• SmartFinancial Announces Results for the Third Quarter 2022

    المصدر: Nasdaq GlobeNewswire / 24 أكتوبر 2022 17:00:30   America/New_York

    Highlights for the Third Quarter of 2022

    • Operating earnings1 of $11.6 million, or $0.69 per diluted common share
    • Operating earnings increase of 13% compared to the previous quarter and 17% compared to the same prior year quarter
    • Net organic loan and lease growth of over $109.0 million - 15% annualized quarter-over-quarter increase
    • Non-maturity deposit growth of over $42.0 million – 4% annualized quarter-over-quarter increase
    • Net interest income growth of $3.6 million or 44% annualized quarter-over-quarter increase
    • Credit quality remains solid with nonperforming assets to total assets of 0.10%
    • Completed the asset purchase of Sunbelt Insurance (“Sunbelt”)

    KNOXVILLE, Tenn., Oct. 24, 2022 (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 third quarter of 2022, compared to net income of $9.6 million, or $0.61 per diluted common share, for the third quarter of 2021, and compared to prior quarter net income of $10.2 million, or $0.61 per diluted common share. Operating earnings1, which excludes securities gains and merger related and restructuring expenses, net of tax adjustments, totaled $11.6 million, or $0.69 per diluted common share, in the third quarter of 2022, compared to $9.9 million, or $0.63 per diluted common share, in the third quarter of 2021, and compared to $10.3 million, or $0.61 per diluted common share, in the second quarter of 2022.

    Billy Carroll, President & CEO, stated: "I am extremely pleased with another outstanding quarter.  We posted a record quarter for revenue and continue to see strong EPS growth.  Our team has done a phenomenal job of building our core revenue foundation this year as we continue to gain operating leverage.”

    SmartFinancial's Chairman, Miller Welborn, concluded: “We are delighted with our results for the quarter. First, I’m very excited to welcome the Sunbelt Insurance team into The SmartFinancial family. Our operating metrics improved for the quarter in almost every category, and this is a testament to the diligent effort by our entire team.”

    Net Interest Income and Net Interest Margin

    Net interest income was $36.7 million for the third quarter of 2022, compared to $33.1 million for the prior quarter. Average earning assets totaled $4.45 billion, an increase of $126.0 million. The growth in average earnings assets was primarily driven by an increase in average loans and leases of $164.3 million and securities of $2.6 million, offset by a decrease in average interest-earning cash of $40.9 million as the Bank continues to deploy excess liquidity into loans and leases.   Average interest-bearing liabilities increased $22.0 million as a result of core deposit growth of $40.3 million and a decrease in borrowings of $18.4 million.

    The tax equivalent net interest margin was 3.29% for the third quarter of 2022, compared to 3.08% for the prior quarter. The tax equivalent net interest margin was positively impacted by the continued deployment of excess cash and cash equivalents into loans and leases and the increase in rates by the Board of Governors of the Federal Reserve System (the “Federal Reserve”).

    The yield on interest-bearing liabilities increased to 0.70% for the third quarter of 2022 compared to 0.42% for the prior quarter. The cost of average interest-bearing deposits was 0.62% for the third quarter of 2022 compared to 0.33% for the prior quarter, an increase of 29 basis points, primarily attributable to the increases in rates by the Federal Reserve. The cost of total deposits for the third quarter of 2022 was 0.45% compared to 0.24% in the prior quarter.

    _____________________________________________

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

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

            
      Three Months Ended   
      Sep Jun Increase 
    Selected Interest Rates and Yields 2022 2022 (Decrease) 
    Yield on loans and leases 4.59%4.40%0.19%
    Yield on earning assets, FTE 3.79%3.39%0.40%
    Cost of interest-bearing deposits 0.62%0.33%0.29%
    Cost of total deposits 0.45%0.24%0.21%
    Cost of interest-bearing liabilities 0.70%0.42%0.28%
    Net interest margin, FTE 3.29%3.08%0.21%

    Provision for Loan and Lease Losses and Credit Quality

    At September 30, 2022, the allowance for loan and lease losses was $22.8 million. The allowance for loan and lease losses to total loans and leases was 0.73% as of September 30, 2022, and June 30, 20022, respectively.   For the Company’s originated loans and leases, the allowance for loan and lease losses to originated loans and leases, less PPP loans, was 0.75% as of September 30, 2022, and 0.74% at June 30, 2022. The remaining discounts on the acquired loan and lease portfolio totaled $14.5 million, or 4.29% of acquired loans and leases as of September 30, 2022.  

