KNOXVILLE, Tenn., July 22, 2024 (GLOBE NEWSWIRE) -- SmartFinancial, Inc. ((", SmartFinancial", or the ", Company", , NYSE:SMBK), today announced net income of $8.0 million, or $0.48 per diluted common share, for the second quarter of 2024, compared to net income of $8.8 million, or $0.52 per diluted common share, for the second quarter of 2023, and compared to prior quarter net income of $9.4 million, or $0.55 per diluted common share. Operating earnings¹, which excludes non-recurring income, net of tax adjustments, totaled $7.8 million, or $0.46 per diluted common share, in the second quarter of 2024, compared to $8.8 million, or $0.52 per diluted common share, in the second quarter of 2023, and compared to $8.4 million, or $0.49 per diluted common share, in the first quarter of 2024.

Highlights for the Second Quarter of 2024

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

___________________________________

¹ Non-GAAP measure. See "Non-GAAP Financial Measures" for more information and see the Non-GAAP reconciliations

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

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

Net Interest Income and Net Interest Margin

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

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

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

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

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

Provision for Credit Losses on Loans and Leases and Credit Quality

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

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

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

Allowance for credit losses to total loans and leases, gross		0.97		%		0.98		%		(0.01	)	%

⁽¹⁾

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

Nonperforming loans and leases as a percentage of total loans and leases was 0.19% as of June 30, 2024, an increase of 1 basis point from the 0.18% reported in the first quarter of 2024. Total nonperforming assets (which include nonaccrual loans and leases, loans and leases past due 90 days or more and still accruing, other real estate owned and other repossessed assets) as a percentage of total assets was 0.20% as of June 30, 2024, and 0.18% on March 31, 2024.

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

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

Nonperforming loans and leases to total loans and leases, gross		0.19	%		0.18	%		0.01		%
Nonperforming assets to total assets		0.20	%		0.18	%		0.02		%

Noninterest Income

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

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

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

Noninterest Expense

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

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

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

Income Tax Expense

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

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

Balance Sheet Trends

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

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

Shareholders' equity at June 30, 2024, totaled $472.5 million, an increase of $12.6 million, from December 31, 2023. The increase in shareholders' equity was primarily driven by net income of $17.4 million for the six months ended June 30, 2024, offset by dividends paid of $2.7 million and repurchase of the Company's stock of $3.0 million. Tangible book value per share¹ was $21.66 at June 30, 2024, compared to $20.76 at December 31, 2023. Tangible common equity¹ as a percentage of tangible assets¹ was 7.66% at June 30, 2024, compared with 7.47% at December 31, 2023.

___________________________________

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

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

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

Conference Call Information

SmartFinancial issued this earnings release for the second quarter of 2024 on Monday, July 22, 2024, and will host a conference call on Tuesday, July 23, 2024, at 10:00 a.m. ET. To access this interactive teleconference, dial (833) 470-1428 or (404) 975-4839 and entering the access code, 533803. A replay of the conference call will be available through August 22, 2024, by dialing (866) 813-9403 or (929) 458-6194 and entering the access code, 897395. Conference call materials will be published on the Company's webpage located at http://www.smartfinancialinc.com/CorporateProfile, at 9:00 a.m. ET prior to the conference call.

About SmartFinancial, Inc.

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

Source
SmartFinancial, Inc.

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

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

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

Non-GAAP Financial Measures

Statements included in this earnings release include measures not recognized under U.S. generally accepted accounting principles ("GAAP") and therefore are considered Non-GAAP financial measures ("Non-GAAP") and should be read along with the accompanying tables, which provide a reconciliation of Non-GAAP financial measures to GAAP financial measures. SmartFinancial management uses several Non-GAAP financial measures and ratios derived therefrom in its analysis of the Company's performance, including:

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

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

Management believes that Non-GAAP financial measures provide additional useful information that allows investors to evaluate the ongoing performance of the company and provide meaningful comparisons to its peers. Management also believes these Non-GAAP financial measures enhance investors' ability to compare period-to-period financial results and allow investors and company management to view our operating results excluding the impact of items that are not reflective of the underlying operating performance.

