SmartFinancial Announces Results for the First Quarter 2022

SmartFinancial, Inc.

Highlights for the First Quarter of 2022

• Operating earnings¹ of $8.6 million, or $0.51 per diluted common share, for the first quarter of 2022

• Net organic loan and lease growth of over $136.9 million - 21% annualized quarter-over-quarter increase

• Non-time deposit growth of over $195.0 million – 23% annualized quarter-over-quarter increase

• Credit quality remains solid with nonperforming assets to total assets of 0.11%

KNOXVILLE, Tenn., April 25, 2022 (GLOBE NEWSWIRE) -- SmartFinancial, Inc. ("SmartFinancial" or the "Company"; NASDAQ: SMBK), today announced net income of $8.3 million, or $0.49 per diluted common share, for the first quarter of 2022, compared to net income of $9.8 million, or $0.65 per diluted common share, for the first quarter of 2021, and compared to prior quarter net income of $6.7 million, or $0.40 per diluted common share. Operating earnings¹, which excludes securities gains, merger related and restructuring expenses and non-operating items, totaled $8.6 million, or $0.51 per diluted common share, in the first quarter of 2022, compared to $9.8 million, or $0.65 per diluted common share, in the first quarter of 2021, and compared to $8.7 million, or $0.52 per diluted common share, in the fourth quarter of 2021.

Billy Carroll, President & CEO, stated: “I am extremely pleased with our results for the first quarter. Both loans and deposits grew at an outstanding pace, as our sales team executed our organic growth strategy. Our wealth platform, insurance platform and equipment finance group all also had strong performance. Earnings performance was on target and while keeping an eye on inflationary pressure in our economy, we remain bullish on the company’s 2022 outlook.”

SmartFinancial's Chairman, Miller Welborn, concluded: “2022 has certainly started on a good note for us. Just as we projected and forecasted our plan is on track. The execution at all levels shows our commitment and discipline to be a top performing bank”.

Net Interest Income and Net Interest Margin

Net interest income was $30.1 million for the first quarter of 2022, compared to $29.9 million for the prior quarter. Average earning assets totaled $4.22 billion, an increase of $139.1 million. The growth in average earnings assets was primarily driven by an increase in average securities of $276.1 million and average loans and leases of $54.3 million, offset by a decrease in average interest-earning cash of $190.1 million, primarily from the purchase of securities. Average interest-bearing liabilities increased $121.8 million, related to continued core deposit growth.

The tax equivalent net interest margin was 2.91% for the first quarter of 2022, compared to 2.92% for the prior quarter. The tax equivalent net interest margin was positively impacted by several factors, mainly the continued deployment of excess cash and cash equivalents into loans and securities. However, the deployment of total cash and cash equivalents was partially offset by a quarter-over-quarter deposit increase of over $169.4 million. Additionally, the yield on interest-earning assets was negatively impacted due to a decrease quarter-over-quarter in loan discount and Payroll Protection Program (“PPP”) fee accretion of $727 thousand.

The yield on interest-bearing liabilities decreased to 0.36% for the first quarter of 2022 compared to 0.39% for the prior quarter. The cost of average interest-bearing deposits was 0.27% for the first quarter of 2022 compared to 0.29% for the prior quarter, a decrease of 2 basis points. The lower cost of average deposits was attributable to the growth of non-time deposits and the continued maturation and repricing of time deposits. The cost of total deposits for the first quarter of 2022 was 0.20% compared to 0.22% in the prior quarter.

¹ Non-GAAP measures. 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
		Mar		Dec		Increase
Selected Interest Rates and Yields		2022		2021		(Decrease)
Yield on loans and leases		4.40	%	4.53	%	(0.13)%
Yield on earning assets, FTE		3.18	%	3.20	%	(0.02)%
Cost of interest-bearing deposits		0.27	%	0.29	%	(0.02)%
Cost of total deposits		0.20	%	0.22	%	(0.02)%
Cost of interest-bearing liabilities		0.36	%	0.39	%	(0.03)%
Net interest margin, FTE		2.91	%	2.92	%	(0.01)%

