• SmartFinancial Announces Results for the First Quarter 2023

    ソース: Nasdaq GlobeNewswire / 24 4 2023 17:00:32   America/New_York

    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
    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.  
    2 Yields 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.




     


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