    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    
       Sep Jun    
     Provision for Loan and Lease Losses Rollforward 2022
     2022
     Change 
     Beginning balance $21,938  $20,078  $1,860  
     Charge-offs  (231)  (143)  (88) 
     Recoveries  88   753   (665) 
     Net charge-offs  (143)  610   (753) 
     Provision  974   1,250   (276) 
     Ending balance $22,769  $21,938  $831  
                
     Allowance for loan losses to total loans and leases, gross  0.73 % 0.73 % - %

    The Company is not required to implement the provisions of the Current Expected Credit Losses (“CECL”) accounting standard until January 1, 2023 and is continuing to account for the allowance for loan and lease losses under the incurred loss model.

    Nonperforming loans and leases as a percentage of total loans and leases was 0.11% as of September 30, 2022, and June 30, 2022, respectively. 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 0.10% as of September 30, 2022, a decrease of 1 bases point from the 11% reported in the second quarter of 2022. 

    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 2022 2022 (Decrease) 
     Nonaccrual loans and leases $3,379 $3,413 $(34) 
     Loans and leases past due 90 days or more and still accruing  -  -  -  
     Total nonperforming loans and leases  3,379  3,413  (34) 
     Other real estate owned  1,226  1,612  (386) 
     Other repossessed assets  -  17  (17) 
     Total nonperforming assets $4,605 $5,042 $(437) 
                
     Nonperforming loans and leases to total loans and leases, gross  0.11% 0.11% - %
     Nonperforming assets to total assets  0.10% 0.11% (0.01)%

    Noninterest Income

    Noninterest income decreased $979 thousand to $6.3 million for the third quarter of 2022 compared to $7.2 million for the prior quarter. During the third quarter of 2022, the primary components of the changes in noninterest income were as follows:

    • Increase in service charges on deposit accounts, related to deposit growth and enhancements to our treasury management fee structure;
    • Decrease in mortgage banking income, related to increased secondary market interest rates driving lower volume;
    • Increase in insurance commissions, driven by the addition of Sunbelt and organic growth;
    • Decrease in interchange and debit card transaction fees, related to lower volume; and
    • 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   
      Sep June Increase
    Noninterest Income 2022 2022 (Decrease)
    Service charges on deposit accounts $1,611 $1,446 $165 
    Mortgage banking income  170  471  (301)
    Investment services  1,051  1,065  (14)
    Insurance commissions  864  598  266 
    Interchange and debit card transaction fees  1,356  1,467  (111)
    Other  1,198  2,182  (984)
    Total noninterest income $6,250 $7,229 $(979)

    Noninterest Expense

    Noninterest expense increased $1.3 million to $27.2 million for the third quarter of 2022 compared to $25.9 million for the prior quarter. During the third quarter of 2022, the primary components of the changes in noninterest expense were as follows:

    • Salaries and employee benefits increased due to stronger than expected performance generating additional accruals to the Bank’s incentive plans and, to a lesser extent, the addition of Sunbelt;
    • Increase in occupancy and equipment as a result of higher utility expenses (seasonality and higher rates) and charges associated with new branch expansions in our footprint; and
    • Increase in data processing and technology as a result of implementation of new loan and security platforms.

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

              
      Three Months Ended   
      Sep June  Increase
    Noninterest Expense 2022 2022  (Decrease)
    Salaries and employee benefits $16,317 $15,673 $644 
    Occupancy and equipment  3,167  2,793  374 
    FDIC insurance  705  676  29 
    Other real estate and loan related expenses  565  636  (71)
    Advertising and marketing  288  327  (39)
    Data processing and technology  1,872  1,728  144 
    Professional services  822  745  77 
    Amortization of intangibles  650  633  17 
    Merger related and restructuring expenses  87  81  6 
    Other  2,757  2,634  123 
    Total noninterest expense $27,230 $25,926 $1,304 

    Income Tax Expense

    Income tax expense was $3.2 million for the third quarter of 2022, an increase of $311 thousand, compared to $2.9 million for the prior quarter.

    The effective tax rate was 21.76% for the third quarter of 2022 and 22.11% for the prior quarter.

    Balance Sheet Trends

    Total assets at September 30, 2022 were $4.80 billion compared with $4.61 billion at December 31, 2021. The increase of $185.3 million is primarily attributable to increases in loans and leases of $405.7 million, securities of $247.5 million, goodwill and other intangibles, net of $4.6 million, attributable to Sunbelt, and other assets of $29.6 million, offset by a decrease in cash and cash equivalents of $502.0 million, primarily from the funding of loans and leases and purchase of securities.

    Total liabilities increased to $4.38 billion at September 30, 2022 from $4.18 billion at December 31, 2021. The increase of $200.1 million was primarily from organic deposit growth of $258.5 million and increase in other liabilities of $10.7 million, offset by a decrease in borrowings of $69.2 million.