Provision for Loan and Lease Losses and Credit Quality

At March 31, 2022, the allowance for loan and lease losses was $20.1 million. The allowance for loan and lease losses to total loans and leases was 0.72% as of March 31, 2022, and December 31, 2021, 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 0.71% as of March 31, 2022, compared to 0.74% as of December 31, 2021. The remaining discounts on the acquired loan and lease portfolio totaled $14.9 million, or 3.64% of acquired loans and leases as of March 31, 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
				Mar				Dec
	Provision for Loan and Lease Losses Rollforward			2022				2021				Change
	Beginning balance		$	19,352			$	19,295			$	57
	Charge-offs			(488	)			(499	)			11
	Recoveries			208				134				74
	Net charge-offs			(280	)			(365	)			85
	Provision			1,006				422				(584	)
	Ending balance		$	20,078			$	19,352			$	726
	Allowance for loan losses to total loans and leases, gross			0.72	%			0.72	%			-	%

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 0.12% as of March 31, 2022, and December 31, 2021, 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 0.11% as of March 31, 2022, and December 31, 2021, respectively.

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

			Three Months Ended
				Mar				Dec				Increase
	Credit Quality			2022				2021				(Decrease)
	Nonaccrual loans and leases		$	3,342			$	3,124			$	218
	Loans and leases past due 90 days or more and still accruing			-				64				(64	)
	Total nonperforming loans and leases			3,342				3,188				154
	Other real estate owned			1,612				1,780				(168	)
	Other repossessed assets			27				90				(63	)
	Total nonperforming assets		$	4,981			$	5,058			$	(77	)
	Nonperforming loans and leases to total loans and leases, gross			0.12	%			0.12	%			-	%
	Nonperforming assets to total assets			0.11	%			0.11	%			-	%

Noninterest Income

Noninterest income increased $305 thousand to $7.1 million for the first quarter of 2022 compared to $6.8 million for the prior quarter. During the first quarter of 2022, the primary components of the changes in noninterest income were as follows:

• Increase in investment services, income led by the new Gulf Coast advisory team’s continued client onboarding;

• Increase in insurance commissions, driven by seasonality;

• Decrease in interchange and debit card transaction fees, related to lower volume; and

• Decrease in other, primarily from the gain on sale of credit card portfolio in prior quarter.

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

			Three Months Ended
				Mar				Dec				Increase
	Noninterest Income			2022				2021				(Decrease)
	Service charges on deposit accounts		$	1,319			$	1,372			$	(53	)
	Gain (loss) on sale of securities, net			-				-				-
	Mortgage banking income			834				803				31
	Investment services			1,070				621				449
	Insurance commissions			901				517				384
	Interchange and debit card transaction fees			1,284				1,445				(161	)
	Other			1,703				2,048				(345	)
	Total noninterest income		$	7,111			$	6,806			$	305

Noninterest Expense

Noninterest expense decreased $2.1 million to $25.7 million for the first quarter of 2022 compared to $27.8 million for the prior quarter. During the first quarter of 2022, the primary components of the changes in noninterest expense were as follows:

• Increase in other real estate and loan related expenses, primarily attributable to increased activity in loan related production;

• Increase in advertising and marketing, related to additional advertising and public relations across the Company;

• Decrease in data processing and technology as a result of continued efficiency efforts;

• Increase in professional services, related to additional services performed during the quarter; and

• Decrease in other expense, related to year-end expenses in prior period and continued efficiency efforts.
  

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

			Three Months Ended
				Mar				Dec				Increase
	Noninterest Expense			2022				2021				(Decrease)
	Salaries and employee benefits		$	15,046			$	14,990			$	56
	Occupancy and equipment			3,059				3,026				33
	FDIC insurance			641				567				74
	Other real estate and loan related expenses			729				583				146
	Advertising and marketing			369				176				193
	Data processing and technology			1,586				1,722				(136	)
	Professional services			1,242				847				395
	Amortization of intangibles			637				660				(23	)
	Merger related and restructuring expenses			439				2,762				(2,323	)
	Other			1,970				2,490				(520	)
	Total noninterest expense		$	25,718			$	27,823			$	(2,105	)

Income Tax Expense

Income tax expense was $2.2 million for the first quarter of 2022, an increase of $485 thousand, compared to $1.8 million for the prior quarter.