Non-GAAP financial measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider SmartFinancial's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the company. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition as reported under GAAP.

Forward-Looking Statements

This news release may contain statements that are based on management's current estimates or expectations of future events or future results, and that may be deemed to constitute forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These statements are not historical in nature and can generally be identified by such words as "expect," "anticipate," "intend," "plan," "believe," "seek," "may," "estimate," and similar expressions. All forward-looking statements are subject to risks, uncertainties, and other factors that may cause the actual results of SmartFinancial to differ materially from future results expressed or implied by such forward-looking statements. Such risks, uncertainties, and other factors include, among others,

	(1)	risks associated with our growth strategy, including a failure to implement our growth plans or an inability to manage our growth effectively;
	(2)	claims and litigation arising from our business activities and from the companies we acquire, which may relate to contractual issues, environmental laws, fiduciary responsibility, and other matters;
	(3)	the risk that cost savings and revenue synergies from recently completed acquisitions may not be realized or may take longer than anticipated to realize;
	(4)	disruption from recently completed acquisitions with customer, supplier, employee, or other business relationships;
	(5)	our ability to successfully integrate the businesses acquired as part of previous acquisitions with the business of SmartBank;
	(6)	changes in management's plans for the future;
	(7)	prevailing, or changes in, economic or political conditions, particularly in our market areas, including the effects of declines in the real estate market, high unemployment rates, inflationary pressures, elevated interest rates and slowdowns in economic growth, as well as the financial stress on borrowers as a result of the foregoing;
	(8)	our ability to anticipate interest rate changes and manage interest rate risk (including the impact of higher interest rates on macroeconomic conditions, competition, and the cost of doing business and the impact of prolonged elevated interest rates on our financial projections, models and guidance);
	(9)	increased technology and cybersecurity risks, including generative artificial intelligence risks;
	(10)	credit risk associated with our lending activities;
	(11)	changes in loan demand, real estate values, or competition;
	(12)	developments in our mortgage banking business, including loan modifications, general demand, and the effects of judicial or regulatory requirements or guidance;
	(13)	changes in accounting principles, policies, or guidelines;
	(14)	changes in applicable laws, rules, or regulations;
	(15)	adverse results from current or future litigation, regulatory examinations or other legal and/or regulatory actions;
	(16)	potential impacts of adverse developments in the banking industry highlighted by high-profile bank failures, including impacts on customer confidence, deposit outflows, liquidity and the regulatory response thereto;
	(17)	significant turbulence or a disruption in the capital or financial markets and the effect of a fall in stock market prices on our investment securities;
	(18)	the effects of war or other conflicts including the impacts related to or resulting from Russia's military action in Ukraine or the conflict in Israel and surrounding areas; and
	(19)	other general competitive, economic, political, and market factors, including those affecting our business, operations, pricing, products, or services.

These and other factors that could cause results to differ materially from those described in the forward-looking statements can be found in SmartFinancial's most recent annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, in each case filed with or furnished to the Securities and Exchange Commission (the "SEC") and available on the SEC's website (www.sec.gov). Undue reliance should not be placed on forward-looking statements. SmartFinancial disclaims any obligation to update or revise any forward-looking statements contained in this release, which speak only as of the date hereof, whether as a result of new information, future events, or otherwise.