    Shareholders' equity at September 30, 2022 totaled $414.7 million, a decrease of $14.7 million, from December 31, 2021. The decrease in shareholders' equity was primarily driven by the market increases in interest rates and the negative impact on accumulated other comprehensive income (loss) of $42.3 million and dividends paid of $3.5 million, offset by net income of $30.0 million for the nine months ended September 30, 2022.   Tangible book value per share2 was $18.02 at September 30, 2022, compared to $19.26 at December 31, 2021. Tangible common equity1 as a percentage of tangible assets1 was 6.49% at September 30, 2022, compared with 7.18% at December 31, 2021.

    _____________________________________________

    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):

      Sep Dec Increase
    Selected Balance Sheet Information 2022 2021 (Decrease)
    Total assets $4,796,911 $4,611,579 $185,332 
    Total liabilities  4,382,200  4,182,149  200,051 
    Total equity  414,711  429,430  (14,719)
    Securities  806,827  559,422  247,405 
    Loans and leases  3,099,116  2,693,397  405,719 
    Deposits  4,280,409  4,021,938  258,471 
    Borrowings  18,423  87,585  (69,162)

    Conference Call Information

    SmartFinancial issued this earnings release for the third quarter of 2022 on Monday, October 24, 2022, and will host a conference call on Tuesday, October 25, 2022, at 10:00 a.m. ET. To access this interactive teleconference, dial (833) 927-1758 or (646) 904-5544 and entering the access code, 380946. A replay of the conference call will be available through December 24, 2022, by dialing (866) 813-9403 or (929) 458-6194 and entering the access code, 355013. 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, including statements regarding the effects of the COVID-19 pandemic and related variants on the Company’s business and financial results and conditions, 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) risks related to the acquisition of Sevier County Bancshares, Inc. (“SCB”); (7) the risk that the anticipated benefits from the acquisition of SCB may not be realized in the time frame anticipated; (8) changes in management’s plans for the future; (9) prevailing, or changes in, economic or political conditions, particularly in our market areas; (10) credit risk associated with our lending activities; (11) changes in interest rates, loan demand, real estate values, or competition; (12) developments in our mortgage banking business, including loan modifications, general demand, and the effects of judicial or regulatory requirements or guidance; (13) changes in prices, values and sales volumes of residential and commercial real estate; (14) changes in accounting principles, policies, or guidelines; (15) changes in applicable laws, rules, or regulations; (16) 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; (17) the impact of the COVID-19 pandemic and related variants on the Company’s assets, business, cash flows, financial condition, liquidity, prospects and results of operations; (18) higher inflation and its impacts; (19) 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; (20) the effects of war or other conflicts including the impacts related to or resulting from Russia’s military action in Ukraine; and (21) 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
     2022
     2022
     2022
     2021
     2021
    Assets:              
    Cash and cash equivalents$543,029  $654,945  $763,968  $1,045,077  $1,091,160 
    Securities available-for-sale, at fair value 519,723   524,864   540,483   482,453   339,343 
    Securities held-to-maturity, at amortized cost 287,104   288,363   289,532   76,969    
    Other investments 15,528   16,569   16,499   16,494   14,972 
    Loans held for sale 2,742   1,707   5,894   5,103   3,418 
    Loans and leases 3,099,116   2,994,074   2,806,026   2,693,397   2,652,663 
    Less: Allowance for loan and lease losses (22,769)  (21,938)  (20,078)  (19,352)  (19,295)
    Loans and leases, net 3,076,347   2,972,136   2,785,948   2,674,045   2,633,368 
    Premises and equipment, net 91,944   89,950   84,793   85,958   85,346 
    Other real estate owned 1,226   1,612   1,612   1,780   2,415 
    Goodwill and other intangibles, net 110,460   104,582   105,215   105,852   104,930 
    Bank owned life insurance 81,001   80,537   80,074   79,619   79,145 
    Other assets 67,807   52,848   44,561   38,229   29,934 
    Total assets$4,796,911  $4,788,113  $4,718,579  $4,611,579  $4,384,031 
    Liabilities:              
    Deposits:              
    Noninterest-bearing demand$1,186,209  $1,162,843  $1,093,933  $1,055,125  $977,180 
    Interest-bearing demand 962,901   999,893   975,272   899,158   847,007 
    Money market and savings 1,663,355   1,607,714   1,573,101   1,493,007   1,389,393 
    Time deposits 467,944   511,182   549,047   574,648   585,692 
    Total deposits 4,280,409   4,281,632   4,191,353   4,021,938   3,799,272 
    Borrowings 18,423   12,549   36,713   87,585   88,748 
    Subordinated debt 41,994   41,973   41,952   41,930   41,909 
    Other liabilities 41,374   31,532   28,519   30,696   29,382 
    Total liabilities 4,382,200   4,367,686   4,298,537   4,182,149   3,959,311 
    Shareholders' Equity:              
    Common stock 16,888   16,898   16,893   16,803   16,801 
    Additional paid-in capital 293,907   293,815   293,376   292,937   292,760 
    Retained earnings 144,723   134,362   125,329   118,247   112,600 
    Accumulated other comprehensive income (loss) (40,807)  (24,648)  (15,556)  1,443   2,559 
    Total shareholders' equity 414,711   420,427   420,042   429,430   424,720 
    Total liabilities & shareholders' equity$4,796,911  $4,788,113  $4,718,579  $4,611,579  $4,384,031 

