SmartFinancial Announces Results for the Third Quarter 2024

KNOXVILLE, Tenn.--(BUSINESS WIRE)--SmartFinancial, Inc. ("SmartFinancial" or the "Company"; NYSE: SMBK), today announced net income of $9.1 million, or $0.54 per diluted common share, for the third quarter of 2024, compared to net income of $2.1 million, or $0.12 per diluted common share, for the third quarter of 2023, and compared to prior quarter net income of $8.0 million, or $0.48 per diluted common share. Operating earnings¹, which excludes non-recurring income, net of tax adjustments, totaled $9.1 million, or $0.54 per diluted common share, in the third quarter of 2024, compared to $7.2 million, or $0.43 per diluted common share, in the third quarter of 2023, and compared to $7.8 million, or $0.46 per diluted common share, in the second quarter of 2024.

Highlights for the Third Quarter of 2024

• Operating earnings¹ of $9.1 million, or $0.54 per diluted common share
• Net organic loan and lease growth of $144 million with 16% annualized quarter-over-quarter increase
• Quarter-over-quarter net tax equivalent interest margin expansion of 14 basis points to 3.11%
• 19% annualized quarter-over-quarter increase in tangible book value per common share¹
• Credit quality remains solid with nonperforming assets to total assets of 0.26%
• Established a Real Estate Investment Trust (“REIT”) subsidiary as a tax saving strategy

Billy Carroll, President & CEO, stated: “As we talked about last quarter, the sales energy throughout our Company remains very positive as demonstrated by our 16% quarterly annualized loan and lease growth. Margin continues to inflect, up another 14 basis points to 3.11% for the quarter, and we continue to position our balance sheet for optimized returns. Credit quality remained strong, and I am pleased with our diligence around expense control. As we look ahead, we are confident in our ability to further enhance profitability and deliver strong tangible book value per share growth.”

SmartFinancial's Chairman, Miller Welborn, concluded: “This quarter was a further demonstration of our team’s ability to execute our plan. The Board was especially pleased with the Company’s operating leverage expansion and quarterly tangible book value per share growth of nearly 9% annualized. And while financial results are important, we don’t take for granted SmartBank’s incredible culture. SmartBank’s certification as a Great Place to Work by over 94% of its employee base is a tremendous honor and we look forward to continuing our tradition of being a premier employment destination.”

Net Interest Income and Net Interest Margin

Net interest income was $35.0 million for the third quarter of 2024, compared to $32.8 million for the prior quarter. Average earning assets totaled $4.5 billion for the current and prior quarters. The categories of average earnings assets changed quarter-over-quarter, primarily from an increase in average loans and leases of $130.5 million, offset by a decrease in average securities of $15.7 million and average interest-earning cash of $79.2 million. Average interest-bearing liabilities increased by $21.4 million from the prior quarter, primarily attributable to an increase in average borrowings of $40.9 million, offset by a decrease in average deposits of $18.2 million.

The tax equivalent net interest margin was 3.11% for the third quarter of 2024, compared to 2.97% for the prior quarter. The tax equivalent net interest margin was positively impacted by the increased yield on interest-earning assets, quarter-over-quarter, coupled with no change in the cost of interest-bearing liabilities, quarter-over-quarter. The yield on loans and leases, excluding loan fees, on a fully tax equivalent basis (“FTE”) was 5.95% for the third quarter, compared to 5.80% for the prior quarter.

The cost of total deposits for the third quarter of 2024 was 2.54% compared to 2.56% in the prior quarter. The cost of interest-bearing liabilities was 3.29% for the third quarter of 2024 and the prior quarter. The cost of average interest-bearing deposits was 3.20% for the third quarter of 2024, compared to 3.23% for the prior quarter, a decrease of 3 basis points.

^1 Non-GAAP measure. See “Non-GAAP Financial Measures” for more information and see the Non-GAAP Reconciliations

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

	Three Months Ended
	Sep			Jun			Increase
Selected Interest Rates and Yields	2024			2024			(Decrease)
Yield on loans and leases, excluding loan fees, FTE		5.95	%		5.80	%		0.15	%
Yield on loans and leases, FTE		6.02	%		5.87	%		0.15	%
Yield on earning assets, FTE		5.65	%		5.52	%		0.13	%
Cost of interest-bearing deposits		3.20	%		3.23	%		(0.03	)%
Cost of total deposits		2.54	%		2.56	%		(0.02	)%
Cost of interest-bearing liabilities		3.29	%		3.29	%		-	%
Net interest margin, FTE		3.11	%		2.97	%		0.14	%

Provision for Credit Losses on Loans and Leases and Credit Quality

At September 30, 2024, the allowance for credit losses was $35.6 million. The allowance for credit losses to total loans and leases was 0.96% as of September 30, 2024, compared to 0.97% as of June 30, 2024.