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)

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

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands except share and per share data)

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

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)

YIELD ANALYSIS

	Three Months Ended
	June 30, 2024						March 31, 2024						June 30, 2023
	Average				Yield/		Average				Yield/		Average				Yield/
	Balance		Interest		Cost		Balance		Interest		Cost		Balance		Interest		Cost
Assets:
Loans and leases, including fees¹	$	3,504,265	$	51,110	5.87	%	$	3,458,109	$	50,020	5.82	%	$	3,308,595	$	45,446	5.51	%
Taxable securities		580,517		5,320	3.69	%		620,805		4,548	2.95	%		770,275		4,335	2.26	%
Tax-exempt securities²		63,690		447	2.82	%		64,161		445	2.79	%		65,265		452	2.78	%
Federal funds sold and other earning assets		346,459		4,759	5.52	%		353,913		4,863	5.53	%		195,266		1,956	4.02	%
Total interest-earning assets		4,494,931		61,636	5.52	%		4,496,988		59,876	5.36	%		4,339,401		52,189	4.82	%
Noninterest-earning assets		383,697						380,231						355,701
Total assets	$	4,878,628					$	4,877,219					$	4,695,102

Liabilities and Shareholders' Equity:
Interest-bearing demand deposits	$	983,433		5,950	2.43	%	$	996,147		6,060	2.45	%	$	950,227		4,892	2.06	%
Money market and savings deposits		1,909,125		16,529	3.48	%		1,904,855		16,149	3.41	%		1,737,303		11,785	2.72	%
Time deposits		528,985		4,960	3.77	%		541,792		4,826	3.58	%		504,350		2,877	2.29	%
Total interest-bearing deposits		3,421,543		27,439	3.23	%		3,442,794		27,035	3.16	%		3,191,880		19,554	2.46	%
Borrowings		12,684		148	4.69	%		11,245		128	4.58	%		24,845		339	5.47	%
Subordinated debt		42,129		884	8.44	%		42,107		899	8.59	%		42,044		626	5.97	%
Total interest-bearing liabilities		3,476,356		28,471	3.29	%		3,496,146		28,062	3.23	%		3,258,769		20,519	2.53	%
Noninterest-bearing deposits		888,693						872,840						951,381
Other liabilities		47,208						47,085						40,669
Total liabilities		4,412,257						4,416,071						4,250,819
Shareholders' equity		466,371						461,148						444,283
Total liabilities and shareholders' equity	$	4,878,628					$	4,877,219					$	4,695,102

Net interest income, taxable equivalent			$	33,165					$	31,814					$	31,670
Interest rate spread					2.22	%					2.13	%					2.30	%
Tax equivalent net interest margin					2.97	%					2.85	%					2.93	%

Percentage of average interest-earning assets to average interest-bearing liabilities					129.30	%					128.63	%					133.16	%
Percentage of average equity to average assets					9.56	%					9.46	%					9.46	%

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

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

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)

YIELD ANALYSIS

	Six Months Ended
	June 30, 2024							June 30, 2023
	Average				Yield/			Average				Yield/
	Balance		Interest		Cost			Balance		Interest		Cost
Assets:
Loans and leases, including fees¹	$	3,481,187	$	101,130		5.84	%	$	3,283,662	$	90,173	5.54	%
Taxable securities		600,661		9,869		3.30	%		747,037		7,986	2.16	%
Tax-exempt securities²		63,925		892		2.81	%		65,405		897	2.77	%
Federal funds sold and other earning assets		350,186		9,620		5.52	%		286,254		6,405	4.51	%
Total interest-earning assets		4,495,959		121,511		5.44	%		4,382,358		105,461	4.85	%
Noninterest-earning assets		381,964							357,837
Total assets	$	4,877,923						$	4,740,195

Liabilities and Shareholders' Equity:
Interest-bearing demand deposits	$	989,790		12,010		2.44	%	$	947,196		9,119	1.94	%
Money market and savings deposits		1,906,990		32,677		3.45	%		1,778,650		22,168	2.51	%
Time deposits		535,389		9,787		3.68	%		486,952		4,613	1.91	%
Total interest-bearing deposits		3,432,169		54,474		3.19	%		3,212,798		35,900	2.25	%
Borrowings		11,964		276		4.64	%		20,874		564	5.45	%
Subordinated debt		42,118		1,782		8.51	%		42,033		1,252	6.01	%
Total interest-bearing liabilities		3,486,251		56,532		3.26	%		3,275,705		37,716	2.32	%
Noninterest-bearing deposits		880,767							983,348
Other liabilities		47,146							42,777
Total liabilities		4,414,164							4,301,830
Shareholders' equity		463,759							438,365
Total liabilities and shareholders' equity	$	4,877,923						$	4,740,195