The effective tax rate was 21.38% for the first quarter of 2022 and 20.93% for the prior quarter.

Balance Sheet Trends

Total assets at March 31, 2022 were $4.72 billion compared with $4.61 billion at December 31, 2021. The increase of $107.0 million is primarily attributable to increases in securities of $270.6 million, loans and leases of $112.6 million, and other assets of $6.3 million, offset by a decrease in cash and cash equivalents of $281.1 million, primarily from the purchase of securities.

Total liabilities increased to $4.30 billion at March 31, 2022 from $4.18 billion at December 31, 2021. The increase of $116.4 million was primarily from organic deposit growth of $169.4 million, offset by a decrease in borrowings of $50.9 million.

Shareholders' equity at March 31, 2022 totaled $420.0 million, a decrease of $9.4 million, from December 31, 2021. The decrease in shareholders' equity was primarily from the change in accumulated other comprehensive income (loss) of $17.0 million and dividends paid of $1.2 million, offset by net income of $8.3 million for the three months ended March 31, 2022. Tangible book value per share¹ was $18.64 at March 31, 2022, compared to $19.26 at December 31, 2021. Tangible common equity¹ as a percentage of tangible assets¹ was 6.82% at March 31, 2022, compared with 7.18% at December 31, 2021.

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

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

		Mar			Dec			Increase
Selected Balance Sheet Information		2022			2021			(Decrease)
Total assets		$	4,718,579		$	4,611,579		$	107,000
Total liabilities			4,298,537			4,182,149			116,388
Total equity			420,042			429,430			(9,388	)
Securities			830,015			559,422			270,593
Loans and leases			2,806,026			2,693,397			112,629
Deposits			4,191,353			4,021,938			169,415
Borrowings			36,713			87,585			(50,872	)

Conference Call Information

SmartFinancial issued this earnings release for the first quarter of 2022 on Monday, April 25, 2022, and will host a conference call on Tuesday, April 26, 2022, at 10:00 a.m. ET. To access this interactive teleconference, dial (844) 200-6205 or (646) 904-5544 and entering the access code, 293033. A replay of the conference call will be available through June 28, 2022, by dialing (866) 813-9403 or (929) 458-6194 and entering the access code, 552729. 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) 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) 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; (16) higher inflation and its impacts; (17) the effects of war or other conflicts including the impacts related to or resulting from Russia’s military action in Ukraine; and (18) other general competitive, economic,, political, and market factors, including those affecting our business, operations, pricing, products, or services. These and other factors that could cause results to differ materially from those described in the forward-looking statements can be found in SmartFinancial’s most recent annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, in each case filed with or furnished to the Securities and Exchange Commission (the “SEC”) and available on the SEC’s website (www.sec.gov). Undue reliance should not be placed on forward-looking statements. SmartFinancial disclaims any obligation to update or revise any forward-looking statements contained in this release, which speak only as of the date hereof, whether as a result of new information, future events, or otherwise.