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

	Three Months Ended
	Sep			Jun			Increase
Provision for Credit Losses on Loans and Leases Rollforward	2024			2024			(Decrease)
Beginning balance	$	34,690		$	34,203		$	487
Charge-offs		(1,426	)		(457	)		(969	)
Recoveries		72			48			24
Net (charge-offs) recoveries		(1,354	)		(409	)		(945	)
Provision for credit losses ^(1)		2,273			896			1,377
Ending balance	$	35,609		$	34,690		$	919
Allowance for credit losses to total loans and leases, gross		0.96	%		0.97	%		(0.01	)%
^(1)The current quarter-ended and prior quarter-ended excludes unfunded commitments provision of $302 thousand and a release of $13 thousand, respectively. At September 30, 2024, the unfunded commitment liability totaled $2.3 million.

Nonperforming loans and leases as a percentage of total loans and leases was 0.26% as of September 30, 2024, an increase of 7 basis points from the 0.19% reported in the second quarter of 2024. Total nonperforming assets (which include nonaccrual loans and leases, loans and leases past due 90 days or more and still accruing, other real estate owned and other repossessed assets) as a percentage of total assets was 0.26% as of September 30, 2024, and 0.20% as of June 30, 2024.

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

	Three Months Ended
	Sep			Jun			Increase
Credit Quality	2024			2024			(Decrease)
Nonaccrual loans and leases	$	9,319		$	6,432		$	2,887
Loans and leases past due 90 days or more and still accruing		172			210			(38	)
Total nonperforming loans and leases		9,491			6,642			2,849
Other real estate owned		179			688			(509	)
Other repossessed assets		2,949			2,645			304
Total nonperforming assets	$	12,619		$	9,975		$	2,644
Nonperforming loans and leases to total loans and leases, gross		0.26	%		0.19	%		0.07	%
Nonperforming assets to total assets		0.26	%		0.20	%		0.06	%

Noninterest Income

Noninterest income increased $1.5 million to $9.1 million for the third quarter of 2024 compared to $7.6 million for the prior quarter. The current quarter increase was primarily associated with a $579 thousand increase in investment services from a higher volume of investment activity, a $193 thousand increase in insurance commissions from new policies and renewals and a $607 thousand increase in other from fees related to capital markets activity.

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

	Three Months Ended
	Sep		Jun		Increase
Noninterest Income	2024		2024		(Decrease)
Service charges on deposit accounts	$	1,780	$	1,692	$	88
Mortgage banking income		410		348		62
Investment services		1,881		1,302		579
Insurance commissions		1,477		1,284		193
Interchange and debit card transaction fees		1,349		1,343		6
Other		2,242		1,635		607
Total noninterest income	$	9,139	$	7,604	$	1,535

Noninterest Expense

Noninterest expense increased $1.6 million to $30.8 million for the third quarter of 2024 compared to $29.2 million for the prior quarter. The current quarter increase was primarily related to an increase in salaries and employee benefits related to incentive accruals for production performance.

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

	Three Months Ended
	Sep		Jun		Increase
Noninterest Expense	2024		2024		(Decrease)
Salaries and employee benefits	$	18,448	$	17,261	$	1,187
Occupancy and equipment		3,423		3,324		99
FDIC insurance		825		825		-
Other real estate and loan related expenses		460		538		(78	)
Advertising and marketing		327		295		32
Data processing and technology		2,519		2,452		67
Professional services		1,201		1,064		137
Amortization of intangibles		604		608		(4	)
Other		3,039		2,834		205
Total noninterest expense	$	30,846	$	29,201	$	1,645

Income Tax Expense

Income tax expense was $1.6 million for the third quarter of 2024, a decrease of $721 thousand, compared to $2.3 million for the prior quarter. The decrease was due to a reduction in the Bank’s annual state income tax expense as a result of the establishment of the Bank’s newly formed REIT. The REIT will create a more tax-effective structure that will result in a lower effective tax rate during future periods by lowering the Bank’s state income tax expense.

Balance Sheet Trends

Total assets at September 30, 2024 were $4.91 billion compared to $4.83 billion at December 31, 2023. The $79.5 million increase is primarily attributable to increases loans and leases of $273.0 million and bank owned life insurance of $21.6 million, offset by a decrease in securities of $60.5 million and cash and cash equivalents of $159.4 million.

Total liabilities were $4.42 billion at September 30, 2024, compared to $4.37 billion at December 31, 2023, an increase of $50.4 million. Total deposits increased $54.6 million, which was driven primarily by the issuance of brokered deposits of $174.8 million, increase in other time deposits of $44.3 million and savings deposits of $42.4 million, offset by a decline in interest-bearing demand deposits of $172.7 million and noninterest bearing deposits of $34 million. Other liabilities increased $2.3 million, which was offset by a decrease in borrowings of $4.1 million and subordinated debt of $2.4 million. During the quarter, the Bank elected not to pursue a higher cost public funds depository relationship and utilized Federal Home Loan Advances temporarily, which was replaced with brokered deposits.