Net interest income, taxable equivalent			$	64,979						$	67,745
Interest rate spread						2.17	%					2.53	%
Tax equivalent net interest margin						2.91	%					3.12	%

Percentage of average interest-earning assets to average interest-bearing liabilities						128.96	%					133.78	%
Percentage of average equity to average assets						9.51	%					9.25	%

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

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

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)

	As of and for The Three Months Ended
	Jun			Mar			Dec			Sep			Jun
	2024			2024			2023			2023			2023
Composition of Loans and Leases:
Commercial real estate:
Owner occupied	$	829,085		$	804,557		$	798,416		$	776,402		$	769,978
Non-owner occupied		986,278			938,648			940,789			890,774			871,779
Commercial real estate, total		1,815,363			1,743,205			1,739,205			1,667,176			1,641,757
Commercial & industrial		701,460			667,903			645,918			617,115			594,427
Construction & land development		294,575			321,860			327,185			373,068			394,742
Consumer real estate		678,331			659,209			649,867			638,518			624,828
Leases		70,299			71,909			68,752			68,538			66,401
Consumer and other		14,130			13,469			13,535			14,584			15,635
Total loans and leases	$	3,574,158		$	3,477,555		$	3,444,462		$	3,378,999		$	3,337,790

Asset Quality and Additional Loan Data:
Nonperforming loans and leases	$	6,642		$	6,266		$	8,101		$	4,163		$	3,722
Other real estate owned		688			696			517			1,370			1,708
Other repossessed assets		2,645			2,033			1,117			348			282
Total nonperforming assets	$	9,975		$	8,995		$	9,735		$	5,881		$	5,712
Modified loans and leases¹ not included in nonperforming loans and leases	$	4,241		$	4,413		$	4,245		$	2,376		$	657
Net charge-offs to average loans and leases (annualized)		0.05	%		0.09	%		0.04	%		0.04	%		(0.01	)	%
Allowance for credit losses to loans and leases		0.97	%		0.98	%		1.02	%		1.00	%		0.98		%
Nonperforming loans and leases to total loans and leases, gross		0.19	%		0.18	%		0.24	%		0.12	%		0.11		%
Nonperforming assets to total assets		0.20	%		0.18	%		0.20	%		0.12	%		0.12		%

Capital Ratios:
Equity to Assets		9.66	%		9.42	%		9.52	%		9.31	%		9.37		%
Tangible common equity to tangible assets (Non-GAAP)²		7.66	%		7.43	%		7.47	%		7.23	%		7.25		%

SmartFinancial, Inc.³
Tier 1 leverage		8.32	%		8.23	%		8.27	%		8.13	%		8.24		%
Common equity Tier 1		10.06	%		10.20	%		10.14	%		10.07	%		10.12		%
Tier 1 capital		10.06	%		10.20	%		10.14	%		10.07	%		10.12		%
Total capital		11.68	%		11.85	%		11.78	%		11.90	%		11.94		%

SmartBank		Estimated⁴
Tier 1 leverage		9.11	%		9.07	%		9.18	%		9.00	%		9.18		%
Common equity Tier 1		11.02	%		11.23	%		11.26	%		11.15	%		11.27		%
Tier 1 capital		11.02	%		11.23	%		11.26	%		11.15	%		11.27		%
Total capital		11.79	%		12.00	%		12.02	%		11.87	%		11.97		%

¹Borrowers that have experienced financial difficulty.