    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 June Mar Dec Sep Sep Sep
     2022 2022 2022 2021 2021 2022 2021
    Interest income:                    
    Loans and leases, including fees$35,127 $31,530 $29,643 $30,567 $31,674 $96,300 $88,015
    Investment securities:                    
    Taxable 3,135  2,908  2,418  1,341  832  8,463  2,472
    Tax-exempt 561  441  368  322  331  1,369  894
    Federal funds sold and other earning assets 3,474  1,430  486  547  474  5,389  1,074
    Total interest income 42,297  36,309  32,915  32,777  33,311  111,521  92,455
    Interest expense:                    
    Deposits 4,866  2,504  2,014  2,116  2,153  9,384  6,733
    Borrowings 97  117  157  180  121  371  360
    Subordinated debt 626  626  626  626  655  1,877  1,823
    Total interest expense 5,589  3,247  2,797  2,922  2,929  11,632  8,916
    Net interest income 36,708  33,062  30,118  29,855  30,382  99,889  83,539
    Provision for loan and lease losses 974  1,250  1,006  422  1,149  3,230  1,211
    Net interest income after provision for loan and lease losses 35,734  31,812  29,112  29,433  29,233  96,659  82,328
    Noninterest income:                    
    Service charges on deposit accounts 1,611  1,446  1,319  1,372  1,220  4,376  3,278
    Gain (loss) on sale of securities, net         45    45
    Mortgage banking 170  471  834  803  994  1,475  3,238
    Investment services 1,051  1,065  1,070  621  448  3,186  1,546
    Insurance commissions 864  598  901  517  745  2,363  2,768
    Interchange and debit card transaction fees 1,356  1,467  1,284  1,445  1,078  4,107  2,839
    Other 1,198  2,182  1,703  2,048  1,779  5,083  3,429
    Total noninterest income 6,250  7,229  7,111  6,806  6,309  20,590  17,143
    Noninterest expense:                    
    Salaries and employee benefits 16,317  15,673  15,046  14,990  13,594  47,036  36,666
    Occupancy and equipment 3,167  2,793  3,059  3,026  2,536  9,020  7,170
    FDIC insurance 705  676  641  567  525  2,022  1,266
    Other real estate and loan related expense 565  636  729  583  407  1,930  1,514
    Advertising and marketing 288  327  369  176  235  985  654
    Data processing and technology 1,872  1,728  1,586  1,722  1,753  5,185  4,642
    Professional services 822  745  1,242  847  810  2,809  2,300
    Amortization of intangibles 650  633  637  660  711  1,919  1,597
    Merger related and restructuring expenses 87  81  439  2,762  464  607  939
    Other 2,757  2,634  1,970  2,490  2,274  7,361  6,822
    Total noninterest expense 27,230  25,926  25,718  27,823  23,309  78,874  63,570
    Income before income taxes 14,754  13,115  10,505  8,416  12,233  38,375  35,901
    Income tax expense 3,211  2,900  2,246  1,761  2,633  8,357  7,767
    Net income$11,543 $10,215 $8,259 $6,655 $9,600 $30,018 $28,134
    Earnings per common share:                    
    Basic$0.69 $0.61 $0.49 $0.40 $0.62 $1.79 $1.85
    Diluted$0.68 $0.61 $0.49 $0.40 $0.61 $1.78 $1.84
    Weighted average common shares outstanding:                    
    Basic 16,749,255  16,734,930  16,718,371  16,699,010  15,557,528  16,734,298  15,192,919
    Diluted 16,872,022  16,867,774  16,858,288  16,846,315  15,691,126  16,867,970  15,312,755

    SmartFinancial, Inc. and Subsidiary
    Condensed Consolidated Financial Information - (unaudited)
    (dollars in thousands)
    YIELD ANALYSIS

