• SmartFinancial Announces Results for the Fourth Quarter 2023

    Источник: Nasdaq GlobeNewswire / 22 янв 2024 16:00:13   America/Chicago

    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.  
    2 Yields 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%

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


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