²Total common equity less intangibles divided by total assets less intangibles. See reconciliation of Non-GAAP measures.

³All periods presented are estimated.

⁴Current period capital ratios are estimated as of the date of this earnings release.

SmartFinancial, Inc. and 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															Six Months Ended
	Jun			Mar			Dec			Sep			Jun			Jun			June
	2024			2024			2023			2023			2023			2024			2023
Selected Performance Ratios (Annualized):
Return on average assets		0.66	%		0.77	%		0.52	%		0.17	%		0.75	%		0.72	%		0.87	%
Return on average shareholders' equity		6.90	%		8.16	%		5.46	%		1.84	%		7.98	%		7.53	%		9.36	%
Return on average tangible common equity¹		8.94	%		10.63	%		7.18	%		2.43	%		10.57	%		9.77	%		12.46	%
Noninterest income / average assets		0.63	%		0.69	%		0.63	%		0.06	%		0.61	%		0.66	%		0.60	%
Noninterest expense / average assets		2.41	%		2.35	%		2.47	%		2.37	%		2.34	%		2.38	%		2.34	%
Efficiency ratio		72.25	%		71.20	%		75.95	%		89.96	%		70.82	%		71.73	%		67.32	%

Operating Selected Performance Ratios (Annualized):
Operating return on average assets¹		0.64	%		0.69	%		0.57	%		0.60	%		0.75	%		0.67	%		0.87	%
Operating PPNR return on average assets¹		0.90	%		0.84	%		0.86	%		0.84	%		0.96	%		0.87	%		1.13	%
Operating return on average shareholders' equity¹		6.72	%		7.29	%		6.07	%		6.41	%		7.98	%		7.00	%		9.36	%
Operating return on average tangible common equity¹		8.70	%		9.49	%		7.98	%		8.46	%		10.57	%		9.09	%		12.46	%
Operating efficiency ratio¹		72.13	%		73.50	%		73.41	%		73.60	%		70.64	%		72.81	%		67.16	%
Operating noninterest income / average assets¹		0.60	%		0.58	%		0.63	%		0.62	%		0.61	%		0.59	%		0.60	%
Operating noninterest expense / average assets¹		2.41	%		2.35	%		2.39	%		2.36	%		2.34	%		2.38	%		2.34	%

Selected Interest Rates and Yields:
Yield on loans and leases, excluding loan fees, FTE		5.80	%		5.71	%		5.61	%		5.52	%		5.39	%		5.76	%		5.30	%
Yield on loans and leases, FTE		5.87	%		5.82	%		5.68	%		5.61	%		5.51	%		5.84	%		5.54	%
Yield on earning assets, FTE		5.52	%		5.36	%		5.22	%		4.99	%		4.82	%		5.44	%		4.85	%
Cost of interest-bearing deposits		3.23	%		3.16	%		3.00	%		2.84	%		2.46	%		3.19	%		2.25	%
Cost of total deposits		2.56	%		2.52	%		2.35	%		2.20	%		1.89	%		2.54	%		1.73	%
Cost of interest-bearing liabilities		3.29	%		3.23	%		3.07	%		2.89	%		2.53	%		3.26	%		2.32	%
Net interest margin, FTE		2.97	%		2.85	%		2.86	%		2.81	%		2.93	%		2.91	%		3.12	%

Per Common Share:
Net income, basic	$	0.48		$	0.56		$	0.37		$	0.12		$	0.53		$	1.03		$	1.21
Net income, diluted		0.48			0.55			0.37			0.12			0.52			1.03			1.20
Operating earnings, basic¹		0.47			0.50			0.41			0.43			0.53			0.96			1.21
Operating earnings, diluted¹		0.46			0.49			0.41			0.43			0.52			0.96			1.20
Book value		27.91			27.37			27.07			26.28			26.16			27.91			26.16
Tangible book value¹		21.66			21.12			20.76			19.94			19.78			21.66			19.78
Common shares outstanding		16,925,902			17,056,704			16,988,879			16,994,543			17,004,092			16,925,902			17,004,092