Shareholders' equity at September 30, 2024, totaled $489.0 million, an increase of $29.1 million, from December 31, 2023. The increase in shareholders' equity was primarily driven by net income of $26.5 million for the nine months ended September 30, 2024, and a positive change of $8.6 million in accumulated other comprehensive income, offset by dividends paid of $4.1 million. Tangible book value per share² was $22.67 at September 30, 2024, compared to $20.76 at December 31, 2023. Tangible common equity¹ as a percentage of tangible assets¹ was 7.99% at September 30, 2024, compared with 7.47% at December 31, 2023.

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

	Sep		Dec		Increase
Selected Balance Sheet Information	2024		2023		(Decrease)
Total assets	$	4,908,934	$	4,829,387	$	79,547
Total liabilities		4,419,911		4,369,501		50,410
Total equity		489,023		459,886		29,137
Securities		629,115		689,646		(60,531	)
Loans and leases		3,717,478		3,444,462		273,016
Deposits		4,322,491		4,267,854		54,637
Borrowings		8,997		13,078		(4,081	)

Conference Call Information

SmartFinancial issued this earnings release for the third quarter of 2024 on Monday, October 21, 2024, and will host a conference call on Tuesday, October 22, 2024, at 10:00 a.m. ET. To access this interactive teleconference, dial [phone] or [phone] and entering the access code, 599429. A replay of the conference call will be available through December 21, 2024, by dialing [phone] or [phone] and entering the access code, 195203. 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.

^1 Non-GAAP measure. See “Non-GAAP Financial Measures” for more information and see the Non-GAAP Reconciliation

Non-GAAP Financial Measures

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

1. Operating earnings
2. Operating noninterest income
3. Operating noninterest expense
4. Operating pre-provision net revenue (“PPNR”) earnings
5. Tangible common equity
6. Average tangible common equity
7. Tangible book value per common share
8. Tangible assets

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

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

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

Forward-Looking Statements

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

1. risks associated with our growth strategy, including a failure to implement our growth plans or an inability to manage our growth effectively;
2. claims and litigation arising from our business activities and from the companies we acquire, which may relate to contractual issues, environmental laws, fiduciary responsibility, and other matters;
3. general risks related to our merger and acquisition activity, including risks associated with our pursuit of future acquisitions;
4. changes in management’s plans for the future;
5. 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;
6. our ability to anticipate interest rate changes and manage interest rate risk (including the impact of higher interest rates on macroeconomic conditions, competition, and the cost of doing business and the impact of interest rate fluctuations on our financial projections, models and guidance);
7. increased technology and cybersecurity risks, including generative artificial intelligence risks;
8. credit risk associated with our lending activities;
9. changes in loan demand, real estate values, or competition;
10. developments in our mortgage banking business, including loan modifications, general demand, and the effects of judicial or regulatory requirements or guidance;
11. changes in accounting principles, policies, or guidelines;
12. changes in applicable laws, rules, or regulations;
13. adverse results from current or future litigation, regulatory examinations or other legal and/or regulatory actions;
14. 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;
15. 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;
16. 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
17. 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
	Sep			Jun			Mar			Dec			Sep
	2024			2024			2024			2023			2023
Assets:
Cash and cash equivalents	$	192,914		$	342,835		$	477,941		$	352,271		$	400,258
Securities available-for-sale, at fair value		501,336			500,821			474,347			408,410			385,131
Securities held-to-maturity, at amortized cost		127,779			128,996			180,169			281,236			282,313
Other investments		20,352			13,780			13,718			13,662			13,805
Loans held for sale		5,804			3,103			4,861			4,418			2,734
Loans and leases		3,717,478			3,574,158			3,477,555			3,444,462			3,378,999
Less: Allowance for credit losses		(35,609	)		(34,690	)		(34,203	)		(35,066	)		(33,687	)
Loans and leases, net		3,681,869			3,539,468			3,443,352			3,409,396			3,345,312
Premises and equipment, net		91,055			91,315			92,694			92,963			92,020
Other real estate owned		179			688			696			517			1,370
Goodwill and other intangibles, net		105,324			105,929			106,537			107,148			107,792
Bank owned life insurance		105,025			84,483			83,957			83,434			82,914
Other assets		77,297			79,591			76,418			75,932			83,522
Total assets	$	4,908,934		$	4,891,009		$	4,954,690		$	4,829,387		$	4,797,171
Liabilities:
Deposits:
Noninterest-bearing demand	$	863,949		$	903,300		$	907,254		$	898,044		$	923,763
Interest-bearing demand		834,207			988,057			996,298			1,006,915			993,717
Money market and savings		1,854,777			1,901,281			1,952,410			1,812,427			1,766,409
Time deposits		769,558			524,018			538,159			550,468			562,620
Total deposits		4,322,491			4,316,656			4,394,121			4,267,854			4,246,509
Borrowings		8,997			12,732			9,849			13,078			14,117
Subordinated debt		39,663			42,142			42,120			42,099			42,078
Other liabilities		48,760			47,014			41,804			46,470			47,815
Total liabilities		4,419,911			4,418,544			4,487,894			4,369,501			4,350,519
Shareholders' Equity:
Common stock		16,926			16,926			17,057			16,989			16,995
Additional paid-in capital		293,909			293,586			296,061			295,699			295,542
Retained earnings		195,537			187,751			181,103			173,105			168,271
Accumulated other comprehensive loss		(17,349	)		(25,798	)		(27,425	)		(25,907	)		(34,156	)
Total shareholders' equity		489,023			472,465			466,796			459,886			446,652
Total liabilities & shareholders' equity	$	4,908,934		$	4,891,009		$	4,954,690		$	4,829,387		$	4,797,171

SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information - (unaudited)
(dollars in thousands except share and per share data)
	Three Months Ended												Nine Months Ended
	Sep		Jun		Mar			Dec		Sep			Sep		Sep
	2024		2024		2024			2023		2023			2024		2023
Interest income:
Loans and leases, including fees	$	54,738	$	50,853	$	50,020		$	48,767	$	47,539		$	155,611	$	137,712
Investment securities:
Taxable		5,233		5,320		4,548			4,344		4,335			15,101		12,322
Tax-exempt		350		353		352			352		356			1,056		1,066
Federal funds sold and other earning assets		3,635		4,759		4,863			4,032		3,045			13,255		9,448
Total interest income		63,956		61,285		59,783			57,495		55,275			185,023		160,548
Interest expense:
Deposits		27,350		27,439		27,035			24,926		23,433			81,824		59,333
Borrowings		709		148		128			162		210			985		775
Subordinated debt		865		884		899			890		626			2,647		1,877
Total interest expense		28,924		28,471		28,062			25,978		24,269			85,456		61,985
Net interest income		35,032		32,814		31,721			31,517		31,006			99,567		98,563
Provision for credit losses		2,575		883		(440	)		1,571		795			3,018		1,458
Net interest income after provision for credit losses		32,457		31,931		32,161			29,946		30,211			96,549		97,105
Noninterest income:
Service charges on deposit accounts		1,780		1,692		1,612			1,673		1,736			5,084		4,838
Loss on sale of securities, net		—		—		—			—		(6,801	)		—		(6,801	)
Mortgage banking		410		348		280			227		309			1,038		813
Investment services		1,881		1,302		1,380			1,339		1,461			4,563		3,766
Insurance commissions		1,477		1,284		1,103			1,133		1,153			3,865		3,551
Interchange and debit card transaction fees		1,349		1,343		1,253			1,370		1,357			3,945		4,087
Other		2,242		1,635		2,752			1,837		1,476			6,627		4,492
Total noninterest income		9,139		7,604		8,380			7,579		691			25,122		14,746
Noninterest expense:
Salaries and employee benefits		18,448		17,261		16,639			16,275		16,785			52,348		49,474
Occupancy and equipment		3,423		3,324		3,396			3,378		3,547			10,144		10,073
FDIC insurance		825		825		915			915		825			2,565		2,241
Other real estate and loan related expense		460		538		584			781		603			1,582		1,616
Advertising and marketing		327		295		302			336		346			924		1,006
Data processing and technology		2,519		2,452		2,465			2,458		2,378			7,435		6,777
Professional services		1,201		1,064		924			1,136		735			3,190		2,307
Amortization of intangibles		604		608		612			643		647			1,824		1,981
Merger related and restructuring expenses		—		—		—			—		110			—		110
Other		3,039		2,834		2,716			3,773		2,540			8,587		7,870
Total noninterest expense		30,846		29,201		28,553			29,695		28,516			88,599		83,455
Income before income taxes		10,750		10,334		11,988			7,830		2,386			33,072		28,396
Income tax expense		1,610		2,331		2,630			1,640		319			6,572		5,993
Net income	$	9,140	$	8,003	$	9,358		$	6,190	$	2,067		$	26,500	$	22,403
Earnings per common share:
Basic	$	0.55	$	0.48	$	0.56		$	0.37	$	0.12		$	1.58	$	1.33
Diluted	$	0.54	$	0.48	$	0.55		$	0.37	$	0.12		$	1.57	$	1.33
Weighted average common shares outstanding:
Basic		16,726,658		16,770,819		16,849,735			16,814,647		16,807,548			16,782,200		16,801,840
Diluted		16,839,998		16,850,250		16,925,408			16,918,234		16,918,635			16,874,316		16,907,325

SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information - (unaudited)
(dollars in thousands)
YIELD ANALYSIS
	Three Months Ended
	September 30, 2024						June 30, 2024						September 30, 2023
	Average				Yield/		Average				Yield/		Average				Yield/
	Balance		Interest		Cost		Balance		Interest		Cost		Balance		Interest		Cost
Assets:
Loans and leases, including fees^1	$	3,634,808	$	54,993	6.02	%	$	3,504,265	$	51,110	5.87	%	$	3,360,678	$	47,539	5.61	%
Taxable securities		564,978		5,233	3.68	%		580,517		5,320	3.69	%		743,054		4,335	2.31	%
Tax-exempt securities^2		63,561		443	2.77	%		63,690		447	2.82	%		64,707		451	2.77	%
Federal funds sold and other earning assets		267,252		3,634	5.41	%		346,459		4,759	5.52	%		229,487		3,045	5.26	%
Total interest-earning assets		4,530,599		64,303	5.65	%		4,494,931		61,636	5.52	%		4,397,926		55,370	4.99	%
Noninterest-earning assets		381,306						383,697						379,456
Total assets	$	4,911,905					$	4,878,628					$	4,777,382
Liabilities and Shareholders’ Equity:
Interest-bearing demand deposits	$	925,307		5,289	2.27	%	$	983,433		5,950	2.43	%	$	969,122		5,463	2.24	%
Money market and savings deposits		1,917,301		16,608	3.45	%		1,909,125		16,529	3.48	%		1,753,671		13,744	3.11	%
Time deposits		560,699		5,453	3.87	%		528,985		4,960	3.77	%		551,191		4,226	3.04	%
Total interest-bearing deposits		3,403,307		27,350	3.20	%		3,421,543		27,439	3.23	%		3,273,984		23,433	2.84	%
Borrowings		53,592		709	5.26	%		12,684		148	4.69	%		16,228		210	5.13	%
Subordinated debt		40,846		865	8.42	%		42,129		884	8.44	%		42,065		626	5.90	%
Total interest-bearing liabilities		3,497,745		28,924	3.29	%		3,476,356		28,471	3.29	%		3,332,277		24,269	2.89	%
Noninterest-bearing deposits		884,938						888,693						951,179
Other liabilities		50,580						47,208						48,494
Total liabilities		4,433,263						4,412,257						4,331,950
Shareholders' equity		478,642						466,371						445,432
Total liabilities and shareholders' equity	$	4,911,905					$	4,878,628					$	4,777,382
Net interest income, taxable equivalent			$	35,379					$	33,165					$	31,101
Interest rate spread					2.36	%					2.22	%					2.11	%
Tax equivalent net interest margin					3.11	%					2.97	%					2.81	%
Percentage of average interest-earning assets to average interest-bearing liabilities					129.53	%					129.30	%					131.98	%
Percentage of average equity to average assets					9.74	%					9.56	%					9.32	%
^1Yields computed on tax-exempt loans on a tax equivalent basis include $255 thousand, $257 thousand, and $0 thousand of taxable equivalent income for the quarters ended September 30, 2024, June 30, 2024, and September 30, 2023, respectively.
^2Yields computed on tax-exempt instruments on a tax equivalent basis include $93 thousand, $94 thousand, and $95 thousand of taxable equivalent income for the quarters ended September 30, 2024, June 30, 2024, and September 30, 2023, respectively.

SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information - (unaudited)
(dollars in thousands)
YIELD ANALYSIS
	Nine Months Ended
	September 30, 2024							September 30, 2023
	Average				Yield/			Average				Yield/
	Balance		Interest		Cost			Balance		Interest		Cost
Assets:
Loans and leases, including fees^1	$	3,532,768	$	156,123		5.90	%	$	3,309,616	$	137,712	5.56	%
Taxable securities		588,679		15,101		3.43	%		745,694		12,322	2.21	%
Tax-exempt securities^2		63,804		1,336		2.80	%		65,170		1,349	2.77	%
Federal funds sold and other earning assets		322,339		13,255		5.49	%		267,124		9,448	4.73	%
Total interest-earning assets		4,507,590		185,815		5.51	%		4,387,604		160,831	4.90	%
Noninterest-earning assets		381,743							365,123
Total assets	$	4,889,333						$	4,752,727
Liabilities and Shareholders’ Equity:
Interest-bearing demand deposits	$	968,139		17,299		2.39	%	$	954,585		14,583	2.04	%
Money market and savings deposits		1,910,452		49,285		3.45	%		1,770,232		35,912	2.71	%
Time deposits		543,887		15,240		3.74	%		508,600		8,838	2.32	%
Total interest-bearing deposits		3,422,478		81,824		3.19	%		3,233,417		59,333	2.45	%
Borrowings		25,941		985		5.07	%		19,309		775	5.37	%
Subordinated debt		41,691		2,647		8.48	%		42,044		1,877	5.97	%
Total interest-bearing liabilities		3,490,110		85,456		3.27	%		3,294,770		61,985	2.52	%
Noninterest-bearing deposits		882,168							972,507
Other liabilities		48,299							44,703
Total liabilities		4,420,577							4,311,980
Shareholders' equity		468,756							440,747
Total liabilities and shareholders' equity	$	4,889,333						$	4,752,727
Net interest income, taxable equivalent			$	100,359						$	98,846
Interest rate spread						2.24	%					2.39	%
Tax equivalent net interest margin						2.97	%					3.01	%
Percentage of average interest-earning assets to average interest-bearing liabilities						129.15	%					133.17	%
Percentage of average equity to average assets						9.59	%					9.27	%
^1Yields computed on tax-exempt loans on a tax equivalent basis included $512 thousand and $0 thousand of taxable equivalent income for the nine months ended September 30, 2024, and 2023, respectively.
^2Yields computed on tax-exempt instruments on a tax equivalent basis included $280 thousand and $283 thousand of taxable equivalent income for the nine months ended September 30, 2024, and 2023, respectively.

SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information - (unaudited)
(dollars in thousands)
	As of and for The Three Months Ended
	Sep			Jun			Mar			Dec			Sep
	2024			2024			2024			2023			2023
Composition of Loans and Leases:
Commercial real estate:
Owner occupied	$	868,077		$	829,085		$	804,557		$	798,416		$	776,402
Non-owner occupied		1,031,708			986,278			938,648			940,789			890,774
Commercial real estate, total		1,899,785			1,815,363			1,743,205			1,739,205			1,667,176
Commercial & industrial		731,600			701,460			667,903			645,918			617,115
Construction & land development		315,006			294,575			321,860			327,185			373,068
Consumer real estate		690,504			678,331			659,209			649,867			638,518
Leases		67,052			70,299			71,909			68,752			68,538
Consumer and other		13,531			14,130			13,469			13,535			14,584
Total loans and leases	$	3,717,478		$	3,574,158		$	3,477,555		$	3,444,462		$	3,378,999
Asset Quality and Additional Loan Data:
Nonperforming loans and leases	$	9,491		$	6,642		$	6,266		$	8,101		$	4,163
Other real estate owned		179			688			696			517			1,370
Other repossessed assets		2,949			2,645			2,033			1,117			348
Total nonperforming assets	$	12,619		$	9,975		$	8,995		$	9,735		$	5,881
Modified loans and leases^1 not included in nonperforming loans and leases	$	4,053		$	4,241		$	4,413		$	4,245		$	2,376
Net charge-offs to average loans and leases (annualized)		0.15	%		0.05	%		0.09	%		0.04	%		0.04	%
Allowance for credit losses to loans and leases		0.96	%		0.97	%		0.98	%		1.02	%		1.00	%
Nonperforming loans and leases to total loans and leases, gross		0.26	%		0.19	%		0.18	%		0.24	%		0.12	%
Nonperforming assets to total assets		0.26	%		0.20	%		0.18	%		0.20	%		0.12	%
Capital Ratios:
Equity to Assets		9.96	%		9.66	%		9.42	%		9.52	%		9.31	%
Tangible common equity to tangible assets (Non-GAAP)^2		7.99	%		7.66	%		7.43	%		7.47	%		7.23	%
SmartFinancial, Inc.^3
Tier 1 leverage		8.44	%		8.32	%		8.23	%		8.27	%		8.13	%
Common equity Tier 1		10.06	%		10.06	%		10.20	%		10.14	%		10.07	%
Tier 1 capital		10.06	%		10.06	%		10.20	%		10.14	%		10.07	%
Total capital		11.63	%		11.68	%		11.85	%		11.78	%		11.90	%
SmartBank		Estimated^4
Tier 1 leverage		9.18	%		9.11	%		9.07	%		9.18	%		9.00	%
Common equity Tier 1		10.92	%		11.02	%		11.23	%		11.26	%		11.15	%
Tier 1 capital		10.92	%		11.02	%		11.23	%		11.26	%		11.15	%
Total capital		11.70	%		11.79	%		12.00	%		12.02	%		11.87	%
^1Borrowers that have experienced financial difficulty.
^2Total common equity less intangibles divided by total assets less intangibles. See reconciliation of Non-GAAP measures.
^3All periods presented are estimated.
^4 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															Nine Months Ended
	Sep			Jun			Mar			Dec			Sep			Sep			Sep
	2024			2024			2024			2023			2023			2024			2023
Selected Performance Ratios (Annualized):
Return on average assets		0.74	%		0.66	%		0.77	%		0.52	%		0.17	%		0.72	%		0.63	%
Return on average shareholders' equity		7.60	%		6.90	%		8.16	%		5.46	%		1.84	%		7.55	%		6.80	%
Return on average tangible common equity¹		9.75	%		8.94	%		10.63	%		7.18	%		2.43	%		9.77	%		9.02	%
Noninterest income / average assets		0.74	%		0.63	%		0.69	%		0.63	%		0.06	%		0.69	%		0.41	%
Noninterest expense / average assets		2.50	%		2.41	%		2.35	%		2.47	%		2.37	%		2.42	%		2.35	%
Efficiency ratio		69.83	%		72.25	%		71.20	%		75.95	%		89.96	%		71.06	%		73.65	%
Operating Selected Performance Ratios (Annualized):
Operating return on average assets^1		0.74	%		0.64	%		0.69	%		0.57	%		0.60	%		0.69	%		0.77	%
Operating PPNR return on average assets^1		1.08	%		0.90	%		0.84	%		0.86	%		0.84	%		0.94	%		1.03	%
Operating return on average shareholders' equity^1		7.60	%		6.72	%		7.29	%		6.07	%		6.41	%		7.21	%		8.35	%