                             
     Three Months Ended 
     September 30, 2022 June 30, 2022 September 30, 2021 
     Average    Yield/ Average    Yield/ Average    Yield/ 
     Balance Interest Cost Balance Interest Cost Balance Interest Cost 
    Assets:                        
    Loans and leases, including fees1$3,037,092 $35,127 4.59%$2,872,748 $31,530 4.40%$2,536,591 $31,674 4.95%
    Taxable securities 720,114  3,135 1.73% 717,507  2,908 1.63% 187,032  832 1.77%
    Tax-exempt securities2 101,559  732 2.86% 101,585  609 2.40% 87,621  477 2.16%
    Federal funds sold and other earning assets 587,755  3,474 2.34% 628,677  1,430 0.91% 802,712  474 0.23%
    Total interest-earning assets 4,446,520  42,468 3.79% 4,320,517  36,477 3.39% 3,613,956  33,457 3.67%
    Noninterest-earning assets 362,869       374,776       323,067      
    Total assets$4,809,389      $4,695,293      $3,937,023      
                             
    Liabilities and Stockholders’ Equity:                        
    Interest-bearing demand deposits$966,437  1,956 0.80%$968,806  734 0.30%$763,613  414 0.21%
    Money market and savings deposits 1,632,510  2,298 0.56% 1,559,963  1,126 0.29% 1,233,533  854 0.27%
    Time deposits 501,919  612 0.48% 531,783  644 0.49% 524,327  885 0.67%
    Total interest-bearing deposits 3,100,866  4,866 0.62% 3,060,552  2,504 0.33% 2,521,473  2,153 0.34%
    Borrowings 13,141  97 2.93% 31,510  117 1.49% 80,188  121 0.60%
    Subordinated debt 41,980  626 5.91% 41,959  626 5.98% 40,211  654 6.47%
    Total interest-bearing liabilities 3,155,987  5,589 0.70% 3,134,021  3,247 0.42% 2,641,872  2,928 0.44%
    Noninterest-bearing deposits 1,192,813       1,112,643       877,831      
    Other liabilities 35,224       28,903       24,522      
    Total liabilities 4,384,024       4,275,567       3,544,225      
    Shareholders' equity 425,365       419,726       392,798      
    Total liabilities and shareholders' equity$4,809,389      $4,695,293      $3,937,023      
                             
    Net interest income, taxable equivalent   $36,879      $33,230      $30,529   
    Interest rate spread      3.09%      2.97%      3.23%
    Tax equivalent net interest margin      3.29%      3.08%      3.35%
                             
    Percentage of average interest-earning assets to average interest-bearing liabilities      140.89%      137.86%      136.80%
    Percentage of average equity to average assets      8.84%      8.94%      9.98%

    1 Includes average balance of $21,968 million, $34,307 million and $128,408 million in PPP loans for the quarters ended September 30, 2022, June 30, 2022, and September 30, 2021, respectively.  
    2 Yields computed on tax-exempt instruments on a tax equivalent basis include $171 thousand, $168 thousand and $146 thousand of taxable equivalent income for the quarters ended September 30, 2022, June 30, 2022 and September 30, 2021, respectively.

    SmartFinancial, Inc. and Subsidiary
    Condensed Consolidated Financial Information - (unaudited)
    (dollars in thousands)
    YIELD ANALYSIS

                      
     Nine Months Ended
     September 30, 2022 September 30, 2021 
     Average    Yield/ Average    Yield/ 
     Balance Interest Cost Balance Interest Cost 
    Assets:                 
    Loans and leases, including fees1$2,880,444 $96,300  4.47%$2,495,567 $88,015 4.72%
    Taxable securities 683,926  8,463  1.65% 163,005  2,472 2.03%
    Tax-exempt securities2 102,872  1,873  2.43% 89,244  1,339 2.01%
    Federal funds sold and other earning assets 663,400  5,389  1.09% 584,970  1,074 0.25%
    Total interest-earning assets 4,330,642  112,025  3.46% 3,332,786  92,900 3.73%
    Noninterest-earning assets 373,081        295,074      
    Total assets$4,703,723       $3,627,860      
                      
    Liabilities and Stockholders’ Equity:                 
    Interest-bearing demand deposits$952,523  3,137  0.44%$698,148  974 0.19%
    Money market and savings deposits 1,572,287  4,282  0.36% 1,112,342  2,580 0.31%
    Time deposits 531,419  1,965  0.49% 517,566  3,179 0.82%
    Total interest-bearing deposits 3,056,229  9,384  0.41% 2,328,056  6,733 0.39%
    Borrowings 37,933  371  1.31% 81,177  360 0.59%
    Subordinated debt 41,959  1,877  5.98% 39,650  1,823 6.15%
    Total interest-bearing liabilities 3,136,121  11,632  0.50% 2,448,883  8,916 0.49%
    Noninterest-bearing deposits 1,111,854        782,960      
    Other liabilities 31,412        21,553      
    Total liabilities 4,279,387        3,253,396      
    Shareholders' equity 424,336        374,464      
    Total liabilities and shareholders' equity$4,703,723       $3,627,860      
                      