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

		Ending Balances
			Mar				Dec				Sep				Jun				Mar
			2022				2021				2021				2021				2021
Assets:
Cash and cash equivalents		$	763,968			$	1,045,077			$	1,091,160			$	673,515			$	556,701
Securities available-for-sale, at fair value			540,483				482,453				339,343				250,817				250,937
Securities held-to-maturity, at amortized cost			289,532				76,969				—				—				—
Other investments			16,499				16,494				14,972				14,584				14,728
Loans held for sale			5,894				5,103				3,418				4,334				7,870
Loans and leases			2,806,026				2,693,397				2,652,663				2,468,318				2,487,129
Less: Allowance for loan and lease losses			(20,078	)			(19,352	)			(19,295	)			(18,310	)			(18,370	)
Loans and leases, net			2,785,948				2,674,045				2,633,368				2,450,008				2,468,759
Premises and equipment, net			84,793				85,958				85,346				72,314				72,697
Other real estate owned			1,612				1,780				2,415				2,499				3,946
Goodwill and other intangibles, net			105,215				105,852				104,930				90,966				86,350
Bank owned life insurance			80,074				79,619				79,145				72,013				71,586
Other assets			44,561				38,229				29,934				23,306				23,629
Total assets		$	4,718,579			$	4,611,579			$	4,384,031			$	3,654,356			$	3,557,203
Liabilities:
Deposits:
Noninterest-bearing demand		$	1,093,933			$	1,055,125			$	977,180			$	807,560			$	777,968
Interest-bearing demand			975,272				899,158				847,007				702,470				683,887
Money market and savings			1,573,101				1,493,007				1,389,393				1,140,029				1,073,941
Time deposits			549,047				574,648				585,692				489,413				512,417
Total deposits			4,191,353				4,021,938				3,799,272				3,139,472				3,048,213
Borrowings			36,713				87,585				88,748				78,834				82,642
Subordinated debt			41,952				41,930				41,909				39,388				39,367
Other liabilities			28,519				30,696				29,382				23,269				22,923
Total liabilities			4,298,537				4,182,149				3,959,311				3,280,963				3,193,145
Shareholders' Equity:
Common stock			16,893				16,803				16,801				15,110				15,105
Additional paid-in capital			293,376				292,937				292,760				252,039				251,836
Retained earnings			125,329				118,247				112,600				103,906				96,034
Accumulated other comprehensive income (loss)			(15,556	)			1,443				2,559				2,338				1,083
Total shareholders' equity			420,042				429,430				424,720				373,393				364,058
Total liabilities & shareholders' equity		$	4,718,579			$	4,611,579			$	4,384,031			$	3,654,356			$	3,557,203

SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information - (unaudited)
(dollars in thousands except share and per share data)

	Three Months Ended
	Mar			Dec			Sep			Jun				Mar
	2022			2021			2021			2021				2021
Interest income:
Loans and leases, including fees	$	29,643		$	30,567		$	31,674		$	28,323			$	28,018
Investment securities:
Taxable		2,418			1,341			832			916				724
Tax-exempt		368			322			331			304				259
Federal funds sold and other earning assets		486			547			474			309				291
Total interest income		32,915			32,777			33,311			29,852				29,292
Interest expense:
Deposits		2,014			2,116			2,153			2,248				2,331
Borrowings		157			180			121			123				117
Subordinated debt		626			626			655			584				584
Total interest expense		2,797			2,922			2,929			2,955				3,032
Net interest income		30,118			29,855			30,382			26,897				26,260
Provision for loan and lease losses		1,006			422			1,149			(5	)			67
Net interest income after provision for loan and lease losses		29,112			29,433			29,233			26,902				26,193
Noninterest income:
Service charges on deposit accounts		1,319			1,372			1,220			1,048				1,009
Gain (loss) on sale of securities, net		—			—			45			—				—
Mortgage banking		834			803			994			1,105				1,139
Investment services		1,070			621			448			567				531
Insurance commissions		901			517			745			557				1,466
Interchange and debit card transaction fees		1,284			1,445			1,078			922				839
Other		1,703			2,048			1,779			944				707
Total noninterest income		7,111			6,806			6,309			5,143				5,691
Noninterest expense:
Salaries and employee benefits		15,046			14,990			13,594			12,203				10,869
Occupancy and equipment		3,059			3,026			2,536			2,294				2,341
FDIC insurance		641			567			525			371				371
Other real estate and loan related expense		729			583			407			506				602
Advertising and marketing		369			176			235			230				190
Data processing and technology		1,586			1,722			1,753			1,509				1,379
Professional services		1,242			847			810			849				641
Amortization of intangibles		637			660			711			441				444
Merger related and restructuring expenses		439			2,762			464			372				103
Other		1,970			2,490			2,274			2,022				2,524
Total noninterest expense		25,718			27,823			23,309			20,797				19,464
Income before income taxes		10,505			8,416			12,233			11,248				12,420
Income tax expense		2,246			1,761			2,633			2,470				2,664
Net income	$	8,259		$	6,655		$	9,600		$	8,778			$	9,756
Earnings per common share:
Basic	$	0.49		$	0.40		$	0.62		$	0.59			$	0.65
Diluted	$	0.49		$	0.40		$	0.61		$	0.58			$	0.65
Weighted average common shares outstanding:
Basic		16,718,371			16,699,010			15,557,528			15,003,657				15,011,573
Diluted		16,858,288			16,846,315			15,691,126			15,126,184				15,111,947