Operating return on average tangible common equity^1		9.75	%		8.70	%		9.49	%		7.98	%		8.46	%		9.32	%		11.09	%
Operating efficiency ratio^1		69.28	%		72.13	%		73.50	%		73.41	%		73.60	%		71.55	%		69.23	%
Operating noninterest income / average assets^1		0.74	%		0.60	%		0.58	%		0.63	%		0.62	%		0.64	%		0.61	%
Operating noninterest expense / average assets^1		2.50	%		2.41	%		2.35	%		2.39	%		2.36	%		2.42	%		2.34	%
Selected Interest Rates and Yields:
Yield on loans and leases, excluding loan fees, FTE		5.95	%		5.80	%		5.71	%		5.61	%		5.52	%		5.82	%		5.37	%
Yield on loans and leases, FTE		6.02	%		5.87	%		5.82	%		5.68	%		5.61	%		5.90	%		5.56	%
Yield on earning assets, FTE		5.65	%		5.52	%		5.36	%		5.22	%		4.99	%		5.51	%		4.90	%
Cost of interest-bearing deposits		3.20	%		3.23	%		3.16	%		3.00	%		2.84	%		3.19	%		2.45	%
Cost of total deposits		2.54	%		2.56	%		2.52	%		2.35	%		2.20	%		2.54	%		1.89	%
Cost of interest-bearing liabilities		3.29	%		3.29	%		3.23	%		3.07	%		2.89	%		3.27	%		2.52	%
Net interest margin, FTE		3.11	%		2.97	%		2.85	%		2.86	%		2.81	%		2.97	%		3.01	%
Per Common Share:
Net income, basic	$	0.55		$	0.48		$	0.56		$	0.37		$	0.12		$	1.58		$	1.33
Net income, diluted		0.54			0.48			0.55			0.37			0.12			1.57			1.33
Operating earnings, basic¹		0.55			0.47			0.50			0.41			0.43			1.51			1.64
Operating earnings, diluted¹		0.54			0.46			0.49			0.41			0.43			1.50			1.63
Book value		28.89			27.91			27.37			27.07			26.28			28.89			26.28
Tangible book value¹		22.67			21.66			21.12			20.76			19.94			22.67			19.94
Common shares outstanding		16,926,374			16,925,902			17,056,704			16,988,879			16,994,543			16,926,374			16,994,543
^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																				Nine Months Ended
	Sep				Jun				Mar				Dec				Sep				Sep				Sep
	2024				2024				2024				2023				2023				2024				2023
Operating Earnings:
Net income (GAAP)	$	9,140			$	8,003			$	9,358			$	6,190			$	2,067			$	26,500			$	22,403
Noninterest income:
Securities (gains) losses, net		—				—				—				—				6,801				—				6,801
Gain on sale of former branch building		—				(283	)			(1,346	)			—				—				(1,629	)			—
Noninterest expenses:
Donation of a former branch location		—				—				—				250				—				—				—
Accruals for pending litigation		—				—				—				675				—				—				—
Merger related and restructuring expenses		—				—				—				—				110				—				110
Income taxes:
Income tax effect of adjustments		—				73				348				(239	)			(1,785	)			421				(1,785	)
Operating earnings (Non-GAAP)	$	9,140			$	7,793			$	8,360			$	6,876			$	7,193			$	25,292			$	27,529
Operating earnings per common share (Non-GAAP):
Basic	$	0.55			$	0.47			$	0.50			$	0.41			$	0.43			$	1.51			$	1.64
Diluted		0.54				0.46				0.49				0.41				0.43				1.50				1.63
Operating Noninterest Income:
Noninterest income (GAAP)	$	9,139			$	7,604			$	8,380			$	7,579			$	691			$	25,122			$	14,746
Securities (gains) losses, net		—				—				—				—				6,801				—				6,801
Gain on sale of former branch building		—				(283	)			(1,346	)			—				—				(1,629	)			—
Operating noninterest income (Non-GAAP)	$	9,139			$	7,321			$	7,034			$	7,579			$	7,492			$	23,493			$	21,547
Operating noninterest income (Non-GAAP)/average assets^1		0.74		%		0.60		%		0.58		%		0.63		%		0.62		%		0.64		%		0.61		%
Operating Noninterest Expense:
Noninterest expense (GAAP)	$	30,846			$	29,201			$	28,553			$	29,695			$	28,516			$	88,599			$	83,455
Donation of a former branch location		—				—				—				(250	)			—				—				—
Accruals for pending litigation		—				—				—				(675	)			—				—				—
Merger related and restructuring expenses		—				—				—				—				(110	)			—				(110	)