    Net interest income, taxable equivalent   $100,393       $83,984   
    Interest rate spread       2.96%      3.24%
    Tax equivalent net interest margin       3.10%      3.37%
                      
    Percentage of average interest-earning assets to average interest-bearing liabilities       138.09%      136.09%
    Percentage of average equity to average assets       9.02%      10.32%

    1 Includes average balance of $36,630 million and $235,027 million in PPP loans for the nine months ended September 30, 2022, and 2021, respectively.
    2 Yields computed on tax-exempt instruments on a tax equivalent basis include $504 thousand and $445 thousand of taxable equivalent income for the nine months ended September 30, 2022, and 2021, 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 
     2022 2022  2022 2021 2021 
    Composition of Loans and Leases:               
    Commercial real estate:               
    owner occupied$714,734 $684,250  $612,675 $590,064 $560,671 
    non-owner occupied 822,317  850,338   863,181  794,092  752,576 
    Commercial real estate, total 1,537,051  1,534,588   1,475,856  1,384,156  1,313,247 
    Commercial & industrial 514,280  483,588   461,153  488,024  469,739 
    Construction & land development 405,007  364,368   314,654  278,386  326,374 
    Consumer real estate 562,408  533,582   483,229  477,272  478,161 
    Leases 64,798  63,264   59,892  53,708  53,396 
    Consumer and other 15,572  14,684   11,242  11,851  11,746 
    Total loans and leases$3,099,116 $2,994,074  $2,806,026 $2,693,397 $2,652,663 
                    
    Asset Quality and Additional Loan Data:               
    Nonperforming loans and leases$3,379 $3,413  $3,342 $3,188 $3,567 
    Other real estate owned 1,226  1,612   1,612  1,780  2,415 
    Other repossessed assets   17   27  90  77 
    Total nonperforming assets$4,605 $5,042  $4,981 $5,058 $6,059 
    Restructured loans and leases not included in nonperforming loans and leases$108 $678  $625 $206 $212 
    Net charge-offs to average loans and leases (annualized) 0.02% (0.09)% 0.04% 0.05% 0.03%
    Allowance for loan and leases losses to loans and leases 0.73% 0.73 % 0.72% 0.72% 0.73%
    Nonperforming loans and leases to total loans and leases, gross 0.11% 0.11 % 0.12% 0.12% 0.13%
    Nonperforming assets to total assets 0.10% 0.11 % 0.11% 0.11% 0.14%
    Acquired loan and lease fair value discount balance$14,465 $14,737  $14,913 $15,483 $13,001 
    Accretion income on acquired loans and leases 148  225   389  457  1,760 
    PPP net fees deferred balance 140  301   972  2,038  3,783 
    PPP net fees recognized 163  669   1,066  1,725  2,873 
                    
    Capital Ratios:               
    Equity to Assets 8.65% 8.78 % 8.90% 9.31% 9.69%
    Tangible common equity to tangible assets (Non-GAAP)1 6.49% 6.74 % 6.82% 7.18% 7.47%
                    
    SmartFinancial, Inc.2               
    Tier 1 leverage 7.40% 7.48 % 7.41% 7.45% 8.36%
    Common equity Tier 1 9.64% 9.95 % 10.30% 10.56% 10.85%
    Tier 1 capital 9.64% 9.95 % 10.30% 10.56% 10.85%
    Total capital 11.43% 11.80 % 12.22% 12.55% 12.92%
                    
    SmartBank Estimated3             
    Tier 1 leverage 8.27% 8.33 % 8.24% 8.23% 9.20%
    Common equity Tier 1 10.77% 11.08 % 11.46% 11.66% 11.94%
    Tier 1 capital 10.77% 11.08 % 11.46% 11.66% 11.94%
    Total capital 11.40% 11.72 % 12.08% 12.29% 12.59%

    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  Nine Months Ended 
     Sep Jun Mar Dec Sep  Sep Sep 
     2022 2022 2022 2021 2021  2022 2021 
    Selected Performance Ratios (Annualized):                      
    Return on average assets 0.95% 0.87% 0.73% 0.59% 0.97%  0.85% 1.04%
    Return on average shareholders' equity 10.77% 9.76% 7.83% 6.19% 9.70%  9.46% 10.05%
    Return on average tangible common equity¹ 14.36% 13.02% 10.39% 8.18% 12.84%  12.60% 13.24%
    Noninterest income / average assets 0.52% 0.62% 0.63% 0.60% 0.64%  0.59% 0.63%
    Noninterest expense / average assets 2.25% 2.21% 2.27% 2.47% 2.35%  2.24% 2.34%
    Efficiency ratio 63.39% 64.35% 69.08% 75.89% 63.53%  65.47% 63.14%
                           