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

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)

NON-GAAP RECONCILIATIONS

	Three Months Ended																				Six Months Ended
	Jun				Mar				Dec				Sep				Jun				Jun				June
	2024				2024				2023				2023				2023				2024				2023
Operating Earnings:
Net income (GAAP)	$	8,003			$	9,358			$	6,190			$	2,067			$	8,836			$	17,360			$	20,336
Noninterest income:
Securities (gains) losses, net		—				—				—				6,801				—				—				—
Gain on sale of former branch building		(283	)			(1,346	)			—				—				—				(1,629	)			—
Noninterest expenses:
Donation of a former branch location		—				—				250				—				—				—				—
Accruals for pending litigation		—				—				675				—				—				—				—
Merger related and restructuring expenses		—				—				—				110				—				—				—
Income taxes:
Income tax effect of adjustments		73				348				(239	)			(1,785	)			—				421				—
Operating earnings (Non-GAAP)	$	7,793			$	8,360			$	6,876			$	7,193			$	8,836			$	16,152			$	20,336
Operating earnings per common share (Non-GAAP):
Basic	$	0.47			$	0.50			$	0.41			$	0.43			$	0.53			$	0.96			$	1.21
Diluted		0.46				0.49				0.41				0.43				0.52				0.96				1.20

Operating Noninterest Income:
Noninterest income (GAAP)	$	7,604			$	8,380			$	7,579			$	691			$	7,130			$	15,984			$	14,055
Securities (gains) losses, net		—				—				—				6,801				—				—				—
Gain on sale of former branch building		(283	)			(1,346	)			—				—				—				(1,629	)			—
Operating noninterest income (Non-GAAP)	$	7,321			$	7,034			$	7,579			$	7,492			$	7,130			$	14,355			$	14,055
Operating noninterest income (Non-GAAP)/average assets¹		0.60		%		0.58		%		0.63		%		0.62		%		0.61		%		0.59		%		0.60		%

Operating Noninterest Expense:
Noninterest expense (GAAP)	$	29,201			$	28,553			$	29,695			$	28,516			$	27,410			$	57,754			$	54,939
Donation of a former branch location		—				—				(250	)			—				—				—				—
Accruals for pending litigation		—				—				(675	)			—				—				—				—
Merger related and restructuring expenses		—				—				—				(110	)			—				—				—
Operating noninterest expense (Non-GAAP)	$	29,201			$	28,553			$	28,770			$	28,406			$	27,410			$	57,754			$	54,939
Operating noninterest expense (Non-GAAP)/average assets²		2.41		%		2.35		%		2.39		%		2.36		%		2.34		%		2.38		%		2.34		%

Operating Pre-provision Net revenue ("PPNR") Earnings:
Net interest income (GAAP)	$	32,814			$	31,721			$	31,517			$	31,006			$	31,575			$	64,535			$	67,557
Operating noninterest income (Non-GAAP)		7,321				7,034				7,579				7,492				7,130				14,355				14,055
Operating noninterest expense (Non-GAAP)		(29,201	)			(28,553	)			(28,770	)			(28,406	)			(27,410	)			(57,754	)			(54,939	)
Operating PPNR earnings (Non-GAAP)	$	10,934			$	10,202			$	10,326			$	10,092			$	11,295			$	21,136			$	26,673