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

		Three Months Ended
		March 31, 2022								December 31, 2021								March 31, 2021
		Average						Yield/		Average						Yield/		Average						Yield/
		Balance			Interest1			Cost1		Balance			Interest1			Cost1		Balance			Interest1			Cost1
Assets:
Loans and leases, including fees2		$	2,724,206		$	29,570		4.40	%	$	2,669,943		$	30,510		4.53	%	$	2,428,499		$	27,943		4.67	%
Loans held for sale			3,890			73		7.62	%		5,116			57		4.44	%		7,913			75		3.82	%
Taxable securities			612,980			2,418		1.60	%		339,371			1,341		1.58	%		136,492			724		2.15	%
Tax-exempt securities			105,516			533		2.05	%		102,989			479		1.85	%		90,849			409		1.82	%
Federal funds sold and other earning assets			775,834			486		0.25	%		965,899			547		0.22	%		417,144			291		0.28	%
Total interest-earning assets			4,222,426			33,080		3.18	%		4,083,318			32,934		3.20	%		3,080,897			29,442		3.88	%
Noninterest-earning assets			381,807								383,783								275,272
Total assets		$	4,604,233							$	4,467,101							$	3,356,169
Liabilities and Stockholders’ Equity:
Interest-bearing demand deposits		$	921,835			446		0.20	%	$	853,763			403		0.18	%	$	641,214			256		0.16	%
Money market and savings deposits			1,523,188			859		0.23	%		1,428,472			920		0.26	%		983,893			821		0.34	%
Time deposits			561,207			709		0.51	%		583,165			793		0.54	%		526,062			1,254		0.97	%
Total interest-bearing deposits			3,006,230			2,014		0.27	%		2,865,400			2,116		0.29	%		2,151,169			2,331		0.44	%
Borrowings			69,769			157		0.91	%		88,828			180		0.80	%		81,837			117		0.58	%
Subordinated debt			41,938			626		6.05	%		41,917			625		5.93	%		39,354			584		6.01	%
Total interest-bearing liabilities			3,117,937			2,797		0.36	%		2,996,145			2,921		0.39	%		2,272,360			3,032		0.54	%
Noninterest-bearing deposits			1,028,298								1,016,438								700,962
Other liabilities			30,053								27,710								21,928
Total liabilities			4,176,288								4,040,293								2,995,250
Shareholders' equity			427,945								426,808								360,919
Total liabilities and shareholders' equity		$	4,604,233							$	4,467,101							$	3,356,169
Net interest income, taxable equivalent					$	30,283							$	30,013							$	26,410
Interest rate spread								2.82	%							2.81	%							3.33	%
Tax equivalent net interest margin								2.91	%							2.92	%							3.48	%
Percentage of average interest-earning assets to average interest-bearing liabilities								135.42	%							136.29	%							135.58	%
Percentage of average equity to average assets								9.29	%							9.55	%							10.75	%

¹ Taxable equivalent
² Includes average balance of $53,966, $80,501 and $312,582 in PPP loans for the quarters ended March 31, 2022, December 31, 2021, and March 31, 2021, respectively.