Operating noninterest expense (Non-GAAP)	$	30,846			$	29,201			$	28,553			$	28,770			$	28,406			$	88,599			$	83,345
Operating noninterest expense (Non-GAAP)/average assets^2		2.50		%		2.41		%		2.35		%		2.39		%		2.36		%		2.42		%		2.34		%
Operating Pre-provision Net revenue ("PPNR") Earnings:
Net interest income (GAAP)	$	35,032			$	32,814			$	31,721			$	31,517			$	31,006			$	99,567			$	98,563
Operating noninterest income (Non-GAAP)		9,139				7,321				7,034				7,579				7,492				23,493				21,547
Operating noninterest expense (Non-GAAP)		(30,846	)			(29,201	)			(28,553	)			(28,770	)			(28,406	)			(88,599	)			(83,345	)
Operating PPNR earnings (Non-GAAP)	$	13,325			$	10,934			$	10,202			$	10,326			$	10,092			$	34,461			$	36,765
Non-GAAP Return Ratios:
Operating return on average assets (Non-GAAP)^3		0.74		%		0.64		%		0.69		%		0.57		%		0.60		%		0.69		%		0.77		%
Operating PPNR return on average assets (Non-GAAP)^4		1.08		%		0.90		%		0.84		%		0.86		%		0.84		%		0.94		%		1.03		%
Return on average tangible common equity (Non-GAAP)^5		9.75		%		8.93		%		10.63		%		7.18		%		2.43		%		9.77		%		9.02		%
Operating return on average shareholders' equity (Non-GAAP)^6		7.60		%		6.72		%		7.29		%		6.07		%		6.41		%		7.21		%		8.35		%
Operating return on average tangible common equity (Non-GAAP)^7		9.75		%		8.70		%		9.49		%		7.98		%		8.46		%		9.32		%		11.09		%
Operating Efficiency Ratio:
Efficiency ratio (GAAP)		69.83		%		72.25		%		71.20		%		75.95		%		89.96		%		71.06		%		73.65		%
Adjustment for taxable equivalent yields		(0.55	)	%		(0.63	)	%		(0.17	)	%		(0.18	)	%		(0.27	)	%		(0.45	)	%		(0.18	)	%
Adjustment for securities gains (losses)		—		%		—		%		—		%		—		%		(15.89	)	%		—		%		(4.17	)	%
Adjustment for sale of branch location		—		%		0.51		%		2.46		%		—		%		—		%		0.94		%		—		%
Adjustment for donation of a former branch location		—		%		—		%		—		%		(0.64	)	%		—		%		—		%		—		%
Adjustment for accruals for pending litigation		—		%		—		%		—		%		(1.72	)	%		—		%		—		%		—		%
Adjustment for merger related income and costs		—		%		—		%		—		%		—		%		(0.20	)	%		—		%		(0.07	)	%
Operating efficiency ratio (Non-GAAP)		69.28		%		72.13		%		73.50		%		73.41		%		73.60		%		71.55		%		69.23		%
^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
	Sep		Jun		Mar		Dec		Sep
	2024		2024		2024		2023		2023
Tangible Common Equity:
Shareholders' equity (GAAP)	$	489,023	$	472,465	$	466,796	$	459,886	$	446,652
Less goodwill and other intangible assets		105,324		105,929		106,537		107,148		107,792
Tangible common equity (Non-GAAP)	$	383,699	$	366,536	$	360,259	$	352,738	$	338,860
Average Tangible Common Equity:
Average shareholders' equity (GAAP)	$	478,642	$	466,371	$	461,148	$	449,526	$	445,432
Less average goodwill and other intangible assets		105,701		106,301		106,920		107,551		108,194
Average tangible common equity (Non-GAAP)	$	372,941	$	360,070	$	354,228	$	341,975	$	337,238
Tangible Book Value per Common Share:
Book value per common share (GAAP)	$	28.89	$	27.91	$	27.37	$	27.07	$	26.28
Adjustment due to goodwill and other intangible assets		(6.22)		(6.25)		(6.25)		(6.31)		(6.34)
Tangible book value per common share (Non-GAAP)^1	$	22.67	$	21.66	$	21.12	$	20.76	$	19.94
Tangible Common Equity to Tangible Assets:
Total Assets (GAAP)	$	4,908,934	$	4,891,009	$	4,954,690	$	4,829,387	$	4,797,171
Less goodwill and other intangibles		105,324		105,929		106,537		107,148		107,792
Tangible Assets (Non-GAAP)	$	4,803,610	$	4,785,080	$	4,848,153	$	4,722,239	$	4,689,379
Tangible common equity to tangible assets (Non-GAAP)		7.99%		7.66%		7.43%		7.47%		7.23%
^1Tangible book value per share (Non-GAAP) is computed by dividing total shareholders’ equity, less goodwill and other intangible assets, by common shares outstanding.