    Operating Selected Performance Ratios (Annualized):                      
    Operating return on average assets1 0.96% 0.88% 0.76% 0.77% 1.00%  0.87% 1.06%
    Operating PTPP return on average assets1 1.30% 1.23% 1.05% 1.03% 1.39%  1.20% 1.40%
    Operating return on average shareholders' equity1 10.83% 9.82% 8.14% 8.09% 10.01%  9.60% 10.28%
    Operating return on average tangible common equity1 14.44% 13.09% 10.80% 10.70% 13.26%  12.78% 13.56%
    Operating efficiency ratio1 62.93% 63.88% 67.60% 68.07% 62.10%  64.69% 61.96%
    Operating noninterest income / average assets1 0.52% 0.62% 0.63% 0.60% 0.63%  0.59% 0.63%
    Operating noninterest expense / average assets1 2.24% 2.21% 2.23% 2.23% 2.30%  2.22% 2.31%
                           
    Selected Interest Rates and Yields:                      
    Yield on loans and leases 4.59% 4.40% 4.40% 4.53% 4.95%  4.47% 4.72%
    Yield on earning assets, FTE 3.79% 3.39% 3.18% 3.20% 3.67%  3.46% 3.73%
    Cost of interest-bearing deposits 0.62% 0.33% 0.27% 0.29% 0.34%  0.41% 0.39%
    Cost of total deposits 0.45% 0.24% 0.20% 0.22% 0.25%  0.30% 0.29%
    Cost of interest-bearing liabilities 0.70% 0.42% 0.36% 0.39% 0.44%  0.50% 0.49%
    Net interest margin, FTE 3.29% 3.08% 2.91% 2.92% 3.35%  3.10% 3.37%
                           
    Per Common Share:                      
    Net income, basic$0.69 $0.61 $0.49 $0.40 $0.62  $1.79 $1.85 
    Net income, diluted 0.68  0.61  0.49  0.40  0.61   1.78  1.84 
    Operating earnings, basic¹ 0.69  0.61  0.51  0.52  0.64   1.82  1.90 
    Operating earnings, diluted¹ 0.69  0.61  0.51  0.52  0.63   1.81  1.88 
    Book value 24.56  24.88  24.86  25.56  25.28   24.56  25.28 
    Tangible book value¹ 18.02  18.69  18.64  19.26  19.03   18.02  19.03 
    Common shares outstanding 16,887,555  16,898,405  16,893,282  16,802,990  16,801,447   16,887,555  16,801,447 

    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 
     2022
     2022
     2022
     2021
     2021
      2022
     2021
     
    Operating Earnings:                      
    Net income (GAAP)$11,543  $10,215  $8,259  $6,655  $9,600   $30,018  $28,134  
    Noninterest income:                      
    Securities gains (losses), net             (45)      (45) 
    Noninterest expenses:                      
    Merger related and restructuring expenses 87   81   439   2,762   464    607   939  
    Income taxes:                      
    Income tax effect of adjustments (22)  (21)  (113)  (713)  (108)   (157)  (231) 
    Operating earnings (Non-GAAP)$11,608  $10,275  $8,585  $8,704  $9,911   $30,468  $28,797  
    Operating earnings per common share (Non-GAAP):                      
    Basic$0.69  $0.61  $0.51  $0.52  $0.64   $1.82  $1.90  
    Diluted 0.69   0.61   0.51   0.52   0.63    1.81   1.88  
                           
    Operating Noninterest Income:                      
    Noninterest income (GAAP)$6,250  $7,229  $7,111  $6,806  $6,309   $20,590  $17,143  
    Securities gains (losses), net             (45)      (45) 
    Operating noninterest income (Non-GAAP)$6,250  $7,229  $7,111  $6,806  $6,264   $20,590  $17,098  
    Operating noninterest income (Non-GAAP)/average assets1 0.52 % 0.62 % 0.63 % 0.60 % 0.63 %  0.59 % 0.63 %
                           
    Operating Noninterest Expense:                      
    Noninterest expense (GAAP)$27,230  $25,926  $25,718  $27,823  $23,309   $78,874  $63,570  
    Merger related and restructuring expenses (87)  (81)  (439)  (2,762)  (464)   (607)  (939) 
    Operating noninterest expense (Non-GAAP)$27,143  $25,845  $25,279  $25,061  $22,845   $78,267  $62,631  
    Operating noninterest expense (Non-GAAP)/average assets2 2.24 % 2.21 % 2.23 % 2.23 % 2.30 %  2.22 % 2.31 %
                           