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

		As of and for The Three Months Ended
		Mar			Dec			Sep			Jun			Mar
		2022			2021			2021			2021			2021
Composition of Loans and Leases:
Commercial real estate:
owner occupied		$	612,675		$	590,064		$	560,671		$	492,750		$	477,293
non-owner occupied			863,181			794,092			752,576			669,741			593,348
Commercial real estate, total			1,475,856			1,384,156			1,313,247			1,162,491			1,070,641
Commercial & industrial			461,153			488,024			469,739			496,114			686,010
Construction & land development			314,654			278,386			326,374			300,704			285,973
Consumer real estate			483,229			477,272			478,161			444,640			432,486
Leases			59,892			53,708			53,396			53,038			—
Consumer and other			11,242			11,851			11,746			11,331			12,019
Total loans and leases		$	2,806,026		$	2,693,397		$	2,652,663		$	2,468,318		$	2,487,129
Asset Quality and Additional Loan Data:
Nonperforming loans and leases		$	3,342		$	3,188		$	3,567		$	3,758		$	6,234
Other real estate owned			1,612			1,780			2,415			2,499			3,946
Other repossessed assets			27			90			77			199			—
Total nonperforming assets		$	4,981		$	5,058		$	6,059		$	6,456		$	10,180
Restructured loans and leases not included in nonperforming loans and leases		$	625		$	206		$	212		$	219		$	250
Net charge-offs to average loans and leases (annualized)			0.04	%		0.05	%		0.03	%		0.01	%		0.01	%
Allowance for loan and leases losses to loans and leases			0.72	%		0.72	%		0.73	%		0.74	%		0.74	%
Nonperforming loans and leases to total loans and leases, gross			0.12	%		0.12	%		0.13	%		0.15	%		0.25	%
Nonperforming assets to total assets			0.11	%		0.11	%		0.14	%		0.18	%		0.29	%
Acquired loan and lease fair value discount balance		$	14,913		$	15,483		$	13,001		$	12,982		$	12,951
Accretion income on acquired loans and leases			389			457			1,760			761			1,636
PPP net fees deferred balance			1,112			2,038			3,783			6,651			7,351
PPP net fees recognized			1,066			1,725			2,873			2,132			2,398
Capital Ratios:
Equity to Assets			8.90	%		9.31	%		9.69	%		10.22	%		10.23	%
Tangible common equity to tangible assets (Non-GAAP)1			6.82	%		7.18	%		7.47	%		7.93	%		8.00	%
SmartFinancial, Inc.2
Tier 1 leverage			7.41	%		7.45	%		8.36	%		8.10	%		8.55	%
Common equity Tier 1			10.30	%		10.56	%		10.85	%		10.63	%		11.29	%
Tier 1 capital			10.30	%		10.56	%		10.85	%		10.63	%		11.29	%
Total capital			12.22	%		12.55	%		12.92	%		12.80	%		13.62	%
SmartBank			Estimated3
Tier 1 leverage			8.24	%		8.23	%		9.20	%		8.75	%		9.33	%
Common equity Tier 1			11.46	%		11.66	%		11.94	%		11.50	%		12.31	%
Tier 1 capital			11.46	%		11.66	%		11.94	%		11.50	%		12.31	%
Total capital			12.08	%		12.29	%		12.59	%		12.19	%		13.05	%

¹Total common equity less intangibles divided by total assets less intangibles. See reconciliation of Non-GAAP measures.
²All periods presented are estimated.
³ Current period capital ratios are estimated as of the date of this earnings release.

SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information - (unaudited)
(dollars in thousands except share and per share data)