Non-GAAP Return Ratios:
Operating return on average assets (Non-GAAP)³		0.64		%		0.69		%		0.57		%		0.60		%		0.75		%		0.67		%		0.87		%
Operating PPNR return on average assets (Non-GAAP)⁴		0.90		%		0.84		%		0.86		%		0.84		%		0.96		%		0.87		%		1.13		%
Return on average tangible common equity (Non-GAAP)⁵		8.94		%		10.62		%		7.18		%		2.43		%		10.57		%		9.77		%		12.46		%
Operating return on average shareholders' equity (Non-GAAP)⁶		6.72		%		7.29		%		6.07		%		6.41		%		7.98		%		7.00		%		9.36		%
Operating return on average tangible common equity (Non-GAAP)⁷		8.70		%		9.49		%		7.98		%		8.46		%		10.57		%		9.09		%		12.46		%

Operating Efficiency Ratio:
Efficiency ratio (GAAP)		72.25		%		71.20		%		75.95		%		89.96		%		70.82		%		71.73		%		67.32		%
Adjustment for taxable equivalent yields		(0.63	)	%		(0.17	)	%		(0.18	)	%		(0.27	)	%		(0.18	)	%		(0.40	)	%		(0.16	)	%
Adjustment for securities gains (losses)		—		%		—		%		—		%		(15.89	)	%		—		%		—		%		—		%
Adjustment for sale of branch location		0.51		%		2.46		%		—		%		—		%		—		%		1.48		%		—		%
Adjustment for donation of a former branch location		—		%		—		%		(0.64	)	%		—		%		—		%		—		%		—		%
Adjustment for accruals for pending litigation		—		%		—		%		(1.72	)	%		—		%		—		%		—		%		—		%
Adjustment for merger related income and costs		—		%		—		%		—		%		(0.20	)	%		—		%		—		%		—		%
Operating efficiency ratio (Non-GAAP)		72.13		%		73.50		%		73.41		%		73.60		%		70.64		%		72.81		%		67.16		%

¹Operating noninterest income (Non-GAAP) is annualized and divided by average assets.

²Operating noninterest expense (Non-GAAP) is annualized and divided by average assets.

³Operating return on average assets (Non-GAAP) is the annualized operating earnings (Non-GAAP) divided by average assets.

⁴Operating PPNR return on average assets (Non-GAAP) is the annualized operating PPNR earnings (Non-GAAP) divided by average assets.

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

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

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

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)

NON-GAAP RECONCILIATIONS

	Three Months Ended
	Jun			Mar			Dec			Sep			Jun
	2024			2024			2023			2023			2023
Tangible Common Equity:
Shareholders' equity (GAAP)	$	472,465		$	466,796		$	459,886		$	446,652		$	444,847
Less goodwill and other intangible assets		105,929			106,537			107,148			107,792			108,439
Tangible common equity (Non-GAAP)	$	366,536		$	360,259		$	352,738		$	338,860		$	336,408

Average Tangible Common Equity:
Average shareholders' equity (GAAP)	$	466,371		$	461,148		$	449,526		$	445,432		$	444,283
Less average goodwill and other intangible assets		106,301			106,920			107,551			108,194			108,851
Average tangible common equity (Non-GAAP)	$	360,070		$	354,228		$	341,975		$	337,238		$	335,432

Tangible Book Value per Common Share:
Book value per common share (GAAP)	$	27.91		$	27.37		$	27.07		$	26.28		$	26.16
Adjustment due to goodwill and other intangible assets		(6.25	)		(6.25	)		(6.31	)		(6.34	)		(6.38	)
Tangible book value per common share (Non-GAAP)¹	$	21.66		$	21.12		$	20.76		$	19.94		$	19.78

Tangible Common Equity to Tangible Assets:
Total Assets (GAAP)	$	4,891,009		$	4,954,690		$	4,829,387		$	4,797,171		$	4,745,800
Less goodwill and other intangibles		105,929			106,537			107,148			107,792			108,439
Tangible Assets (Non-GAAP)	$	4,785,080		$	4,848,153		$	4,722,239		$	4,689,379		$	4,637,361
Tangible common equity to tangible assets (Non-GAAP)		7.66	%		7.43	%		7.47	%		7.23	%		7.25	%

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

SmartFinancial Announces Results for the Second Quarter 2024