22	)	%		(0.18	)	%		(0.26	)	%
Adjustment for securities gains (losses)		—		%		(15.89	)	%		—		%		—		%		0.20		%		(3.17	)	%		0.06		%
Adjustment for donation of a former branch location		(0.64	)	%		—		%		—		%		—		%		—		%		(0.16	)	%		—		%
Adjustment for accruals for pending litigation		(1.72	)	%		—		%		—		%		—		%		—		%		(0.44	)	%		—		%
Adjustment for merger related income and costs		—		%		(0.20	)	%		—		%		—		%		0.10		%		(0.03	)	%		(0.34	)	%
Operating efficiency ratio (Non-GAAP)		73.41		%		73.60		%		70.64		%		64.02		%		61.36		%		70.26		%		63.79		%

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															Year Ended
	Dec			Sep			Jun			Mar			Dec			Dec			Dec
	2023			2023			2023			2022			2022			2023			2022
Tangible Common Equity:
Shareholders' equity (GAAP)	$	459,886		$	446,652		$	444,847		$	443,399		$	432,452		$	459,886		$	432,452
Less goodwill and other intangible assets		107,148			107,792			108,439			109,114			109,772			107,148			109,772
Tangible common equity (Non-GAAP)	$	352,738		$	338,860		$	336,408		$	334,285		$	322,680		$	352,738		$	322,680

Average Tangible Common Equity:
Average shareholders' equity (GAAP)	$	449,526		$	445,432		$	444,283		$	432,382		$	420,037		$	442,960		$	423,252
Less average goodwill and other intangible assets		107,551			108,194			108,851			109,537			110,206			108,527			106,834
Average tangible common equity (Non-GAAP)	$	341,975		$	337,238		$	335,432		$	322,845		$	309,831		$	334,433		$	316,418

Tangible Book Value per Common Share:
Book value per common share (GAAP)	$	27.07		$	26.28		$	26.16		$	26.08		$	25.59		$	27.07		$	25.59
Adjustment due to goodwill and other intangible assets		(6.31	)		(6.34	)		(6.38	)		(6.42	)		(6.50	)		(6.31	)		(6.50	)
Tangible book value per common share (Non-GAAP)¹	$	20.76		$	19.94		$	19.78		$	19.66		$	19.09		$	20.76		$	19.09

Tangible Common Equity to Tangible Assets:
Total Assets (GAAP)	$	4,829,387		$	4,797,171		$	4,745,800		$	4,769,805		$	4,637,498		$	4,829,387		$	4,637,498
Less goodwill and other intangibles		107,148			107,792			108,439			109,114			109,772			107,148			109,772
Tangible Assets (Non-GAAP)	$	4,722,239		$	4,689,379		$	4,637,361		$	4,660,691		$	4,527,726		$	4,722,239		$	4,527,726
Tangible common equity to tangible assets (Non-GAAP)		7.47	%		7.23	%		7.25	%		7.17	%		7.13	%		7.47	%		7.13	%

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.