	As of and for The
	Three Months Ended
	Mar			Dec			Sep			Jun			Mar
	2022			2021			2021			2021			2021
Selected Performance Ratios (Annualized):
Return on average assets		0.73	%		0.59	%		0.97	%		0.98	%		1.18	%
Return on average shareholders' equity		7.83	%		6.19	%		9.70	%		9.53	%		10.96	%
Return on average tangible common equity¹		10.39	%		8.18	%		12.84	%		12.54	%		14.41	%
Noninterest income / average assets		0.63	%		0.60	%		0.64	%		0.58	%		0.69	%
Noninterest expense / average assets		2.27	%		2.47	%		2.35	%		2.33	%		2.35	%
Efficiency ratio		69.08	%		75.89	%		63.53	%		64.91	%		60.92	%
Operating Selected Performance Ratios (Annualized):
Operating return on average assets1		0.76	%		0.77	%		1.00	%		1.01	%		1.19	%
Operating PTPP return on average assets1		1.05	%		1.03	%		1.39	%		1.30	%		1.52	%
Operating return on average shareholders' equity1		8.14	%		8.09	%		10.01	%		9.83	%		11.05	%
Operating return on average tangible common equity1		10.80	%		10.70	%		13.26	%		12.93	%		14.53	%
Operating efficiency ratio1		67.60	%		68.07	%		62.10	%		63.46	%		60.31	%
Operating noninterest income / average assets1		0.63	%		0.60	%		0.63	%		0.58	%		0.69	%
Operating noninterest expense / average assets1		2.23	%		2.23	%		2.30	%		2.29	%		2.34	%
Selected Interest Rates and Yields:
Yield on loans and leases		4.40	%		4.53	%		4.95	%		4.52	%		4.67	%
Yield on earning assets, FTE		3.18	%		3.20	%		3.67	%		3.65	%		3.88	%
Cost of interest-bearing deposits		0.27	%		0.29	%		0.34	%		0.39	%		0.44	%
Cost of total deposits		0.20	%		0.22	%		0.25	%		0.29	%		0.33	%
Cost of interest-bearing liabilities		0.36	%		0.39	%		0.44	%		0.49	%		0.54	%
Net interest margin, FTE		2.91	%		2.92	%		3.35	%		3.29	%		3.48	%
Per Common Share:
Net income, basic	$	0.49		$	0.40		$	0.62		$	0.59		$	0.65
Net income, diluted		0.49			0.40			0.61			0.58			0.65
Operating earnings, basic¹		0.51			0.52			0.64			0.60			0.65
Operating earnings, diluted¹		0.51			0.52			0.63			0.60			0.65
Book value		24.86			25.56			25.28			24.71			24.10
Tangible book value¹		18.64			19.26			19.03			18.69			18.39
Common shares outstanding		16,893,282			16,802,990			16,801,447			15,109,736			15,104,536

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

SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information - (unaudited)
(dollars in thousands)
NON-GAAP RECONCILIATIONS

		Three Months Ended
			Mar				Dec				Sep				Jun				Mar
			2022				2021				2021				2021				2021
Operating Earnings:
Net income (GAAP)		$	8,259			$	6,655			$	9,600			$	8,778			$	9,756
Noninterest income:
Securities gains (losses), net			—				—				(45	)			—				—
Noninterest expenses:
Merger related and restructuring expenses			439				2,762				464				372				103
Income taxes:
Income tax effect of adjustments			(113	)			(713	)			(108	)			(96	)			(27	)
Operating earnings (Non-GAAP)		$	8,585			$	8,704			$	9,911			$	9,054			$	9,832
Operating earnings per common share (Non-GAAP):
Basic		$	0.51			$	0.52			$	0.64			$	0.60			$	0.65
Diluted			0.51				0.52				0.63				0.60				0.65
Operating Noninterest Income:
Noninterest income (GAAP)		$	7,111			$	6,806			$	6,309			$	5,143			$	5,691
Securities gains (losses), net			—				—				(45	)			—				—
Operating noninterest income (Non-GAAP)		$	7,111			$	6,806			$	6,264			$	5,143			$	5,691
Operating noninterest income (Non-GAAP)/average assets1			0.63	%			0.60	%			0.63	%			0.58	%			0.69	%
Operating Noninterest Expense:
Noninterest expense (GAAP)		$	25,718			$	27,823			$	23,309			$	20,797			$	19,464
Merger related and restructuring expenses			(439	)			(2,762	)			(464	)			(372	)			(103	)
Operating noninterest expense (Non-GAAP)		$	25,279			$	25,061			$	22,845			$	20,425			$	19,361
Operating noninterest expense (Non-GAAP)/average assets2			2.23	%			2.23	%			2.30	%			2.29	%			2.34	%
Operating Pre-tax Pre-provision ("PTPP") Earnings:
Net interest income (GAAP)		$	30,118			$	29,855			$	30,382			$	26,897			$	26,260
Operating noninterest income (Non-GAAP)			7,111				6,806				6,264				5,143				5,691
Operating noninterest expense (Non-GAAP)			(25,279	)			(25,061	)			(22,845	)			(20,425	)			(19,361	)
Operating PTPP earnings (Non-GAAP)		$	11,950			$	11,600			$	13,801			$	11,615			$	12,590
Non-GAAP Return Ratios:
Operating return on average assets (Non-GAAP)3			0.76	%			0.77	%			1.00	%			1.01	%			1.19	%
Operating PTPP return on average assets (Non-GAAP)4			1.05	%			1.03	%			1.39	%			1.30	%			1.52	%
Return on average tangible common equity (Non-GAAP)5			10.39	%			8.18	%			12.84	%			12.54	%			14.41	%
Operating return on average shareholders' equity (Non-GAAP)6			8.14	%			8.09	%			10.01	%			9.83	%			11.05	%
Operating return on average tangible common equity (Non-GAAP)7			10.80	%			10.70	%			13.26	%			12.93	%			14.53	%
Operating Efficiency Ratio:
Efficiency ratio (GAAP)			69.08	%			75.89	%			63.53	%			64.91	%			60.92	%
Adjustment for taxable equivalent yields			(0.31	)%			(0.32	)%			(0.25	)%			(0.30	)%			(0.28	)%
Adjustment for securities gains (losses)			—	%			—	%			(0.08	)%			—	%			—	%
Adjustment for merger related income and costs			(1.17	)%			(7.50	)%			(1.10	)%			(1.15	)%			(0.33	)%
Operating efficiency ratio (Non-GAAP)			67.60	%			68.07	%			62.10	%			63.46	%			60.31	%