    Operating Pre-tax Pre-provision ("PTPP") Earnings:                      
    Net interest income (GAAP)$36,708  $33,062  $30,118  $29,855  $30,382   $99,889  $83,539  
    Operating noninterest income (Non-GAAP) 6,250   7,229   7,111   6,806   6,264    20,590   17,098  
    Operating noninterest expense (Non-GAAP) (27,143)  (25,845)  (25,279)  (25,061)  (22,845)   (78,267)  (62,631) 
    Operating PTPP earnings (Non-GAAP)$15,815  $14,446  $11,950  $11,600  $13,801   $42,212  $38,006  
                           
    Non-GAAP Return Ratios:                      
    Operating return on average assets (Non-GAAP)3 0.96 % 0.88 % 0.76 % 0.77 % 1.00 %  0.87 % 1.06 %
    Operating PTPP return on average assets (Non-GAAP)4 1.30 % 1.23 % 1.05 % 1.03 % 1.39 %  1.20 % 1.40 %
    Return on average tangible common equity (Non-GAAP)5 14.36 % 13.02 % 10.39 % 8.18 % 12.84 %  12.60 % 13.24 %
    Operating return on average shareholders' equity (Non-GAAP)6 10.83 % 9.82 % 8.14 % 8.09 % 10.01 %  9.60 % 10.28 %
    Operating return on average tangible common equity (Non-GAAP)7 14.44 % 13.09 % 10.80 % 10.70 % 13.26 %  12.78 % 13.56 %
                           
    Operating Efficiency Ratio:                      
    Efficiency ratio (GAAP) 63.39 % 64.35 % 69.08 % 75.89 % 63.53 %  65.47 % 63.14 %
    Adjustment for taxable equivalent yields (0.25)% (0.27)% (0.31)% (0.32)% (0.25)%  (0.28)% (0.28)%
    Adjustment for securities gains (losses)  %  %  %  % (0.08)%   % (0.03)%
    Adjustment for merger related income and costs (0.21)% (0.20)% (1.17)% (7.50)% (1.10)%  (0.50)% (0.87)%
    Operating efficiency ratio (Non-GAAP) 62.93 % 63.88 % 67.60 % 68.07 % 62.10 %  64.69 % 61.96 %

    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  Nine Months Ended
     Sep Jun Mar Dec Sep  Sep Sep
     2022
     2022
     2022
     2021
     2021
      2022
     2021
    Tangible Common Equity:                     
    Shareholders' equity (GAAP)$414,711  $420,427  $420,042  $429,430  $424,720   $414,711  $424,720 
    Less goodwill and other intangible assets 110,460   104,582   105,215   105,852   104,930    110,460   104,930 
    Tangible common equity (Non-GAAP)$304,251  $315,845  $314,827  $323,578  $319,790   $304,251  $319,790 
                          
    Average Tangible Common Equity:                     
    Average shareholders' equity (GAAP)$425,365  $419,726  $427,945  $426,808  $392,798   $424,336  $374,464 
    Less average goodwill and other intangible assets 106,483   104,986   105,617   104,193   96,250    105,698   90,445 
    Average tangible common equity (Non-GAAP)$318,882  $314,740  $322,328  $322,615  $296,548   $318,638  $284,019 
                          
    Tangible Book Value per Common Share:                     
    Book value per common share (GAAP)$24.56  $24.88  $24.86  $25.56  $25.28   $24.56  $25.28 
    Adjustment due to goodwill and other intangible assets (6.54)  (6.19)  (6.23)  (6.30)  (6.25)   (6.54)  (6.25)
    Tangible book value per common share (Non-GAAP)1$18.02  $18.69  $18.64  $19.26  $19.03   $18.02  $19.03 
                          
    Tangible Common Equity to Tangible Assets:                     
    Total Assets$4,796,911  $4,788,113  $4,718,579  $4,611,579  $4,384,031   $4,796,911  $4,384,031 
    Less goodwill and other intangibles 110,460   104,582   105,215   105,852   104,930    110,460   104,930 
    Tangible Assets (Non-GAAP):$4,686,451  $4,683,531  $4,613,364  $4,505,727  $4,279,101   $4,686,451  $4,279,101 
    Tangible common equity to tangible assets (Non-GAAP) 6.49%  6.74%  6.82%  7.18%  7.47%   6.49%  7.47%

    1Tangible book value per share is computed by dividing total stockholder's equity, less goodwill and other intangible assets by common shares outstanding.

     


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