¹Operating noninterest income (Non-GAAP) is annualized and divided by average assets.
²Operating noninterest expense (Non-GAAP) is annualized and divided by average assets.
³Operating return on average assets (Non-GAAP) is the annualized operating earnings (Non-GAAP) divided by average assets.
⁴Operating PTPP return on average assets (Non-GAAP) is the annualized operating PTPP earnings (Non-GAAP) divided by average assets.
⁵Return on average tangible common equity (Non-GAAP) is the annualized net income divided by average tangible common equity (Non-GAAP).
⁶Operating return on average shareholders’ equity (Non-GAAP) is the annualized operating earnings (Non-GAAP) divided by average equity.
⁷Operating return on average tangible common equity (Non-GAAP) is the annualized operating earnings (Non-GAAP) divided by average tangible common equity (Non-GAAP).

SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information - (unaudited)
(dollars in thousands)
NON-GAAP RECONCILIATIONS

		Three Months Ended
			Mar				Dec				Sep				Jun				Mar
			2022				2021				2021				2021				2021
Tangible Common Equity:
Shareholders' equity (GAAP)		$	420,042			$	429,430			$	424,720			$	373,393			$	364,058
Less goodwill and other intangible assets			105,215				105,852				104,930				90,966				86,350
Tangible common equity (Non-GAAP)		$	314,827			$	323,578			$	319,790			$	282,427			$	277,708
Average Tangible Common Equity:
Average shareholders' equity (GAAP)		$	427,945			$	426,808			$	392,798			$	369,325			$	360,919
Less average goodwill and other intangible assets			105,617				104,193				96,250				88,551				86,424
Average tangible common equity (Non-GAAP)		$	322,328			$	322,615			$	296,548			$	280,774			$	274,495
Tangible Book Value per Common Share:
Book value per common share (GAAP)		$	24.86			$	25.56			$	25.28			$	24.71			$	24.10
Adjustment due to goodwill and other intangible assets			(6.23	)			(6.30	)			(6.25	)			(6.02	)			(5.71	)
Tangible book value per common share (Non-GAAP)1		$	18.64			$	19.26			$	19.03			$	18.69			$	18.39
Tangible Common Equity to Tangible Assets:
Total Assets		$	4,718,579			$	4,611,579			$	4,384,031			$	3,654,356			$	3,557,203
Less goodwill and other intangibles			105,215				105,852				104,930				90,966				86,350
Tangible Assets (Non-GAAP):		$	4,613,364			$	4,505,727			$	4,279,101			$	3,563,390			$	3,470,853
Tangible common equity to tangible assets (Non-GAAP)			6.82	%			7.18	%			7.47	%			7.93	%			8.00	%

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